Asia Market Update: Trade war talk dominates talk in the region, equities track higher following US
***Headlines/Economic Data***
General Trend: Asian equity markets rise amid rebound in steel makers and earlier gains in the US
- Asian automakers also trade generally higher
-Energy producers gain after rise in oil prices on Monday
- RBA expects faster economic growth in 2018 vs 2017; notes wage growth ‘appears to have troughed’
- Weaker yen boosts Japanese exporters, especially auto makers
- Australia Q4 Net Exports expected to subtract from GDP; Q4 GDP data due on Wednesday’s session
-Korean Won (KRW) gains over 0.5% versus US dollar as talks between the two Koreas in focus
Australia/New Zealand
-ASX 200 opened +0.3: closed +1.1%
- ASX 200 Energy Index +2%, Utilities +1.8%, Telecom +1.6% Resources +1.5%, Consumer Discretionary +1.1%, Financials +1%
- NZM.NZ Terminates merger agreement with Fairfax’s Stuff Limited, will continue with appeal
-(AU) Australia Q4 Current Account (A$): -14.0B v -12.2Be; Net Exports of GDP: -0.5% v -0.6%e
- (AU) AUSTRALIA JAN RETAIL SALES M/M: 0.1% V 0.4%e
-(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
Looking ahead: Australia Q4 GDP data due to be released on Wed, RBA Gov Lowe scheduled to speak (topic: ‘The Changing Nature of Investment’)
China/Hong Kong
-Shanghai Composite opened flat, Hang Seng -0.2%
-Hang Seng Energy Index +2.7%, Info Tech +2.6%, Materials +1.8%, Services +1.3%, Consumer Goods +1.2%, Financials +1.2%
-(CN) China PBoC monetary policy expected to be more flexible this year; Should cut RRR to prevent risks from slower growth - China Securities Journal
-(CN) According Financial Stability Board (FSB) stats China shadow banks account for 15% of global market, with ~$7T of the global $45.2T global shadow banking assets
-(CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 2nd consecutive session; Net drain nil v CNY100B prior
- (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3386 V 6.3431 PRIOR
Japan
-Nikkei225 opened +1.7%; closed: +1.8%
- TOPIX Iron & Steel +2.4% Index, Electric Appliances +2.3%
- Cosmetics company Shisheido [4911.JP] gains over 4% following release of FY18-20 corporate strategy
- (JP) Barclays pushes back forecast for BoJ policy changes to 2019 – US financial press
-(JP) Top analysts say a worsening in trade concerns could weigh on foreign demand for Japanese equities – US financial press
-(JP) Japan Trade Min Seko: Japanese products contribute to US growth and jobs
-(JP) Japan's Persol, Recruit, and other major human resource firms to start providing commutation allowances for temporary workers in administrative positions from April this year as labor shortages become an increasingly serious issue - Nikkei
-(JP) Japan Cabinet approves plan to improve the accuracy of prelim GDP data - financial press
-(JP) Japan Govt approves signing of TPP FTA without the US - Nikkei (to happen later this week in Chile)
-(JP) Japan MoF sells ¥800B v ¥800B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.75% v 0.820% prior; Bid to cover: 4.24x v 4.27x prior
-(JP) BoJ Gov Kuroda: BOJ is keeping policy very accomodative, takes time to get rid of deflationary mindset - Confirmation Hearings
Looking Ahead: Additional confirmation hearings for the BoJ Dep Gov Nominees (Amamiya, Wakatabe) set for Wed, March 7th
Korea
-Kospi opens +1.1%
-Shares of Samsung Electronics gain over 3% (declined ~1.8% on Monday’s session)
-LG Display’s shares underperform amid cautious broker commentary
- (KR) North Korea and South Korea hold high level talks today, North Korea has a "firm will" to advance relations with South Korea. Kim Jung Un has agreed to meet with South Korea President Moon after successful talks.
-(KR) SOUTH KOREA FEB CPI M/M: 0.8% V 0.5%E; Y/Y: 1.4% V 1.2%E
-(KR) South Korea Jan Current Account: $2.68B v $4.1B prior; Balance of Goods (BOP): $8.11B v $8.2B prior
-(KR) South Korea to talk about revision of property holding tax - Korean press
-(KR) South Korea to challenge US steel tariffs in G20 - Korean press
-(KR) South Korea to announce scale and date of military drills with US after the 18th (were delayed due to Olympics)
- (KR) South Korea sells 30-yr bonds; avg yield 2.735%
Other Asia
- (PH) Philippines Feb CPI M/M: 0.8% v 1.0% prior; Y/Y: 4.5% v 4.1%e (Highest annual pace since 2014)
-Punjab National Bank [PNB.IN] Foreign banks said to stop sales of gold to the bank - Indian Press
North America
-US equity markets ended broadly higher: Dow +0.7%, S&P500 +0.8%, Nasdaq +0.7%, Russell 2000 +0.7%
-S&P500 Utilities +2%, Financials +1.4%, Real Estate +1.4%
- (US) On Thursday (Mar 8th), US President Trump expected to discuss impact of planned tariffs with US companies that use aluminum and steel - US financial press
- (US) President Trump: Will not back down on trade; I don't think we will have a trade war; Reiterates threat to raise tax on car imports
- LOGI Guides initial FY19 Rev growth in 'high single-digit'; Op $310-320M; affirms FY18 Rev +12-14% y/y; Op $270-280M
Looking ahead: US Weekly API Crude Oil Inventories due for release
Europe
-(UK) Reportedly the EU's initial offer on trade will not be very detailed; The lack of detail in the offer would leave the UK having to renegotiate large parts of its trade agreement with the EU during the post-Brexit period. The UK has been seeking to have the entire trade accord squared away before the March 2019 Brexit – press
-(UK) Senior EU Brexit negotiator Rynck: not likely that there will be certainty about future ties to the EU by this fall [*Note: previously EU had sought to wrap up trade negotiations by Nov]
- (UK) Feb BRC Sales LFL y/y: 0.6% v 0.5%e
-OPEC Sec Gen Barkindo: Demand has not been this solid and positive since before the financial crisis; Have to wait on a decision about whether production cuts will be extended into 2019; Shale producers are interested in a dialogue with OPEC, but will not be discussion production cuts or prices
-Telecom Italia [TIT.IT]: Elliott said to build stake in the company - US financial press
***Levels as of 01:00ET***
- Hang Seng +1.7%; Shanghai Composite +0.8%; Kospi +1.5%
- Equity Futures: S&P500 +0.0%; Nasdaq 100 +0.2%, Dax +0.1%; FTSE100 -0.1%
- EUR 1.2332-1.2363; JPY 106.16-106.47; AUD 0.7761-0.7792 ; NZD 0.7203-0.7245
- Apr Gold +0.3% at $1,324/oz; Apr Crude Oil +0.2% at $62.70/brl; Mar Copper +0.5% at $3.14/lb