Asian Market Update: Japanese GDP data show capital expenditure expected to slow - Q4 Japanese GDP is revised upwards: Many analysts expected a strong upward revision in Q4 Japanese GDP, and the annualized figure was in fact revised to 5.5% (markets expected a revision to 5.1%). The Japanese GDP revision can almost entirely be attributed to the higher-than-expected capital expenditure growth. Japanese companies boosted capital spending by 16.8% in Q4 y/y (this is the 15th straight quarter of increase in this component) - Slowing Japanese exports cast doubt over capex in 2007: Q4 GDP revisions showed that there was a slowdown in Japanese exports, and this could lead to a slowdown in capex during 2007. Analysts point out that capex trails exports with a 6mnth gap (implying that capex will start weakening from the April-June period). In a related story on Asian exports, the South Korean Commerce Ministry said that the export environment is not as positive as had been expected. - Japanese current account surplus widens: (JP JAN CURRENT ACCOUNT TOTAL: ¥1.194T V ¥1.04T expected). It seems that the Japanese economy is being driven by overseas demand, masking the weakness in consumer spending. - Asian Equities: Asian equities are higher on the U.S. payrolls data. The Nikkei 225 is higher by more than 0.70% and above the 17,250 level. Gains on the Nikkei are being led by exporters, boosted by U.S. employment data and easing concerns over the carry trade. Semiconductor equipments shares are also gaining on expectations of strong profit results from Tokyo Electron. The Nikkei is gaining for the 3rd consecutive session as the equity rebound continues. The ASX 200 index is higher by more than 0.50%, with gains being driven by mining shares on Rio Tinto providing an optimistic outlook for 2007 conditions. Shares of James Hardie, the largest supplier of home siding to the US, also traded higher on the U.S. jobs data. There was limited upside to Aussie equities, with light volumes and caution ahead of upcoming U.S. data. The Hang Seng is currently little changed after opening up sharply. The Kospi is higher by more than 0.25% on gains in exporters. - Forex outlook for the week: Some analysts suggest that the focus will shift from the carry trade and risk aversion to specific pieces of economic data, especially CPI data out of the U.S on Friday. AUD/JPY traded up by 0.10% as Friday's U.S. jobs data gave traders renewed confidence to go ahead with the carry trade. The JPY failed to hold on to gains related to the upward revision to the Japanese Q4 GDP. - Commodities: Crude oil is lower and below $60 on warm weather in the US's northeast region. Crude oil is trading lower for the 3rd consecutive session ahead of this week's OPEC meeting. Spot gold is trading higher on fundamentals, as news broke that Australia's gold production fell to the lowest level in 13 years. Traders were talking about the rise in Shanghai Futures Exchange copper stocks eroding confidence of the strength of Chinese copper demand.