Positive day across Asian equities as Nikkei strives for all-time high, BoJ Ueda stays dovish

Asia Market Update: Positive day across Asian equities as Nikkei strives for all-time high; BOJ Ueda stays dovish; RNBZ Gov signals no near-term cuts; Focus tonight on UK Retail Sales, US Jan Building Permits + Jan PPI.

General trend

- Nikkei up again today, early in the morning reaching just a hair below the all-time 1989 high of 38,957.44 Chip-relateds Tokyo Electron and Advantest as well as major Nikkei component Fast Retailing strong out the gate.

- BOJ Gov Ueda reiterated to consider keeping negative rates, even once price goal is in sight. USD/JPY caught a bid to head back above the previous 18 hours price action when Ueda stated, “Easy financial conditions likely to stay even if negative rates end.”

- Kiwi dollar underperforms after RBNZ Gov Orr kept his talk on the RBNZ remit technical, saying only that 2% mid-point inflation remains appropriate, but did suggest that OCR cuts are not on the immediate horizon.

- Orr also kept away from discussion about the looming overturning of the ‘dual mandate’ imposed by the previous govt which also had the RBNZ committed to supporting MSE (Maximum Sustainable Employment). Without the dual mandate going forward (assuming the new govt follows through with its promised legislation) this may free up the RBNZ to be more focused in its monetary policy to solely focus on achieving ‘midpoint 2% inflation’.

- According to a tier 1 US analyst, "Overall, the Governor did not appear to be positioning for a near-term policy change".

- US financial analysts also reported that market probabilities after Orr speaking were to pare the risk of a hike this month to just 21%. The probability of another rate rise at all this year declined to 44%, having been above 90% at one stage last week.

- Kiwi bond yields have fallen 14bps the past 24 hours, but the currency has not (yet) followed suit.

- Hong Kong Mainland Properties Index up over 5%, assisted by property developer Logan winning a stay of execution when a HK Court dismissed the winding-up petition against the company.

- NZ Business PMI improved, but still in the 11th month of contraction.

- US equity FUTs flat to slightly up during Asian trading;

Looking ahead (Asian time zone)

- Fri Feb 16th (Fri evening) UK Retail Sales, (Fri night) US Jan Building Permits, Jan PPI, Feb Consumer Sentiment.

Holidays in Asia this week

- Fri Feb 16th China.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.5% at 7,643.

- Australia places nickel on critical minerals list - Press.

- New Zealand Jan Manufacturing PMI: 47.3 v 43.4 prior (11th straight contraction).

- RBNZ Gov Orr: 2% mid-point inflation targets remains appropriate; A flexible approach to inflation targeting with a medium term focus remains appropriate.

- New Zealand Treasury Sec McLeish: GDP turnovers have been lower than expected.

China/Hong Kong

- Hang Seng opens +0.4% at 16,007.

- Shanghai Composite closed for Lunar New Year holiday.

- Spring Festival holiday spending in China rose 36% y/y - China Daily (overnight update).

Japan

- Nikkei 225 opens +0.9% at 38,517 (highest since Jan 1990).

- Japan Dec Tertiary Industry Index M/M: 0.7% v 0.2%e.

- Bank of Japan (BOJ) Gov Ueda: Easy financial conditions likely to stay even if negative rates end - Parliamentary testimony.

- Japan Fin Min Suzuki: Declines comment on FX levels; reiterates closely watching FX moves with high sense of urgency.

- IMF: Affirms Japan 2023 GDP growth forecast at 1.9%.

- Japan releases weekly flows data [period ended Feb 9th]: Foreign buying of Japan equities: ¥621.3B v ¥308.2B prior; Japan buying of foreign bonds: ¥1.50T v ¥456.7B prior.

- Japan sells ¥5.8T v ¥5.8T indicated in 3-Month Bills; Avg Yield: -0.1157% v -0.1222% prior; bid-to-cover: 2.70x v 2.81x prior.

- Japan sells ¥500B in 20-yr, 30-yr and 40-yr JGB's in liquidity enhancement auction: Avge accepted spread 0.009% v 0.064% prior, bid-to-cover: 2.87x v 2.1x prior.

