BoJ’s ueda accelerates JPY-turnaround with dovish comments, HK leads again on tech gains

Asia Market Update: BOJ’s Ueda accelerates JPY-turnaround with dovish comments; HK leads again on tech gains; TW exports crater; Focus on EU & US Flash PMIs and DE w/e elections.

- JPY turnaround: Japan national CPI core outperformed slightly, with core-core the fastest pace since Jun 2023. However, the release marked the exact peak in this week’s extensive Yen strength at 149.30. Later BOJ Gov Ueda accelerated JPY weakness with comments interpreted as indecisive on future policy direction: “BOJ will respond to sharp rises in bond yields; We stand ready to respond nimbly if markets make abnormal moves.”

- The comments came as bond dealers this week have speculated the Japan BOJ may soon reverse course on its planned reduction of bond buying and increase JGB purchases once more. USD/JPY rose strongly +0.6% back to 150.40 while JGB yields moved sharply lower on the comments. 2-year JGB yield declined by 4bps; 5-year JGB falls 3bps; 10-year JGB drops >4bps.

- USD/JPY later pared gains, particularly after the Japan 3-month bill auction, but still up +0.4% on the day.

- Hang Seng outperformed again, +3.0% at a fresh three-year high; HK tech enjoyed another strong day as Alibaba and Lenovo surged >10%, (back to late-2021 levels for BABA) after reporting strong results with AI re-accelerating growth in the core business.

- Taiwanese export orders cratered 3% year-on-year in January, far worse than expected, flashing red on global demand - plastics, textiles, and tech exports took the brunt, though transport equipment surged 128%.

- A reminder this weekend is Germany's federal election, with markets looking out for whether the left-wing Greens or right-wing AfD may end up with a nominal balance of power over the ruling coalition CDU/CSU block.

- US equity FUTs -0.1% during Asian trading.

Looking ahead (Asian time zone)

- Fri 21st (Fri night EU & US Flash PMIs).

- Sat 22nd CN Jan FDI (YTD), DE Federal Election.

Holidays in Asia this week

- Mon 17th (Monday night US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,331.

- AUSTRALIA FEB PRELIMINARY PMI MANUFACTURING: 50.6 V 50.2 PRIOR.

- Australia sells A$700M v A$700M indicated in 2.50% May 2030 bonds; Avg Yield: 4.0988% v 4.3317% prior; bid-to-cover: 4.74x v 3.67x prior.

- RBA Gov Bullock: While the strong employment growth is good news for jobseekers, we're alert to the possibility that it's signaling a bit more strength for the economy; The economic outlook remains uncertain.

- New Zealand Jan Trade Balance (NZD): -0.5B v 0.2B prior.

- Reserve Bank of New Zealand (RBNZ) Chief Economist Conway: OCR forecasts suggests another 75bps of easing.

China/Hong Kong

- Hang Seng opens +2.3% at 23,090; Shanghai Composite opens +0.2% at 3,356.

- China Loan Prime Rates (LPRs) still have room to go lower - China Securities Daily.

- US Senate hearing: US should consider barring Chinese citizens from US labs - financial press.

- China Foreign Minister Wang Yi: China and Russia plan to deepen strategic coordination [overnight update].

- China Premier Li: Will direct more economic policy focus on boosting consumption - State TV [overnight update].

- China PBOC Gov Pan Gongsheng: Reiterates to implement a moderately loose monetary policy [overnight update].

- China Feb Retail Vehicle Sales seen -30.3% m/m; +13.6% y/y – PCA [overnight update].

- China PBoC: To promote cross border use of CNY currency (Yuan) - Macroprudential work conference.

- Hong Kong Jan CPI Composite Y/Y: 2.0% v 1.8%e [overnight update].

- BABA Reports Q3 (CNY) 21.39 v 19.12e, Rev 280.2B v 277.4Be; Expects Rev growth at Cloud Intelligence Group driven by AI will continue to accelerate [overnight update].

- China PBOC sets Yuan reference rate: 7.1696 v 7.1712 prior.

- China PBOC Open Market Operation (OMO): Injects CNY183B in 7-day reverse repos; Net injects CNY84B v prior drains CNY0.8B.

Japan

- Nikkei 225 opens -0.4% at 38,523.

- JAPAN JAN NATIONAL CPI Y/Y: 4.0% V 4.0%E; CPI EX FRESH FOOD (CORE) Y/Y: 3.2% V 3.1%E.

