Equities start 2023 mixed

General trend

- China PMIs miss ests, the press continues to focus on COVID.

- USD/JPY declines [tests ¥130].

- Commodity currencies rebound.

- CNH rises.

- Precious Metals also gain.

- US Natural Gas FUTs drop [extend recent declines amid warmer weather].

- Chinese equities outperform.

- Hang Seng reversed opening decline.

- Casino firms rise in HK [Macau Dec Casino Rev (MOP) 3.5B v 3.0B prior; Y/Y: -56.3% v -57.1%e].

- Financials lag in Australia.

- US equity FUTS reversed opening gains.

- Japanese markets return from holiday on Wed (Jan 4th).

- German CPI data in focus.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened +0.1%.

- (AU) Australia Dec Final PMI Manufacturing: 50.2 v 50.4 prelim (confirms 32nd month of expansion, lowest level since May 2020).

Japan

- Nikkei 225 closed for holiday.

- (JP) BoJ said to be considering raising inflation forecasts closer to 2% in FY24, which could support a pivot away from ultra-loose monetary policy – Nikkei [from Dec 30th].

South Korea

- Kospi opened +0.2%.

- (KR) South Korea said to be talking on Joint Planning for US Nuclear assets - Press.

- (KR) South Korea Govt confirms expanding tax breaks for chip investments, to offer up to 35% deduction in key sectors.

- (KR) South Korea Health Dept announces that Travellers from Hong Kong and Macau will be required to show negative coronavirus tests prior to departure.

- (KR) Bank of Korea (BOK) Gov Rhee: Pledges coordination with Govt to soften economic landing, will do all possible to ensure soft landing.

China/Hong Kong

- Hang Seng Opens -1.1%; Shanghai Composite opened -0.1%.

- (CN) Follow Up: China PBOC expected to cut interest rates and RRR during H1 2023; reiterates budget deficit ratio to rise in 2023 – Chinese press.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY50B in 7-day reverse repos v CNY183B prior; Net drain CNY534B v net inject CNY181B prior.

- (CN) China PBOC sets Yuan reference rate: 6.9475 v 6.9646 prior.

- (HK) Hong Kong Government: Seeking to sell USD, EUR and offshore yuan (CNH)-denominated Green Bonds.

- (CN) China dec caixin PMI manufacturing: 49.0 V 49.1E (5th straight contraction).

- (CN) China issues 8Mts of low-sulfur fuel oil export quota [first batch of 2023 quota], issued 17.1Mts of oil product export quotas to state-run cos. v 13.0Mts y/y – financial press.

- (CN) China President Xi: Domestic 2022 GDP reached >CNY120T; Economy is resilient and has great potential [from Jan 1st].

- (HK) Banks in Hong Kong are expected to further raise lending rates in 2023; cites analysts; prime rate expected to rise by up to 100bps – SCMP.

- (CN) China CISA expects domestic steel demand to decline ‘slightly’ in 2023; notes the impact of the property market – US financial press.

- (CN) China Securities Regulator (CSRC): Supports securities companies reasonable financing.

- (CN) According to researchers of Ruijin Hospital and Shanghai Jiao Tong University, first winter COVID-19 wave might have peaked in major Chinese cities but cases expected to spike in inner provinces around mid-Jan due to Lunar New Year travelers – SCMP [***Insight: On Dec 17th, China‘s chief epidemiologist Wu Zunyou gave a speech. He said that this winter the domestic epidemic will have three peaks, the first wave will last from mid-Dec to mid-Jan, mainly in cities. The second wave, which will start from late Jan to mid-Feb 2023, will be triggered by the movement of people ahead of the week-long New Year holiday and the third wave of cases would last from late Feb to mid-Mar as people returned to work after the holidays].

Other

- Said that 2023 CAPEX could reach close to $40B - Press.

- (SG) Singapore Q4 Advance GDP Q/Q: 0.2% v 1.1% prior; Y/Y: 2.2% v 4.1% prior.

- (SG) Singapore Preliminary Q4 URA Private Home Prices Q/Q: 0.2% v 3.8% prior.

- Taiwan Semi: Said that 2023 CAPEX could reach close to $40B - Press.

North America

- (US) FAA resolves computer issue that caused slow traffic volumes in Florida airspace today.

- (US) Senior BIden Admin Official: North Korea has made increasingly threatening statements.

- Tesla [TSLA]: Reports Q4 deliveries 405K v 343K q/q; Q4 production 440K v 365K q/q; Continue to transition towards a more even regional mix of vehicle builds which again led to a further increase in cars in transit at the end of the quarter.

Europe

- (UK) UK Pension Service notes that a total of £900 will be made over 3 separate payments to help with cost of living for low income households.

- (UK) China passengers who arrive in the UK next week will not face mandatory COVID tests on arrival – UK press.

- (IE) Ireland Dec PMI Manufacturing: 48.7 v 48.7 prior.

- (IT) Italy Dec New Car Registrations Y/Y: 21.0% v 14.7% prior.

Levels as of 00:20 ET

- Nikkei 225, closed, ASX 200 -1.3% , Hang Seng +1.4%; Shanghai Composite +0.7% ; Kospi flat.

- Equity S&P500 Futures: +0.1%; Nasdaq100 +0.1%, Dax -0.4%; FTSE100 +0.1%.

- EUR 1.0683-1.0650 ; JPY 131.40-129.51 ; AUD 0.6834-0.6772 ;NZD 0.6363-0.6296.

- Gold +1.1% at $1,846/oz; Crude Oil -0.4% at $79.92/brl; Copper +1.1% at $3.8625/lb.