China is historical surplus thanks to Russia. Yen rally hurts Nikkei

Asia closes the week, Friday 13 January, subdued, above all because of the Nikkei, which at 7:15 Italian time loses 1.32%, while Hong Kong rose by 0.4% and Shanghai by 0.39%. The Tokyo Stock Exchange is weighed down by yen rally which puts exporting groups in difficulty and by a sharp decline in the shares of Fast Retailing (-8%) after missed profit estimates.

Gold is weak at 1,897 dollars per ounce, US WTI oil drops 0.22% to 78.22 dollars a barrel, while theEUR retrace while remaining above 1.08 a 1.0842, a level it hasn’t seen since April 2022. The yen’s rally continues to 129.07 (+0.2%), the pound is weak at 1.2190.

The 10-year US T bond sees the yield rise from 3.44% at the beginning of the Asian session to 3.46%, while the futures on Wall Street they are in red about 0.3% (Nasdaq) after data released on Thursday in theUS inflation downwhich suggests a less aggressive Fed in terms of rate hikes.

China, exports and imports at a standstill

Chinese exports are dropped by 9.9% on an annual basis as of December 2022, the largest decline in nearly three yearswhile imports decreased by 7.5%, down for the third consecutive month, due to the deterioration of domestic and foreign demand.

But it is an all-time record for the trade surplus

China’s trade surplus fell to $78 billion in December 2022 from $93.7 billion in the same month a year earlier, compared with market forecasts of +76.2 billion due to weakening global demand and internal.

In all of 2022, sales increased by 7%, while purchases climbed by 1.1% thanks to robust trade with the Russia and the countries of Southeast Asia, leading China to a record trade surplus of $877.6 billion.

South Korea raises rates by 0.25% to 3.5%

The Bank of Korea (BoK) raised rates by 25 basis points to 3.5% at its January meeting, in line with market consensus. Friday’s move came after the same hike in November amid cost pressures and prospects of continued Fed rate hikes, driving borrowing costs to their highest level since November 2008.

It was also the 10th rate hike since the start of the current tightening cycle that started in August 2021with the central bank raising the cost of borrowing by 300 basis points.

The Bank of Korea said domestic economic growth was expected to weaken on a global slowdown and higher rates, with 2023 GDP growth below November forecasts by 1.7%.

Meanwhile, headline inflation appears to be consistent with a previous forecast of 3.6%. The board reiterated that it will judge whether the base rate should increase further by assessing the downside risks and financial stability risks, the effects of tightening and changes in monetary policy in the main countries.

Watch out for the quarterly reports of the big US banks

Wall Street futures are soft on Friday as investors cautiously await earnings reports from major banks as they weigh the latest inflation report and its implications for monetary policy.

December US inflation data showed year-on-year data slowed to respectively 6.5% (CPI) and 5.7% (core)confirming expectations of a further easing of inflationary pressure and reinforcing the thesis for a less aggressive tightening by the Federal Reserve (a +0.25% increase in the cost of money is now expected).

Investors have their eyes on Friday’s quarterly earnings from big bank stocks, including JP Morgan, Wells Fargo, Citigroup and Bank of America. (All rights reserved)