Economic Data
(JP) BANK OF JAPAN (BOJ) LEAVES TARGET RATE RANGE UNCHANGED BETWEEN 0.0% TO 0.10% AS EXPECTED; LOWERS GDP FORECASTS AND ECONOMIC ASSESSMENT (3rd consecutive cut)
North America Semi Equipment Industry DEC Sales book to bill ratio: 0.88 v 0.83 (3rd consecutive monthly increase)
(AU) AUSTRALIA NOV CONFERENCE BOARD LEADING INDEX: -0.3% V 0.5% PRIOR (5-month low)
(IN) INDIA CENTRAL BANK (RBI) CUTS CASH RESERVE RATIO (CRR) BY 50BPS to 5.50% (not expected); LEAVES REPO RATE UNCHANGED AT 8.50%, AS EXPECTED
Markets Snapshot (as of 05:30GMT)
Nikkei225 +0.2%
S&P/ASX unchanged
Kospi closed
Taiwan Taiex closed
Singapore Straits Times Index closed
Shanghai Composite closed
Hang Seng closed
S&P Futures -0.3 at 1,307
Feb Gold -0.2% at $1,674/oz
March Crude +0.2% at $99.81
Overview/Top Headlines
For the second consecutive day only Australia and Japan were open due to the New Year's celebrations, equities markets were decidedly more positive today with hopes that a resolution may be reached for Greece. EU's Juncker said that the PSI must achieve 120% debt to GDP target in 2020 and that the Greek program is off track, action needs to be taken before there is a new program. Ministers rejected an offer out of the PSI, made from the private bondholders on how to restructure Greek debt, ministers said to be pushing the group to agree to receive less than 4% on the restructured debt.
EU Fin Mins also talked about stronger budget rules for EU members and got a few steps closer on finalizing the structure for the permanent EU bailout fund. France Fin Min Baroin said that there was good progress made on the ESM treaty, expects it to be signed Jan 30th. Agreement said to say the ESM can make loans without unanimous govt backing and will only require support of 85% of eurozone governments.
EUR/USD came off its 3 week high, staying mostly unchanged for the Asian session. AUD/USD lost 30 pips to $1.0493. The other major currencies were little changed. Brent crude held around $110.60 as Iran sanctions are agreed upon around the globe including the EU. US Treasury yields helped to push Japan's 10-yr JGB yield to 1%, the highest level since mid-Dec.
As expected the Bank of Japan left its target rate unchanged. It cut its economic assessment for the 3rd consecutive time, saying "economic activity has been more or less flat, mainly due to effects of slowdown in overseas economy and appreciation of JPY." The BoJ as promised, also updated GDP forecasts cutting FY11/12 to -0.4% from +0.3% and FY12/13 to +2% from +2.2% and raising FY13/14. CPI forecast for FY11/12 was cut to -0.1% from 0.0% prior, other years were confirmed. Also, Japan Cabinet Office guides FY15 primary deficit of 3.6% of GDP; Will miss budget surplus in FY20 even with 10% sales tax, deficit will be 3.1% of GDP. This puts Japan's sovereign rating in danger of a downgrade, outlook is already negative.
Even though the IMF report on Australia is not expected until June, the IMF has instructed Australia's biggest banks to increase their capital. IMF said that the banks may not be able to withstand dual shock of residential property downturn and losses on corporate lending. The IMF noted the main vulnerabilities of the Australian banking sector was their exposure to highly indebted households through residential mortgage lending, together with their large levels of short-term offshore borrowing.
Speakers/Geopolitical/In the press
(JP) Japan Econ Min Furukawa: Declining trade surplus in Japan confirms that domestic industry is being hollowed out; Japan to face further trade deficit if JPY remains strong - Nikkei News
(CN) China Central Bank (PBoC) Gov Zhou: Chinese companies need to rely less on S&P, Fitch and Moody's for credit assessments and do more of their own due diligence - China Newsweek
(AU) Australia Manufacturing Min Carr rejects suggestions that car subsidies should be wound back, calling the industry a foundation stone ton Australia manufacturing - The Australian
(PT) US Financial press comments that a growing number of analysts, economists and politicians worry that Portugal will need a second bailout in 2013 when it has €9B in debt coming due
Equities
LYC.AU: Announces new cornerstone investor; Raising $225M through convertible bond issuance
9501.JP: Nippon Life Insurance Co., Dai-ichi Life Insurance Co, and two other insurers may offer TEPCO ¥100B in syndicated loans as early as April - Nikkei News
NCM.AU: Reports Q2 gold output 579K vs 587.3K q/q, -20% y/y; Copper 18.2K tons vs 19.2K q/q
US Equities
VMW: Reports Q4 $0.62 v $0.60e, R$1.06B v $1.0Be; Guides initial FY12 Rev $4.48-4.6B v $4.5Be; +4.7% afterhours
TXN: Reports Q4 $0.25 (incl $0.23 in charges) v $0.39e, R$3.42B v $3.3Be; CFO: Saw a resumption of demand across a broad range of products in the quarter; +3.6% afterhours
STM: Reports Q4 -$0.01 v -$0.03e, R$2.19B v $2.2Be; Guides Q1 Rev -10% to -4% q/q (implies $1.97-2.10B v $2.1Be); +1.9% afterhours
WDC: Reports Q2 $1.51(adj) v $0.71e, R$1.99B v $1.8Be; Guides Q3 $1.15-1.45 (ex items) v $0.91e, R$2.0-2.15B v $2.0Be; +5.2% afterhours
PLCM: Reports Q4 $0.41 v $0.29e, R$407.0M v $401Me; +14.0% afterhours
CSX: Reports Q4 $0.43 v $0.44e, R$2.95B v $3.0Be; -3.0% afterhours
CR: Reports Q4 $0.88 v $0.90e, R$632M v $650Me; Guides initial FY12 $3.75-3.95 v $3.86e, Rev +5-6% (implies $2.67-2.70B v $2.7Be); -0.2% afterhours.