Asia Market Update: Korean Won (KRW), USD/JPY gain as US and North Korea agree to talks; US payrolls and BoJ Gov Kuroda press conference in focus
***Headlines/Economic Data***
- Asian equities trade generally higher but pare gains
- China Feb CPI rises at fastest pace since 2013; Government cites Lunar New Year impact
- China Feb banking lending slows more than expected
- PBoC officials discuss the merits of M2 in terms of monetary policy
- PBoC Gov Zhou said the central bank is developing digital currency
- Few surprises seen in BoJ policy statement
- Markets now await upcoming BoJ Gov Kuroda press conference (prior was held at 6:30 GMT)
- Upcoming release of US monthly payrolls and wage data also in focus
Australia/New Zealand
-ASX 200 opened +0.1% closed +0.3%
ASX 200 Telecom Index +1.6%, Consumer Discretionary +1%, Financials +0.7%; Resources -1.8%, Energy -1.2%
- (AU) Australia sells A$M v A$500M indicated in 3.25% April 2029 Bonds, avg yield 2.8212% v 2.6438% prior, bid to cover 4.36x v 3.8x prior
- (NZ) RBNZ paper: natural rate of unemployment is estimated at about 5%
China/Hong Kong
-Hang Seng opened +0.7%, Shanghai +0.1%
-Shanghai Property index declines less than 1%
- (CN) CHINA FEB CPI Y/Y: 2.9% V 2.5%E (highest reading since Dec 2013)
-(CN) China: March CPI growth to be lower as holiday (Lunar New Year) factor fades.
- (CN) China National Development and Reform Commission: sees 2018 China PPI growth at ~4% - Chinese press
-(CN) CHINA FEB NEW YUAN LOANS (CNY): 839.3B V 900BE
-(CN) CHINA FEB AGGREGATE FINANCING (CNY): 1.17T V 1.07TE
- (CN) CHINA FEB M2 MONEY SUPPLY Y/Y: 8.8% V 8.7%E; M1 MONEY SUPPLY M1 Y/Y: 8.5% V 11.0%E
(CN) PBoC comments on Feb lending data: Jan-Feb loan data should be read together due to the Lunar New Year holiday
-(CN) PBoC Gov Zhou: Global economy shows recovery signs; to rely less on quantitative stimulus, may reduce reliance on money supply to boost growth
-(CN) PBoC Dep Gov Yi: There is no quantitative target for China M2 in 2018
- (CN) China PBoC Vice Gov Pan Gongsheng: FX reserves to be basically steady in future; mortgages have risen rapidly; reiterates monetary policy is neutral and appropriate
-(CN) China Commerce Ministry (MOFCOM): Firmly opposes US trade measures, urges US to withdraw measures on steel and aluminum; to take 'strong' measures to safeguard own interest
-(US) US Commerce Dept: Affirms preliminary determination on some China steel fittings; to impose 13.79% duties
- (CN) China PBoC Open Market Operation (OMO): To skip OMO (5th straight session) v: Net drain CNY40B v CNY100B drain prior; For the week, PBoC drained net of CNY240B v net CNY120B injection w/w
- (CN) PBOC SETS YUAN REFERENCE RATE AT 6.3451 v 6.3239 PRIOR
- (CN) Shanghai Rebar Steel declines over 4.5%
- (CN) China said to place curbs on OTC options trading by asset managers
Japan
-Nikkei 225 opened +1.1%; closed +0.5%
- (JP) Nikkei 225 March Futures and Options said to settle at ~21,575
(JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Official Kataoka dissents for 5th straight meeting.
- (JP) Japan Jan Labor Cash Earnings Y/Y: 0.7% v 0.7%e; Real Cash Earnings Y/Y: -0.9% v -0.7%e
- (JP) Japan Feb Money Stock M2 Y/Y: 3.3% v 3.3%e; M3 Y/Y: 2.8% v 2.8%e
- (JP) Japan Jan Overall Household Spending Y/Y: +2.0% v -1.0%e
- (JP) Japan Finance Min Aso: US tariffs will disturb global steel and aluminum markets; to have 'big' effect on global economy; To work to get Japanese companies excluded from the tariffs; Will take necessary action in the WTO on the tariffs.
- Mazda and Toyota Establish Joint-Venture Company "Mazda Toyota Manufacturing, U.S.A., Inc."; involves investment of $1.6B and expected to create up to 4K jobs by 2021, annual capacity seen at 300K units
Korea
-Kospi opened +0.4%
- (KR) South Korea Envoy Chung-Eui-Yong: North Korea to 'refrain further missile tests'; US President Trump and North Korea leader Kim Jong Un to meet by May
-(KR) US White House: Confirms President Trump to accept invitation to meet with North Korea leader Kim; the time and place of meeting yet to be determined
Other Asia
-Taiwan Semi [2330.TW]: Reports Feb Sales NT$64.6B -9.5% y/y
North America
-US equity markets closed mostly higher: Dow +0.4%, S&P500 +0.5%, Nasdaq +0.4%, Russell 2000 -0.2%
-S&P500 Consumer Staples +0.9%, Real Estate +0.8%
-(US) Pres Trump: we need to show flexibility on tariffs to global friends; Confirms 25% tariff on foreign steel and 10% tariff on foreign aluminum; Canada and Mexico to be exempt while NAFTA talks go on; Open to modifying or removing tariffs for individual countries as long as we find way to ensure products no longer threaten security; US Trade Rep Lighthizer will be in charge of accepting offers from countries seeking exemptions - comments from White House
- (US) Fed George (hawk): Reiterates important to continue gradual normalization of rates; Risks appear to be 'predominately' to upside
- GoPro [GPRO]: Said to not receive 'serious' bid interest - NY Post
Europe
-(UK) UK govt officials reportedly don't see reaching a Brexit deal until next year – press
-(UK) Foreign Min Johnson: UK govt is prepared for a "no deal" Brexit scenario; No deal Brexit should not hold any terrors for UK because we'd 'do very well' under WTO rules
-(EU) Internal ECB staff calculations assume final €30B of QE purchases in Q4; Sources say there is broad agreement among members of the Governing Council that QE should probably come stop by the end of 2018 – press
-(EU) EU trade chief: to ask for clarity on tariff issue in days ahead; still believe EU should be exempt from US steel & aluminum tariffs
***Levels as of 01:00ET***
- Hang Seng +1%; Shanghai Composite +0.3%; Kospi +0.9%
- Equity Futures: S&P500 flat; Nasdaq100 flat, Dax flat; FTSE100 flat
- EUR 1.2295-1.2320 ; JPY 106.16-106.96; AUD 0.7776-0.7796 ;NZD 0.7249-0.7275
- Feb Gold -0.3% at $1.318/oz; Feb Crude Oil +0.3% at $60.24/brl; Mar Copper -0.1% at $3.074/lb