Asian Market Update: China leads decline as cabinet officials talk down stimulus expectations
***Economic Data***
- (AU) AUSTRALIA JAN HOME LOANS M/M: -3.9% V -3.0%E; biggest decline in 8 months
- (AU) AUSTRALIA MAR WESTPAC CONSUMER CONFIDENCE INDEX: 99.1 V 101.3 PRIOR, M/M: -2.2% V +4.2% PRIOR
- (NZ) NEW ZEALAND FEB RETAIL CREDIT CARD SPENDING M/M: 0.7% v 0.3%e; TOTAL: -0.1% v 0.6% PRIOR
- (JP) JAPAN FEB M2 MONEY STOCK Y/Y: 3.1% V 3.2%E; M3 MONEY STOCK Y/Y: 2.5% V 2.6%E
- (KR) South Korea Feb Bank Lending to Households (KRW): 644T v 641T prior
- (KR) South Korea Jan "L" Money Supply m/m: 1.1% v 0.4% prior; M2 Money Supply m/m: 1.1% v 0.0% prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.2%, S&P/ASX +0.7%, Kospi -0.1%, Shanghai Composite -2.9%, Hang Seng -0.6%, Mar S&P500 flat at 1,982
***Commodities/Fixed Income***
- Apr gold -0.6% at $1,255/oz, Apr crude oil flat at $36.51/brl, May copper -0.6% at $2.21/lb
- (US) Weekly API Oil Inventories: Crude: +4.4M v +9.9M prior; 3rd straight week of build
- GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 790.7 tonnes
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5106 V 6.5041 PRIOR; first weaker setting in 5 sessions
- (CN) PBOC to inject CNY15B in 7-day reverse repos
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥260B in 10-25yr JGBs and ¥180B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$700M in 4.25% Bonds; avg yield: 2.53%; bid-to-cover: 2.81x
***Market Focal Points/FX***
- Asian equity markets are generally lower with the exception of a modest bounce in Sydney, where ASX200 is up nearly 1pct in spite of the losses in mining and energy sectors. Shanghai Composite is leading the selloff among decliners. In FX, USD majors were generally less volatile - USD/JPY traded in a 40pip range below 112.80, AUD/USD was down 20pips at the lows around 0.7410, and NZD/USD was down over 30pips below 0.6720 - 2nd straight day of declines going into tomorrow's RBNZ and the possibility of a more dovish central bank stance.
- The cloud of soft China exports figures released overnight continues to hang over the investors mindset, and interestingly, PBoC has responded with a slightly weaker fix for the first time in 5 sessions. Economists have digested some of the trade data, and there was little evidence of any silver lining. ANZ chief economist remarked that disappointing exports reflect weaker global trade while also discounting Lunar New Year seasonality, stating "exports fell deeper than expected in January and February combined, suggesting that Chinas external profile has worsened." Comments from a cabinet researcher, who said the 2016 budget deficit rise will be driven mainly by tax cuts rather than a massive fiscal stimulus, is not helping expectations of a stronger policy response from Beijing.
- Elsewhere in Asia, tensions on the Korean peninsula remain high. KCNA reported that Kim Jong Un has claimed the North has developed a miniaturized nuclear warhead, prompting talks between US State Sec Kerry and his China counterpart. South Korea Finance ministry's monthly report expressed ongoing concern related to low oil prices, Fed tightening, and China slowdown ahead of this week's BOK decision. Korea's rise in household loans was also said to be "above average", just as the BIS warned that Korea's household debt to GDP ratio has been the highest among emerging economies for 13 consecutive years. In Japan, PM Abe reiterated the govt would not consider new stimulus or an extra budget at this point, also defusing speculation of an early Parliament election this year.
- Stateside, Donald Trump had a good night in the Republican primaries with victories in Michigan and Mississippi. Hillary Clinton looked more vulnerable after a narrow loss to Sanders in Michigan - a state she was expected to win easily.
***Equities***
US equities / ADRs:
- BUFF: Reports Q4 $0.16 adj v $0.14e, R$265M v $259Me; +13.4% afterhours
- AVAV: Reports Q3 $0.27 v $0.05e, R$67.6M v $72.1Me; +6.6% afterhours
- PLNT: Spruce Point Capital's Axler discusses PLNT as a short idea - Harbor conf comments; -8.9% afterhours
- ZAGG: Reports Q4 $0.18 v $0.24e, R$78.6M v $82.2Me; -14.4% afterhours
- NTES: To Join the NASDAQ-100 Index Beginning March 16, 2016, replacing SNDK
Notable movers by sector:
- Industrials: CITIC Limited 267.HK -5.1% (impairment); Takata Corp.7312.JP -4.6% (said to consider restructuring)
- Technology: Shanghai Great Wisdom Co 601519.CN -5.0% (terminates restructuring plan)
- Materials: Rusal 486.HK -6.8% (Q4 result); Fortescue Metals Group FMG.AU -3.1% (response to ASX letter)