- Japan Chief Cabinet Sec Hayashi: Will mobilize all available policies to achieve higher growth (overnight update).

- Japan Ruling Party LDP reportedly to seek regulations on generative AI in 2024 – Nikkei (overnight update).

South Korea

- Kospi opens +0.8% at 2,635.

- South Korea Jan Unemployment Rate: 3.0% v 3.2%e.

- South Korea Jan Import Price Index M/M: 2.2% v -1.7% prior; Y/Y: 0.2% v -4.1% prior.

- South Korea Dec M2 Money Supply M/M: 0.8% v 0.9% prior.

Other Asia

- Singapore Jan Non-oil Domestic Exports M/M: 2.3% v 0.5%e; Y/Y: 16.8% v 4.3%e.

- PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 6.50%; AS EXPECTED (overnight update).

- Thailand Debt Agency (PDMO): government to complete study on international bond sale by May; considers $1.0B overseas sovereign bond sale [first in 20 years] (overnight update).

- Indonesia Jan Retail Sales Estimate Y/Y: 3.7% v 0.2% prior.

- Malaysia Q4 GDP Q/Q: +2.1% v -1.6%e; Y/Y: 3.0% v 3.4%e.

- Malaysia Q4 Current Account (MYR): 0.3B v 4.9Be.

North America

- (US) Fed’s Bostic (dove, voter): Fed likely to soon contemplate cutting rates; Unlikely Jan CPI signals a big change in trend of weakening inflation.

- (US) White house economic advisor Brainard: Underlying US fundamentals seem quite good, consumer purchasing power is strong.

- (US) DEC NET LONG-TERM TIC FLOWS: $160.2B V $126.1B PRIOR; TOTAL NET TIC FLOWS: $139.8B V $260.2B PRIOR.

- (US) FEB EMPIRE MANUFACTURING: -2.4 V -12.5E; Prices Paid: 33.0 v 23.2 prior (input prices pace pick up for second straight month).

- (US) JAN IMPORT PRICE INDEX rbnzM/M: 0.8% V 0.0%E; Y/Y: -1.3% V -1.3%E.

- (US) JAN ADVANCE RETAIL SALES M/M: -0.8% V -0.2%E; RETAIL SALES (EX-AUTO) M/M: -0.6% V +0.2%E.

- (US) INITIAL JOBLESS CLAIMS: 212K V 220KE; CONTINUING CLAIMS: 1.90M V 1.88ME (highest since end-Nov).

- (US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: +5.2 V -8.1E (1st positive print since Aug 2023); Prices Paid: 16.6 v 11.3 prior; New Orders: -5.2 v -17.9 prior.

- (US) FEB NAHB HOUSING MARKET INDEX: 48 V 46E.

Europe

- (UK) Labour Party wins by-election in Kingswood against Conservative rival – Press.

- (UK) Labour Party wins by-election in Wellingborough, taking the seat from the Conservatives - UK Press.

- (EU) Commission approves €6.9B state aid for hydrogen projects - press.

- (IE) Ireland Jan CPI M/M: -1.3% v +0.5% prior; Y/Y: 4.1% v 4.6% prior.

- (UK) Chancellor of the Exchequer (Fin Min) Hunt reportedly scaling back plans for tax cuts in the Budget next month; Office for Budget Responsibility tell Chancellor that he has less money available than expected for his Budget on Mar 6th - UK press.

- (IE) ECB's Lane (Ireland, chief economist): Impact of policy tightening is still unfolding.

- (UK) BOE's Greene (neutral): Policy will need to remain restrictive for some time; Signs that UK inflation is stickier than that in the US, this may not be reflected in the market pricing of rate paths.

Levels as of 00:20 ET

- Nikkei 225 +1.2% ; ASX 200 +0.7% ; Hang Seng +2.3% ; Shanghai Composite closed ; Kospi +1.3%.

- Equity S&P500 Futures flat; Nasdaq100 +0.2%, Dax -0.1%; FTSE100 +0.7%.

- EUR 1.0757-1.0777; JPY 149.83 -150.37; AUD 0.6507-0.6529; NZD 0.6089-0.6116.

- Gold flat at $2,015/oz; Crude Oil +0.1% at $78.12/brl; Copper +0.3% at $3.7698lb.