Stock Market Update

The S&P 500 futures currently trade 13 points above fair value. 

Equity indices in the Asia-Pacific region had a mixed finish to the week with Japan's Nikkei (-0.3%) inching down from record territory while South Korea's Kospi (+0.9%) cruised to another record high, extending its January gain to 14.9%. The Japanese yen extended this week's rise off an 18-month low against the dollar after Japan's Finance Minister Katayama hinted at a potential joint intervention with the U.S. Treasury. The Bank of Japan is not expected to announce a rate hike next week, but expectations for a rate increase in April are on the rise. NTT and Honda priced upcoming bonds while Credit Agricole priced its Samurai bonds. Japan's CDP and Komeito parties have established an alliance aimed at blocking Prime Minister Takaichi's LDP from gaining outright majority in the Lower House. The U.S. reached an agreement with Taiwan on a quota system for chip tariffs.

• In economic data:
  • Singapore's December trade surplus SGD2.205 bln (last surplus of SGD6.777 bln). December non-oil exports -9.4% m/m (expected -4.5%; last 7.1%); 6.1% yr/yr (expected 10.0%; last 11.5%)
  • New Zealand's December Business PMI 56.1 (last 51.4). December FPI -0.3% m/m (last -0.4%)

---Equity Markets---

• Japan's Nikkei: -0.3% 
• Hong Kong's Hang Seng: -0.3% 
• China's Shanghai Composite: -0.3% 
• India's Sensex: +0.2% 
• South Korea's Kospi: +0.9% 
• Australia's ASX All Ordinaries: +0.5%

Major European indices are on track for a lower finish to the week. Germany's final CPI report for December showed a dip below the 2.0% target. Spreads between yields on Germany's 10-yr bund and corresponding instruments from Spain and Italy have hit their tightest levels since 2008 thanks to improving fiscal situations in Spain and Italy combined with prolonged weakness in the German economy.

• In economic data:
  • Germany's final December CPI 0.0% m/m, as expected (last -0.2%); 1.8% yr/yr, as expected (last 2.3%)
  • Italy's December CPI 0.2% m/m, as expected (last -0.2%); 1.2% yr/yr, as expected (last 1.1%)

---Equity Markets---

• STOXX Europe 600: -0.2% 
• Germany's DAX: -0.3% 
• U.K.'s FTSE 100: -0.2%
• France's CAC 40: -0.7% 
• Italy's FTSE MIB: -0.3%
• Spain's IBEX 35: UNCH