Euro, commodities pare losses

Asian Market Update: PBoC Gov Zhou comments indicate preference for RRR policy tightening; Euro, commodities pare losses

Economic Data

- (SI) SINGAPORE NOV NON-OIL DOMESTIC EXPORTS M/M: -12.9% V 0.3%E; Y/Y: +10.9% V 21.5%E; ELECTRONIC EXPORTS Y/Y: V 30.0%E

- (UK) UK NOV NATIONWIDE CONSUMER CONFIDENCE: 45 V 52E (lowest level since Mar of 2009)

- (CL) CHILE CENTRAL BANK RAISED NOMINAL OVERNIGHT RATE BY 25BPS TO 3.00%; AS EXPECTED

Markets Snapshot (as of 12:30amET)

- Nikkei225 -0.2%

- S&P/ASX -0.3%

- Kospi +0.8%

- Taiex +0.4%

- Shanghai Composite -0.4%

- Hang Seng -0.3%

- Mar S&P Futures -0.1% at 1,237

- Feb Gold +0.4% $1,375/oz

- Jan Crude oil +0.5% $88.16/brl

- Mar Copper +1.4% at $4.17

Overview/Top Headlines

- Asian equity markets are trading on a slightly firmer footing relative to the rest of the week, cheering a string of upbeat economic datapoints out of the US. Weekly jobless claims 4-week average fell to its lowest level since Aug 2008 while Philly Fed saw its highest print since Apr 2005, fuelling hopes for a long-awaited US employment recovery. Late in Asia session, US House of Reps approved the extension of the Bush tax cuts for 2-yrs by a 277-148 vote. March S&Ps remain supported above 1,238, following the first trading session this week when US indices did not reverse opening gains. Commodity markets are also reflecting some fresh optimism, as March copper jumped over 1% above $4.17, oil rose above $88.20, and gold pared 2 days of weakness to trade above $1,377. In currencies, risk appetite translated into dollar weakness, with EUR/USD spiking above 1.33 late in the Asia hours and AUD/USD rising above $0.99. Cable gains were more muted following a poor consumer confidence print in the UK as well as an extremely cautious semiannual BOE stability report profiling rising risks of funding challenges for US banks in 2011. USD/JPY traded sideways in a 30 pip range just below ¥84.

- Chinese press continued to leak commentary from the PBoC Gov Zhou. Recall overnight he noted China economy remains on weak footing - sentiment reflected in today's session by hina Banking Regulator (CBRC) expressing concern over fragility of the global financial system. In a more transparent assessment of China policy bias since the Politburo shift to a "prudent" monetary policy, Zhou suggested PBoC is unlikely to use both RRR and interest rate tightening measures at the same time. Meanwhile, market timing on expectations of peak inflation in China has been complicated by local think tank CASS suggesting Q1 CPI will be contained within 6% at its peak. This could disappoint the likes of China top planning agency National Development and Reform Commission (NDRC), which anticipated November to mark the peak with descent below 5% in December.

Speakers/Geopolitical/In the press

- (CH) China Banking Regulator (CBRC) Liu: Global financial systems remain fragile; Asset risks in the US and Europe will emerge further

- (CH) China and India are to double bilateral trade to $100B by 2015; Agreed to boost India exports in order to close the trade surplus currently in China's favor - HK Standard

- (HK) Hong Kong Trade Development Council: Exports will fall 8% in 2011 v 20% in 2010 due to slow global recovery and less demand for electronics - HK Standard

- (KS) South Korea retail market is expected to reach KRW211T, +5.7% y/y in 2011 - Korean press citing Shinsegae Research Institute of Distribution

- (AU) IMF comments that the Australia housing prices are overvalued by 5%-10%; Correction is expected to be gradual with no crash - Sydney Morning Herald

- (JP) Japan domestic smartphone shipments expected to almost triple in FY10 to 6.8M units, +190% y/y

- (UK) Bank of England (BOE) Stability Report: UK banks facing an even larger funding challenge in 2011; Lower interest rates could be hiding weakness

Equities

- (AU) Australia's RBA establishing liquidity facilities with Australian banks as part of Basel III rules compliance - financial press

- (JP) Japan Auto Association: 2010 Japan auto sales to rise 7.5%, but fall 9.9% to 4.47M vehicles in 2011

- DCM: To buy back 160K, 0.4% of shares outstanding for about ¥20B

- STO.AU: To raise A$500M in equity funding at A$12.55/shr (about 5% of market cap); To sell 7.5% stake in Gladstone LNG to KoGAS and 7.5% to Total

- RIMM: Reports Q3 $1.74 v $1.65e, R $5.49B v $5.4Be; Guides Q4 shipments 14.5-15M units (v 14.2M in Q3); +2.1% afterhours

- TTWO: Reports Q4 $0.67 v $0.31e, R$373.7M v $325Me; +6.2% afterhours

- ORCL: Reports Q2 $0.51 v $0.46e, R$8.6B v $8.3Be; +3.8% afterhours

- ACN: Reports Q1 $0.81 v $0.75e, R$6.48B v $5.8Be; +2.6% afterhours

FX/Fixed Income/Commodities

- World Gold Council: China's investment-driven consumption of gold to nearly double in 2010 to CNY45B amid rising inflation concerns and govt curbs on property sector - China Daily

- (JP) Bank of Japan (BOJ) bought ¥2.2B in REITs as part of ¥5T asset-purchase program on Thursday - Nikkei News

- GLD: SPDR Gold Trust daily holdings fall by 2.4 tons to 1,283.8 tons (2-month low)

- (AU) Australia Nov iron ore exports from Port Hedland 15.7M tons v 16.99M tons in Oct,-7/6% m/m

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