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Indian Morning Briefing: Asian Markets Mixed; China's PBOC Cuts Two Key Rates

01/16/2022 | 10:16pm EDT
GLOBAL MARKETS 
DJIA         35911.81  -201.81  -0.56% 
Nasdaq       14893.75    86.94   0.59% 
S&P 500       4662.85     3.82   0.08% 
FTSE 100      7542.95   -20.90  -0.28% 
Nikkei Stock 28343.88   219.60   0.78% 
Hang Seng    24259.06  -124.26  -0.51% 
Kospi         2891.07   -30.85  -1.06% 
SGX Nifty*   18204.00   -70     -0.38% 
*Jan contract 
 
USD/JPY  114.42-43  +0.20% 
Range    114.50   114.15 
EUR/USD  1.1414-17   0.00% 
Range    1.1420   1.1401 
 
CBOT Wheat March $7.414 per bushel 
Spot Gold   $1,813.73/oz  0.2% 
Nymex Crude (NY) $84.21  $2.09 
 
 
U.S. STOCKS 

The stock market's winter selloff deepened, pushing all three major indexes further into the red for 2022.

The S&P 500 and Dow Jones Industrial Average both fell a second straight week, while the Nasdaq Composite has been down the last three. Investors continued to sell bonds, pushing the yield on the benchmark 10-year U.S. Treasury note up for a fourth straight week, notching its biggest rise over that stretch since mid-March.

Lackluster earnings from some big U.S. banks, along with weak retail sales and manufacturing data, sent most of the market lower again on Friday until a late-session buying rush pushed the S&P 500 and Nasdaq back into positive territory. The S&P 500 added 3.82 points, or less than 0.1%, to 4662.85, and the Nasdaq gained 86.94 points, or 0.6%, to 14893.75. The Dow fell 201.81 points, or 0.6%, to 35911.81.

 
 
ASIAN STOCKS 

Japanese stocks were higher in morning trade, led by gains in electronics, energy and pharmaceutical stocks, as the yen weakened. USD/JPY was recently at 114.39 compared with 113.72 as of Friday's Tokyo stock market close, as U.S. Treasury yields rose on Friday on the prospects of the Fed's rate increases. Covid-19 infection trends in Japan and the government's countermeasures were in focus. The Nikkei Stock Average was up 0.9% at 28386.20.

South Korea's Kospi fell 0.6% to 2905.11 in early trade, dragged by shipbuilding, airline and auto stocks. The persistent Covid-19 Omicron variant and China's likely softer 4Q growth data, due out later in the day, were weighing on investor sentiment. Daewoo Shipbuilding & Marine Engineering fell 3.4%, reeling from the European Union's veto against its merger with Hyundai Heavy Industries. Car-parts supplier Hanon Systems lost 3.6% as auto maker Hyundai Motor retreated 1.7%. Meanwhile, LIG Nex1 rose 1.5% after signing a contract to supply surface-to-air missiles to the United Arab Emirates.

Hong Kong shares slipped in early trade, weighed by the property sector and tech weakness, even as Macau casino stocks surged after the government released a new draft law which would not lower the number of gaming licenses available, alleviating investor concerns. Sands China surged 14%, Galaxy Entertainment jumped 7.1% and Wynn Macau added 9.9%. The Hang Seng Index declined 0.2% to 24336.04.

Chinese shares edged higher, supported by gains in oil stocks. The Shanghai Composite Index was flat at 3522.09, the Shenzhen Composite Index was 0.1% higher at 2438.38 and the ChiNext Price Index rose 0.2% to 3124.63. Oil stocks rose amid signs of stronger demand. Sinopec gained 0.7% and PetroChina advanced 1.9%. Coronavirus-related developments would remain in focus, following news that Beijing has reported its first case of the Covid-19 Omicron variant.

FOREX 

China's central bank injected 700 billion yuan ($110.19 billion) worth of liquidity via the MLF and CNY100 billion of liquidity via reverse repos.

Asian currencies were mostly weaker versus USD in the morning Asian session on prospects for swift Fed tightening. Increasingly hawkish rhetoric from Fed officials seems to be doubling down on "sooner and faster" tightening across taper, rate increases and quantitative tightening, Mizuho Bank said. All else equal, this should spell sharp USD strength in tandem with upswing in Treasury yields across the curve, Mizuho Bank added. USD/JPY rose 0.2% to 114.44, USD/SGD edged 0.1% higher to 1.3495 while AUD/USD dropped 0.3% to 0.7198.

Malaysian ringgit may strengthen against the U.S. dollar this week supported by rising crude oil prices, while the greenback may be pressured by the weak U.S. retail sales data, Kenanga Research said. If Malaysia's central bank delivers an upbeat economic assessment in its monetary policy statement due Thursday, the ringgit may strengthen and trade around the 4.17 level against the U.S. dollar, it said. Nonetheless, in the immediate short-term, a potential slowdown in China's 4Q 2021 GDP may help the U.S. dollar to appreciate and put some pressure on ringgit, Kenanga added. USD/MYR was 0.2% higher at 4.1880.

METALS 

Gold fell in the morning Asian session on possible trimming of long positions by speculators. Several factors including hawkish signals from the Fed had prompted speculators to reduce their long gold exposure, TD Securities said. However, Fed Chair Powell's recent comments that signaled a very measured course of action to fight inflation implied that real interest rates may rise only modestly and that the precious metal could climb on potential short-covering, the brokerage added. Spot gold was recently down 0.2% at $1,813.73/oz.

OIL SUMMARY 

Oil rose in early Asian trade, amid potential supply disruptions as tensions intensify between Russia and Ukraine. Global oil demand appeared stronger than expected with the Covid-19 Omicron variant looking to be milder compared with other variants, ANZ said. "Strong global demand has helped ease concerns about China, where a zero-Covid strategy has seen increased restrictions put in place," ANZ added. Front-month WTI was recently 0.7% higher at $84.40/bbl, while Brent rose 0.4% to $86.41/bbl.

 
 
TOP HEADLINES 
 
China Cuts Two Key Rates to Support Slowing Economy 
China GDP Grew 8.1% in 2021, Though Momentum Slowed in Fourth Quarter 
China's Property Market Cooled in 2021 as Beijing Reined in Developers 
China's Population Barely Grew in 2021 as Births Dropped for a Fifth Year 
Credit Suisse Chairman to Leave Bank Amid Board Probe 
Elon Musk's Tesla Asked Law Firm to Fire Associate Hired From SEC 
Unilever Makes Approach for Glaxo's Consumer-Healthcare Business 
Citigroup Sticks With Its Covid-19 Vaccine Mandate, While GE Drops Its Rules 
Loop, Suez to Build $285 Million Recycled-Plastic Factory in France 
London Stock Exchange Proposes Special Listings for Private Companies 
Some Starbucks, Chipotle Sites Cut Hours, Limit Seating Over Omicron 
Databricks Ventures Seeks Startups Aligned With the 'Lakehouse' 
DirecTV to Drop OAN Conservative News Channel 
North Korea Fires Two Suspected Ballistic Missiles From Airfield, South Korea Says 
Israel's Benjamin Netanyahu Explores Plea Deal in Corruption Case 
 
 

(END) Dow Jones Newswires

01-16-22 2215ET

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.60% 32120.28 Real-time Quote.-12.14%
ON SEMICONDUCTOR CORPORATION 3.19% 56.24 Delayed Quote.-17.20%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 6.78% 60.2 Delayed Quote.-24.77%
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