MKS PAMP Group - Daily Asia Wrap

Range Asian Hours (from Globex open)

MARKETS/MACRO: US equities recovered from heavy losses earlier in the day to finished marginally lower, as the Trump rally loses steam and traders reposition ahead of earnings season. The markets seem still to be digesting the content of Trump's press conference yesterday, during which details of fiscal stimulus policy were conspicuous in their absence. The Dow Jones lost 63.28 points, or 0.3%, to 19,891.00. The S&P500 fell 4.88 points, or 0.2%, to 2,270.44, whilst the Nasdaq eased 16.16 points, or 0.3%, to 5,547.49. Financials (-0.7%) saw the biggest losses ahead of todays earnings announcements from Bank of America, JP Morgan and Wells Fargo. Energy (-0.5%) was also amongst the laggards. Telecoms (+0.6%) and REIT's (+0.4%) were the best performers. Treasury yields were lower, 2 year yields lost 1.2 bps to 1.173% whilst 10 year yields eased 1.6 bps to 2.356%. In European markets, stocks closed mostly lower as Fiat Chrysler tanked (-16.1%) following US EPA accusations that the auto maker used secret software that allowed vehicles to emit pollutants above legal limits. The Euro STOXX fell 2.39 points, or 0.6%, to 362.51,  the German Dax dropped 125.13 points, or 1.1%, to 11,521.04, whilst the UK FTSE was flat. The loss of confidence in US reflation trade weighed on the greenback, the dollar index lost 0.42 points to 101.36, recovering from a low of 100.72. The EUR traded up to a high of 1.0680 whilst the USDJPY traded down to 113.75. AUD continued its rally, reaching a high of 0.7519, the Aussie has advanced more than 4% in Jan. In commodities news, oil markets were higher on the weak dollar and news that Saudi Arabia had made greater than expected supply cuts. Brent firmed 1.7% to $56.05 whilst WTI added 1.6% to $53.06. LME metals were broadly higher, with copper (+2.2%) leading the way. In US economic data, initial jobless claims rose 10,000 to a seasonally adjusted 247,000 in the week ending Jan 7, while continuing unemployment claims fell 29,000 to 2.087 M in the week ending Dec 31. Import prices grew 0.4% m/m in December on the back of higher prices for petroleum products (+7.9%). Year on year import prices increased 1.8%, the biggest rise since March 2012. Some fairly hawkish sentiment from the Federal Reserve members who delivered speeches on Thursday. St Louis Federal Reserve President James Bullard was the most cautious and is expecting one rate hike in 2017, he commented that "any effects from the new administrations policies are only likely to be observed in 2018 and 219". Philadelphia Federal Reserve President Patrick Harker reiterated his support for three hikes, he believes the economy is showing strength and is likely to reach the 2% inflation target in 2017 or 2018, President of the Atlanta Fed Dennis Lockhart is anticipating two hikes in 2017, he is forecasting a gradual path of rate hikes over the next 2-3 years. Chicago Federal Reserve President Charles Evans has forecast two rate hikes, but agrees three hikes is possible. 

PRECIOUS: A disappointing session for the precious, erasing most of the gains made in London and Asia during NY trade. Gold opened on the bid in Asia and climbed steadily in the wake of Trump's press conference, the bid tone continued through London open as the yellow metal pushed through the $1200 resistance to the days high of $1206.95.  New York session saw the metal drift lower as the greenback turned around, closing around the $1195 level. SGE premiums were lower again at around $12-13. Silver was buoyed by the dollar weakness, pushing higher to test the psychological resistance at $17.00. Resting orders appeared to cap the market and the grey metal eventually sold down in whippy trade during the NY session, closing lower at $16.85. The Philadelphia Gold and Silver index fell 0.21% to 86.22. PGM's also succumbed to profit taking, with platinum closing at $980 whilst Palladium finished the session at $762. Silver ETF's sold 2.7m ozs whilst the SPDR Gold Trust was unchanged at 805 tons. 

ASIA TODAY: Gold was soft on the open, trading down to the days low of $1191.56 during the lunchtime session. There appears to be good support around the 55 day EMA at $1193 as we have seen the yellow metal come off the low and trade steadily higher during the PM session, it is sitting at $1196 as I write. PGMs have not fared as well, both on track to finish lower for the day. In other markets, equities are mixed today, as I write the Nikkei sits at +0.80%, the Shanghai composite at -0.21%, the Hang Seng at +0.43%, and the ASX S&P 200 closed down -0.79%. On the data calendar tonight we have retail sales, producer price index, consumer sentiment, and business inventories out of the US. The market will be eagerly anticipating earnings announcements from Bank of America, JP Morgan, Wells Fargo, and Adavaxis. Have a good day ahead.