AUD declines on softer core inflation readings, RBA rate cut now even more likely in Feb?

Asia Market Update: AUD declines on softer core inflation readings; RBA rate cut now even more likely in Feb?; Chinese holiday continues; Rate decisions in focus for Wed [including the US Fed]; BOJ Himino to speak on Jan 30th.

General trend

- Aussie bond yields decline on CPI data; AUD/USD declines by 0.4%; money markets were pricing in an >80% chance of a RBA rate cut in Feb [Feb 18th] ahead of the data.

- Aussie REITs outperform on CPI data.

- Quiet/cautious equity session amid holidays and ahead of rate decisions.

- JGB yields decline ahead of month-end; Reportedly Japan Government Pension Fund (GPIF) to be allowed bid in bond auctions - press.

- Will Trump take action against DeepSeek?

- Corporate earnings still in focus [including SMFG, Shin-Etsu Chemical, CyberAgent, Makita and Advantest].

Headlines/economic data

Australia/New Zealand

-ASX 200 opens -0.1% at 8,408.

- AUSTRALIA DEC CPI Y/Y: 2.5% V 2.5%E; CPI Trimmed Mean Y/Y: 2.7% v 3.2% prior [**Note: The RBA has an inflation target range of between 2.0-3.0%].

-AUSTRALIA Q4 CPI Q/Q: 0.2% V 0.3%E; Y/Y: 2.4% V 2.5%E.

-Westpac: Now expects the RBA to cut rates in Feb v May prior.

-Australia Treasurer Chalmers: The 'soft landing' we have been planning and preparing for is looking more and more likely [follows Q4 and Dec CPI data]; urges cautious approach to DeepSeek developments.

-Reserve Bank of New Zealand Chief Economist Conway: Long-term nominal neutral interest rate currently 2.5-3.5%.

-New Zealand Fin Min Willis: A return to growth can't be taken for granted.

-Reserve Bank of New Zealand (RBNZ): Purchased net NZ$177M in Dec.

China/Hong Kong

-Hang Seng closed for holiday [**Note: HK markets are closed on Jan 29th-31st for the Chinese Lunar New Year holiday.].

-Shanghai Composite closed for holiday [**Reminder: China expanded market closures for Lunar New Year Holiday from 6 to 8 days [Jan 28th through Feb 4th], effective from Jan 28th 2025 - press].

-Microsoft is probing if DeepSeek-linked group obtained data from OpenAI - US financial press.

-OpenAI: Says China companies are 'constantly' trying to 'distill' US AI models; engages in countermeasures' to protect its intellectual property; Will work with the US government to protect US technology.

- (US) White House Press Sec: Looking at national security implications of Deepseek.

-US Navy announces ban on use of China's DeepSeek AI due to security and ethical concerns - CNBC.

-US Senators examine influence of China over the Panama Canal; cites Senate hearing - SCMP.

Japan

-Nikkei 225 opens +0.7% at 39,273.

-Bank of Japan (BOJ) Dec Monetary Policy Meeting Minutes (2 decisions ago): members concurred that, given that real interest rates were at significantly low levels, if the outlook for economic activity and prices was realized, in principle, the Bank would accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation.

- Japan Jan Consumer Confidence: 35.2 v 36.5e [matches the lowest since Sept 2023].

-Sony [6758.JP]: Group President Totoki to also become CEO, effective Apr 1st; the current CEO Yoshida to remain as Chairman.

-Japan MOF sells ¥350B vs. ¥350B indicated in 5-year Climate Transition Bonds; Yield at the Lowest Accepted Price: 0.8880% v 0.5950% prior ; bid-to-cover: 3.19x v 4.04x prior.

Korea

- Kospi closed for holiday.

North America

-Apple [AAPL]: Said to be working with SpaceX and T-Mobile to offer service on iPhones; new iPhone update is expected to support Starlink satellites - US financial press.

-Juniper [JNPR]: HPE and Juniper met with Trump DOJ on the fate of their $14.0B merger - US financial press.
Calumet [CLMT]: Has been informed by the U.S. Department of Energy ("DOE") Loan Programs Office ("LPO") that the first tranche of approximately $782M under the guaranteed loan facility that was previously approved for funding today, January 28, will undergo a tactical delay to confirm alignment with White House priorities.

Levels as of 00:20 ET

- Nikkei 225, +0.8%, ASX 200 +0.6% , Hang Seng closed; Shanghai Composite closed ; Kospi closed.

- Equity S&P500 Futures: flat; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 flat.

- EUR 1.0442-1.0425 ; JPY 155.79-155.20 ; AUD 0.6255-0.6226 ;NZD 0.5671-0.5654.

- Gold +0.1% at $2,797/oz; Crude Oil -0.2% at $73.62/brl; Copper -0.8% at $4.2175/lb.