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Wednesday, November 30, 2022

Gold and USD gain as risk off sentiment comes back into the market

Asia Market Update: Markets reverse on report that Ukraine fires on Luhansk People’s Republic, gold and USD gain as risk off sentiment comes back into the market; Aussie employment better than expected but little reaction.

General trend

– Equity markets remain mixed, US futures slightly lower in the session. US officials note that additional 7.0K Russian troops have moved towards the Ukraine border.

– With risk off sentiment holding USD was generally weaker against the majors.

Mid-session markets reversed earlier gains and USD strengthened against the majors as the news that Ukraine fired on Luhansk People’s Republic (Russian backed rebels).

– Japan recorded the largest monthly trade deficit since Jan 2014 in January.

– Recent poll shows that Japan Spring wage talks may result in limited outcomes, though companies indicate they want to rage wages.

– Early in the session Japan JGB 20-year yield hits 0.72%, 5-year high.

– China orders Hong Kong to get more aggressive dealing with pandemic.

– Singapore final Q4 GDP revised lower, MAS confirms to meet as usual in April, noting balance of risk remains with inflation.

– As Japan earnings season winds down, Australia remains in full swing, South32, Woodside and Whitehaven showed strong results. Wesfarmers notes impacts of inflation.

Headlines/Economic data

Australia/New Zealand

– ASX 200 opened +0.4%.

(AU) Australia Jan employment change:: +12.9K V 0.0KE; unemployment rate: 4.2% V 4.2%E.

– WES.AU Reports H1 (A$) adj Net 1.2B v 1.4B y/y; adj EBIT 1.9B v 2.1B y/y; Rev 17.8B v 17.8B y/y; dividend lower y/y.

– ORG.AU Reports H1 (A$) underlying Net 268M v 224M y/y; underlying EBITDA 1.1B v 1.15B y/y; Rev 6.51B v 6.07B y/y.

– WPL.AU Reports FY21 underlying Net $1.6B v $447M y/y; EBITDA $4.1B v $1.9B y/y; Rev $6.9B v $3.6B y/y.

Japan

Nikkei 225 opened -0.1%.

– (JP) Japan Jan Trade Balance: -¥2.19T v -¥1.60TBe (largest monthly deficit since Jan 2014); Adj Trade Balance: -¥932.6B v -¥398.3Be.

(JP) Japan DEC core machine orders M/M: +3.6% V -2.0%E; Y/Y: +5.1% V %0.9E; raises machine order assessment, orders are picking up; Q4 core machine orders is expected to decline for the first time in 4 quarters.

– (JP) According to recent survey more than 50% of companies in Japan are targeting to raise overall pay including bonuses in FY22/23; 66% have no plans to raise base pay, will use merit for raises – financial press.

– (JP) Japan Investors Net Buying of Foreign Bonds: -¥1.91T v +¥107.1B prior; Foreign Net Buying of Japan Stocks: -¥29.7B v -¥232.1B prior.

6701.JP LG Energy Solution acquires NEC Energy Solutions, no terms disclosed.

Japan MoF sells ¥1.2T v ¥1.2T indicated in 0.500% 20-year JGBs, Avg Yield: 0.7360% v 0.5320% prior, bid-to-cover: 3.39x v 3.18x prior.

Korea

Kospi opened +0.2%.

– (KR) South Korea military will reinforce the Air Force’s missile defense unit by deploying additional equipment amid growing threat from North Korea – Yonhap.

– (KR) Bank Indonesia (BI) and Bank of Korea (BOK) sign MOU to expand the existing partnership, particularly in payment system and settlement, as part of efforts to strengthen economy.

– (KR) Hana Financial now sees Bank of Korea (BOK) hiking rate to 2.0% by the end of 2022 (prior 1.75%).

China/Hong Kong

Hang Seng opened 0.0%; Shanghai Composite opened -0.1%.

– (CN) China Provinces have revealed a CNY25T investment plan – China media.

– (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net drain CNY10B v drain CNY10B prior.

– (CN) China Jan Swift Global Payments (CNY): 3.20% v 2.70% prior.

– (CN) China PBOC sets Yuan reference rate: 6.3321 v 6.3463 prior.

Other

(SG) Singapore Q4 final GDP Q/Q: 2.3% V 3.0%E; Y/Y: 6.1% V 6.2%E; 2021 GDP Y/Y: 7.6% v 7.2% prelim; See CPI picking up as demand rises.

(SG) Singapore Jan non-oil domestic exports M/M: 5.0% V 1.3%E; Y/Y: 17.6% V 12.4%E; Electronic Exports Y/Y: 14.0% v 13.6% prior.

– (SG) Singapore Central Bank (MAS) Next monetary policy decision to be in April (regularly scheduled bi-annual meeting); For monetary policy purpose, assess that balance of risk is still tipped towards inflation.

North America

– (US) Trade Rep (USTR) official: Reiterates China had failed to make good progress on Phase 1 commitments – assessment report.

Europe

– (UR) US Senior Administration official: Russia claims about withdrawing troops was false, they have increased troops near Ukraine border by up to 7,000 – press.

Levels as of 00:15ET

– Hang Seng -0.5%; Shanghai Composite +0.2%; Kospi +0.7%; Nikkei225 -0.9%; ASX 200 +0.2%.

– Equity Futures: S&P500 -0.6%; Nasdaq100 -0.8%, Dax -0.9%; FTSE100 -0.3%.

– EUR 1.1385-1.1324; JPY 115.54-115.14; AUD 0.7216-0.7150; NZD 0.6705-0.6660.

– Commodity Futures: Gold +0.2% at $1,875/oz; Crude Oil -1.4% at $92.39/brl; Copper -0.0% at $4.53/lb.

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