Asian Market Update: RBA leaves rates on hold; Concerns over global volatility replaced by those over AUD appreciation
***Economic Data***
- (AU) AUSTRALIA FEB TRADE BALANCE (A$): -3.4B V -2.5BE; 22nd straight month of deficit
- (AU) AUSTRALIA MAR AIG PERF OF SERVICES INDEX: 49.5 V 51.8 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.4 v 114.5 prior
- (JP) JAPAN JAN LABOR CASH EARNINGS Y/Y: 0.9% (7-month high) V 0.2%E; REAL EARNINGS (EX-INFLATION) Y/Y: 0.4% V 0.4% PRIOR
- (JP) JAPAN JAN SERVICES PMI: 50.0 V 51.2 PRIOR; COMPOSITE PMI: 49.9 V 51.0 PRIOR
- (NZ) NEW ZEALAND MAR ANZ COMMODITY PRICE M/M: -1.3% V +0.5% PRIOR; Y/Y: -22.4%
- (NZ) NEW ZEALAND Q1 NZIER BUSINESS OPINION SURVEY: +2 V +15 PRIOR
- (PH) PHILIPPINES MAR CPI M/M: 0.1% V 0.0%E; Y/Y: 1.1% V 1.1%E
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -2.2%, S&P/ASX -1.5%, Kospi -0.9%, Shanghai Composite +1.0%, Hang Seng -1.3%, Jun S&P500 -0.3% at 2,051
***Commodities/Fixed Income***
- Apr gold +0.6% at $1,227/oz, May crude oil -0.4% at $35.55/brl, May copper +0.8% at $2.16/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 815.7 tonnes; 4th straight decline; lowest since Mar 19th
- SLV: iShares Silver Trust ETF daily holdings rise to 10,378 tonnes from 10,344 tonnes prior; Highest since Dec 2014
- JGB: (JP) Japan MoF sells ¥2.18T in 10-year 0.1% JGBs; Avg yield: -0.069% v -0.024% prior; bid to cover: 3.89x (highest since August 2014) v 3.20x prior
- (CN) PBOC to inject CNY60B in 7-day reverse repos
- (CN) PBOC SETS YUAN MID POINT AT 6.4663 V 6.4585 PRIOR; 1st weaker setting in 5 sessions
***Market Focal Points/FX***
- Asian equity markets are down across the board with the exception of Shanghai Composite which returned from yesterday's holiday to added investor pressure for expanded fiscal stimulus. Nikkei225 is the biggest loser, with USD/JPY falling to a 2-week low below the ¥111 handle. AUD/USD has also been especially volatile in the wake of mixed sentiment from the RBA decision, initially falling below 0.7570 and then spiking up above 0.7630. Going into tomorrow's Fonterra dairy auction, NZD/USD fell over 50pips from the highs below 0.6790, with most of the weakness coming after the soft NZIER business opinion survey.
- RBA's policy decision had something for the hawks and the doves, though the former appear to have prevailed in the initial hour after the statement. Holding rates unchanged, RBA removed prior statement's reference to financial turbulence portending weaker global and domestic demand. On the flip side, Gov Stevens also acknowledged that AUD has appreciated somewhat recently and warned that "appreciating exchange rate could complicate the adjustment under way in the economy." Outside of those two key changes, the statement was largely unchanged, reiterating that China's growth rate has continued to moderate and inflation would remain low over the next year or two, justifying that the current setting of monetary policy remained appropriate. Earlier in the day, Australia trade balance underscored continued adjustment away from mining economy, printing its 22nd consecutive deficit as exports fell 1%. Shipment value of Australia crude oil fell to a 12-year low, while exports of coal fell to a 6-year low.
- In China, the PBoC has set CNY weaker for the first time in 5 sessions, just as an advisor with the central bank warned that easing room for PBoC is becoming more limited even with significant scope for fiscal adjustment. China state planning agency NDRC also suggested that consumer price growth may start to pick up this year due to govt efforts to curb overcapacity and ongoing momentum of the rising property market values.
- Japan saw surprisingly strong demand in the 10-year JGB auction despite the negative yields for the 2nd straight months. Also, as speculated, govt officials announced the details of frontloaded FY16/17 budget, with 80% of infrastructure spending expected in the Apr-Sept half. BOJ Gov Kuroda continued to defend QQE, pointing to oil price decline as the key reason for low inflation and adding that technically it is possible to push rates further into negative territory. This more upbeat view and its positive repercussions did gain some traction by multi-month highs in labor wage data. Note, however, that traders have recently pared expectations of deeper cuts to rates on reserves, and today's testimony did not sway that view as JPY continued to rally during Kuroda comments. In the mean time, a Nikkei feature speculated that the central bank may in fact be forced to once again downgrade inflation expectations later this month after the overnight cut in inflation forecasts for the next 1-, 3-, and 5-years in the quarterly Tankan survey.
***Equities***
US equities / ADRs:
- DIS: COO Staggs plans to step down early next month - NYT; -1.8% afterhours
- TSLA: Guides Q1 deliveries 14,820 units (vs 16K guidance on 2/10); on track for FY16 delivery guidance of 80-90K vehicles - CNBC; -4.3% afterhours
- NATI: Reports prelim Q1 $0.14-0.15 (adj) v $0.16e, R$288M v $303Me; -8.4% afterhours
- (US) Treasury Dept lays out new plans to limit tax inversions; AGN -21.8%, PFE +2.9%
Notable movers by sector:
- Consumer discretionary: Nine Entertainment Co Holdings NEC.AU -21.3% (Q3 result); Fast Retailing Co 9983.JP -3.1% (March Uniqlo result)
- Industrials: Zhengzhou Yutong Bus Co 600066.CN +5.1% (FY15 result); China CSSC Holdings 600150.CN +2.5% (awarded contract); Samsung Engineering Co 028050.KR +1.5% (may merge with Samsung C&T)
- Materials: Mitsubishi Materials 5711.JP -2.3% (result speculation)
- Energy: Kansai Electric Power 9503.JP -0.5% (nuclear cooperation speculation)