- JAPAN FEB PRELIMINARY PMI MANUFACTURING: 48.9 V 48.7 PRIOR (8th month of contraction).

- Japan Fin Min Kato: Higher JBG yields will increase debt-servicing costs in Japan - financial press.

- Japan PM Ishiba: Confirms bond yields were not discussed in Thursday's meeting with BOJ Gov Ueda; 'strong concerns' rising bond yields may hurt finances - US financial press.

- Japan said to 'court' Tesla on a Nissan investment in exchange for US factories - FT.

- Japan Econ Min Muto: Will exchange views with the steel, aluminium and auto industries next week - financial press.

- Japan's Trade Ministry: Working to identify items and find out how Japanese companies will be impacted by US tariffs – Nikkei [overnight update].

- Former BOJ board member Sakurai: BOJ could raise rates again on May 1st but Jun seems to be the most reasonable time for next move [overnight update].

Korea

- Kospi opens flat at 2,653.

- South Korea Feb Business Manufacturing Survey: 90.1 v 85.9 prior.

- South Korea delegation said to request exemption from US steel and aluminum tariffs as well as reciprocal tariffs – press.

- South Korea Acting President: To prepare measures this month related to the management of household.

- South Korea Acting Pres Choi: Orders to reach out to US 'more actively' for effective on trade policy - press.

Other Asia

- India Feb Preliminary PMI Manufacturing: 57.1 v 57.7 prior (44th month of expansion).

- Indonesia Central Bank (BI): To issue bonds to fund affordable housing program under which the central bank will buy housing bonds in the secondary market.

- TAIWAN JAN EXPORT ORDERS Y/Y: -3.0% V +2.7%E (1st drop in 11 months); Sees February orders between +15.3-20.6% y/y [overnight update].

North America

- (US) State Dept Sec State Rubio: Meeting between Trump, Putin "depends largely on whether we make any progress on ending the war on Ukraine" - financial press.

- (US) Fed's Kugler (voter): For now, there's a lot of uncertainty about the potential effects of Trump's tariffs.

- (US) US National Security Advisor Waltz: Ukraine should tone it down, take a hard look at that minerals and sign it.

- (US) INITIAL JOBLESS CLAIMS: 219K V 215KE; CONTINUING CLAIMS: 1.869M V 1.87ME.

- (US) FEB PHILADELPHIA FED BUSINESS OUTLOOK: 18.1 V 14.3E; Prices Paid: 40.5 v 31.9 prior; New Orders: 21.9 v 42.3 prior.

- (US) Treasury Sec Bessent: US has a Strong dollar policy; To have first call with China counterpart tomorrow; Have not seen Europe offer to cut auto tariffs.

- (US) JAN LEADING INDEX: -0.3% V -0.1%E.

- (US) Fed's Goolsbee (voter): Jan PCE not likely to be as sobering as CPI number; Before new uncertainties, the path to 2% (inflation) looked good.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: -196 BCF VS. -187 BCF TO -189 BCF INDICATED RANGE.

- (US) Fed's Bostic (non-voter for 2025): Forecasts two rate cuts this year; Much could happen to yield more or fewer cuts; Businesses say they would try to pass along import taxes to customers.

- (US) DOE CRUDE: +4.6M V +2.5ME; GASOLINE: -0.2M V 0ME; DISTILLATE: -2.1M V -1.5ME.

- (US) Fed's Musalem (voter): Inflation expectations have moved higher, would make Fed's job more difficult if sustained.

- (MX) Mexico Econ Min Ebrard: Joint work with US on trade will start on Monday (Feb 24th).

Europe

- (UK) Feb GfK Consumer Confidence: -20 v -22e.

- (UK) FEB CBI INDUSTRIAL TRENDS TOTAL ORDERS: -28 V -30E.

- (SE) Sweden Central Bank (Riksbank) Breman: prepared to raise or lower rates if outlook changes.

- (UR) NATO Sec Gen Rutte: We'll need to increase military spending to considerably more than 3% of GDP as a new NATO target.

Levels as of 00:20 ET

- Nikkei 225 +0.1%, ASX 200 -0.3%, Hang Seng +2.9%; Shanghai Composite +0.7%; Kospi -0.4%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; Dax flat; FTSE100 -0.5%.

- EUR 1.0484-1.0505; JPY 149.29-150.74; AUD 0.6391-0.6409; NZD 0.5758-0.5773- Gold -0.4% at $2,944/oz; Crude Oil flat at $72.51/brl; Copper -0.7% at $4.5787/lb.