FOMC Minutes inline – BoK holds rates

Asia market update: NVDA does it again, sparking another surge in the Nikkei to surpass the previous high of Dec 1989 on intraday basis; FOMC Minutes inline; BoK holds rates; CN tightens the noose further on stock selling; AU PMI contracts and JP PMI lowest since Aug 2020; EU inflation and US jobless tonight.

General trend

- Not just US but global equities were waiting for Nvidia’s Q4 earnings, and the AI chip-maker did not disappoint; surpassing estimates again and adding that ‘demand far exceeds supply for next-gen products’. Stock +9% A/H, taking the Co. closer towards having a $2.0T dollar market cap when US markets open up tomorrow.

- Nvidia rescued a week of losses on the NASDAQ and set off large tech rallies in Tokyo upon the open.

- Advantest +5%, Tokyo Electron +6%, Softbank +4% and South Korea’s Hynix +4%.

- US FOMC Minutes reinforced the view that many members are unclear about when the rate cuts that the market has already priced in may begin to occur.

- The Bank of Korea held rates at 3.5%, and Gov Rhee said it was unlikely to cut during H1.

- In further suppression of stock selling, late in yesterday’s Asia session China said it will enact a net sale ban on stocks at the markets' open and close.

- Both Australia and Japan PMI contractions will only add to concerns of a global slowdown, and the BOJ is unlikely to be impressed upon to raise rates with the lowest PMI out of Japan since the pandemic in 2020.

- US equity FUTs up strongly during Asian trading.

Looking ahead (Asian time zone)

- Thu 22nd (Thu evening) DE Feb prelim PMI, EU Jan inflation, US initial jobless.

- Fri 23rd CN House Price Index, (Fri evening) CN FDI, DE Feb Business Climate.

Holidays in Asia this week

- Fri Feb 23rd Emperor’s Birthday.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 7,604.

- Australia Feb preliminary PMI manufacturing: 47.7 V 50.1 prior (moves back into contraction).

- Reserve Bank of Australia (RBA) Gov Bullock: Continuity of membership needed for new policy setting board.

- New Zealand Jan Trade Balance (NZD): -976M v -0.3B prior.

- RBNZ survey shows household two-year inflation expectation 3.2% v 3.0% prior.

- ANZ now sees 2023-24 Fonterra milk price at NZ$7.85/kg.

- Rio Tinto (RIO.AU) Reports FY23 underlying Net $11.8B v $13.3B y/y (vs $11.6Be), underlying EBITDA $23.9B v $26.3B y/y (vs $23.6Be), Rev $54.0B v $55.6B y/y (vs $53.8Be) (overnight update).

China/Hong Kong

- Hang Seng opens -0.1% at 16,489.

- Shanghai Composite opens -0.2% at 2,845.

- Fitch affirms Hong Kong at AA-; Outlook stable.

- China Jan Swift Global Payments (CNY): 4.5% v 4.1% prior.

- China said to enact net sale ban at each market's open and close – press (overnight update).

- EU reportedly agrees first sanctions on Chinese and Indian companies for Russia war links – FT (overnight update).

- China end-2023 Bad Loan Ratio (NPLs): 1.59% v 1.86% h/h (overnight update).

- China said to boost AI development by state-owned companies – press (overnight update).

- Siemens (ENR.DE) CEO: Demanding EU action like quotas or other measures to protect EU wind power sector from cheap Chinese competition, or it'll be decimated like the solar sector (overnight update).

- China PBOC: At the end of 2023 overseas entities held CNY2.79T in China equities, CNY3.72T in China bonds (overnight update).

- China PBOC sets Yuan reference rate: 7.1018 v 7.1030 prior.

- China PBOC Open Market Operation (OMO): Sells CNY58B in 7-day reverse repos; Net drains CNY197B v drains CNY347B prior.

Japan

- Nikkei 225 opens +0.6% at 38,508.

- Japan Feb preliminary PMI manufacturing: 47.2 V 48.0 PRIOR (9th month of contraction and lowest since Aug 2020).

- Japan releases weekly flows data [period ended Feb 16th]: Foreign buying of Japan equities: ¥382.0B v ¥621.2B prior; Japan buying of foreign bonds: -¥560.8B v ¥1.50T prior.

- Toyota 7203.JP Downgrades Mar, Apr domestic production plans to ~14K units per day due to Daihatsu, Toyota Industries production halts - Japan press.

