MKS PAMP Group - Daily Asia Wrap

Range Asian Hours (from Globex open)

MARKETS/MACRO: US equities were narrowly mixed amid further solid economic data and some mixed earnings releases. The Dow was able to  continue its record run, consolidating above 20,000. The Dow added 32.4 points, or 0.2%, to 20,100.91, the S&P 500 eased 1.69 points, or 0.1%. to 2,296.68, whilst the Nasdaq shed 1.16 points, or 0.02%, to 5,655.18. There were wins for financials (+0.3%), discretionary (+0.2%) and materials (+0.2%), whilst healthcare (-0.7%) and staples (-0.4%) were among the losers. Treasury yields were slightly lower,  2 year yields lost 1.4 bps to 1.22% whilst 10 year yields fell 0.9 bps to 2.502%. European equities were mixed, the EuroSTOXX added 0.91 of a point, or 0.25%, to 367.50, buoyed by the announcement that Johnson & Johnson agreed to buy Swiss biotech blue-chip Actelion (19.4%) for $30bn. The German DAX gained 42.58 points, or 0.4%, to 11,848.63, whilst the UK FTSE lost 2.94 points, or 0.04%, to 7,161.49 despite the British economy expanding 0.6% (vs expected 0.5%) during the final quarter of 2016. In the currency markets, the US dollar index rebounded 0.6% to 100.62 ahead of next weeks FOMC meeting. The Euro traded down to 1.0655 and USD JPY surged to 114.82. In commodities news, oil markets rallied on rising optimism OPEC will follow through with planned output cuts, Brent climbed 2.2% to %56.27 whilst WTI put on 1.9% to $53.77. Base metals were were lower ahead of the Chinese year, with Nickel (-0.3%) the biggest loser. 
In US economic data, Markit 'flash' Services PMI Business Activity index grew to 55.1 in January from 53.9 in December, representing the fastest rate of business activity growth in more than a year. The Conference Board's leading economic index increased 0.5% in December, marking it's fifth straight rise. Comment from the Conference Board suggested "the economy will continue growing at a moderate pace, perhaps even accelerating slightly in the early months of this year". The Chicago Fed National Activity Index climbed to +0.14 in December from -0.33 in November, a positive value indicates the economy is growing at a rate above the historical average. The government's advanced report on trade balance indicated that the trade gap in goods declined 0.5% to $65bn in December, wholesale inventories rose 1% and retail inventories remained unchanged. New home sales dropped 10.4% m/m (vs market expectation of -0.7%) to a seasonally adjusted annual rate of 536k, whilst the inventory of new homes on the market increased 4% to 259k units. Initial jobless claims were up 22k to 259k seasonally adjusted in the week ending 21 Jan, whilst continuing unemployment claims grew 41k to 2.1M. 

PRECIOUS: Another disappointing session for the precious, closing lower ahead of the Chinese New Year holiday period. Gold opened on the high in Asia but found no buying support, trading steadily lower through the day, London open saw the yellow metal tank below $1190 to the days low of 1184.54 as the greenback took off. There was something of a rebound in NY but the metal met with some resistance at  $1190 before finishing up around $1188. The Philadelphia Gold and Silver index fell 2.4%. Gold ETF holdings were flat, the SPDR Gold Trust remained unchanged at 799 metric tons. PGM's were under pressure also, palladium traded down to $716.75 before rallying late in the session to close up at $729, it has now dropped has now tumbled over 9% in the last two days. Platinum faired better but is also under pressure, touching a low of $970.65 overnight.   

ASIA TODAY: Lacklustre demand and a firming US dollar are heaping more misery on the yellow metal today. The market was on the offer at the open as gold was sold down through the NY low to test the $1180 level, it is sitting at the low of $1181.30 as I write. SGE was closed today for the beginning of the Chinese New Year holiday period, however there was still solid volume on Comex with 24,877 lots traded. Silver looking weak also, sold down to a 2 week low of $16.62. Platinum is on track to close near the lows while Palladium was range-bound, if a little soft. In other markets, equities are mixed today, as I write the Nikkei sits at +0.34%, the Shanghai composite at +0.31%, the Hang Seng at -0.06%, and the ASX S&P 200 closed up 0.75%. In Australian economic data, producer prices rose 0.5% during the December quarter, confirming the message of the weak consumer price inflation data released by the ABS earlier in the week. On the data calendar tonight we have fourth quarter GDP, durable goods orders, core capital equipment orders, and consumer sentiment out of the US; EU M3 Money Supply, French Consumer Confidence, and German Import prices out of the Eurozone. Have a good day ahead.