- Japan Jan Final Machine Tool Orders Y/Y: -14.0% v -14.1% prelim (overnight update).

- Japan Cabinet Office (Govt) Feb Monthly Report: Downgrades overall economic assessment; Sees gradual economic recovery despite some sluggishness (1st time since Nov 2023) (overnight update).

- Japan sells ¥5.8T v ¥5.8T indicated in 3-Month Bills; Avg Yield: % v -0.1157% prior; bid-to-cover: 2.27x v 2.70x prior.

- Japan sells ¥498.B v ¥500B indicated in 10-yr, 20-yr, and 30-yr JGB's in liquidity enhancement auction: Avg accepted spread -0.015% v -0.010% prior, bid-to-cover: 4.48x v 3.40x prior.

South Korea

- Kospi opens +0.7% at 2,671

- Bank of Korea (BoK) leaves 7-day repo rate unchanged at 3.50%; as expected.

- Bank of Korea (BoK) Gov: Today's rate decision was unanimous - post rate decision press conference.

Other Asia

- India Feb Preliminary PMI Manufacturing: 56.7 v 56.5 prior (32nd month of expansion).

- Taiwan President: Will continue to engage with the world.

- Thailand PM: Confirms plans measures to increase tourism; Says 'plenty of room' to reduce key policy rate.

- Indonesia Q4 Current Account: -$1.3B v -$0.2Be.

- Indonesia Central Bank (BI) leaves bi rate unchanged at 6.00%; as expected (overnight update).

- Indonesia Central Bank (BI) Gov Warjiyo: Geopolitical escalation may affect supply chain thus the pace of inflation easing - pre-rate decision press conference (overnight update).

- Thailand Central Bank (BOT) Feb Minutes: Vote was 5-2 to keep policy steady; rate consistent with sustaining growth and long-term financial stability (overnight update).

- Thailand Central Bank (BOT) Gov Sethaput said to deny that domestic economy in crisis; resists government calls to hold an emergency meeting - Japanese press (overnight update).

North America

- NVDA Reports Q4 $5.16 v $4.54e, Rev $22.1B v $20.3Be; Guides Q1 Rev well ahead of ests; Says accelerated computing and generative AI have hit the tipping point
CEO: Demand far exceeds supply for next generation products - earnings call.

- Plans to begin Pixel phone production in India - Japanese press.

- (US) Fed’s Barkin (voter): January data made things harder, but should not put too much weight on the month’s information given seasonal issues.

- (US) Treasury $16b 20-year bond auction draws 4.595% v 4.780% prior, bid-to-cover 2.39 v 2.58 prior and 2.56 over last 8 auctions; Tails when issued by 3bps.

- (US) Fed’s Bowman (voter, hawk): The time for lower rates is certainty not now.

- (US) FOMC Jan Minutes: Some officials saw risk inflation progress could stall; Judged policy rate likely at peak for the cycle.

Europe

- (NE) Netherlands Jan House Price Index M/M: 1.2% v 0.2% prior; Y/Y: 1.8% v 1.6% prior.

- (DE) German Cabinet said to approve Economic Report; Sees 2024 GDP growth forecast cut from 1.3% to 0.2%.

- (UK) Feb CBI industrial trends total orders: -20 V -27E.

- (EU) EU reportedly agrees first sanctions on Chinese and Indian companies for Russia war links - FT.

- (DE) German Econ Min: Our energy supply is secure, inflation has eased.

- (UK) BOE’s Dhingra (dovish dissenter): Monetary policy needs to be forward looking because moderation of the policy stance required time to implement and to feed through to the real economy.

- (IL) Reportedly the UK is planning to restrict arms to Israel if it plans to go into Rafah - press.

- (EU) Eurozone Feb advance consumer confidence: -15.5 V -15.5E.

- (EU) ECB’s Wunsch (Netherlands): It may be too early to get hopes up on rates.

Levels as of 00:20 ET

- Nikkei 225 +1.8% ; ASX 200 flat ; Hang Seng +0.2% ; Shanghai Composite +0.6%; Kospi +0.4%.

- Equity S&P500 Futures +0.7%; Nasdaq100 +1.5%, Dax +0.1%; FTSE100 +0.3%.

- EUR 1.0815-1.0835; JPY 150.24-150.47; AUD 0.6542-0.6561; NZD 0.6176-0.6199.

- Gold +0.3% at $2,039/oz; Crude Oil +0.3% at $78.12/brl; Copper flat at $3.8792/lb.