Asian Market Update: RBA Gov Stevens sees the $0.90 line as "too high" for AUD; Investors weather-weary ahead of Feb jobs report
***Economic Data*** - (AU) AUSTRALIA FEB AIG PERFORMANCE OF CONSTRUCTION INDEX: 44.2 V 48.2 PRIOR (2nd month of contraction; 6-month low) - (JP) JAPAN FEB OFFICIAL RESERVE ASSETS: $1.29T V $1.28T - (MY) MALAYSIA JAN TRADE BALANCE (MYR): 6.4B V 9.1BE
Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.3%, S&P/ASX +0.2%, Kospi -0.1%, Shanghai Composite flat, Hang Seng -0.2%, Mar S&P500 flat at 1,877, Apr gold -0.1% at $1,350, Apr crude oil +0.2% at $101.77/brl
***Highlights/Observations/Insights*** - RBA Gov Stevens caused the biggest ripple in the currency markets in an otherwise quiet pre-NFP trading session. Speaking before the House of Representatives of Economic Committee, Stevens saw the $0.90 as a critical threshold where AUD becomes too high. Stevens further acknowledged wage growth has slowed and unemployment rate will edge high yet, but also affirmed there is no need to lower rates at this time, expressing some more concern about the dangers of overheating property markets. Stevens also noted the recent GDP data does not change the RBA's assessment that domestic economy is running below trend.
- Ukraine/Crimea/Russia standoff remains tense in the 24 hours after Crimea parliament formally approved secession and announced it would put the matter to a Mar 16th referendum vote. Pres Obama and Russia's Putin held another hour-long phone session but remain far apart in their positions - US continues to maintain Russia is in violation of Ukraine's sovereignty and would oppose Crimea independence vote, while Russia still deems Ukraine's new govt as illegitimate in making demands regarding the peninsula. Separately, Ukraine press has speculated that Fri-Sun will see a "high chance" of an assault by Russian troops on Ukraine bases in Crimea.
- Chinese press headlines of note: - PBoC adviser Chen: China trust product default risks are under control - Xinhua - PBoC may gradually expand Yuan trading band with a series of small but incremental steps in 2014 - Sec Journal - According to Deovolente Realty Co, Shanghai pre-owned home sales for Feb: 11.6K units (2-year low), -18.9% m/m, -20.4% y/y; Avg price fell 4% m/m to CNY19.6K/sqm - Shanghai Daily - China Commerce Min sais he was confident 7.5% GDP target would be achieved despite overnight remarks that 7.2-7.3% range would be the more realistic estimate.
- Fed's Lockhart said it would be reasonable to anticipate a soft jobs report for February given the "winter's wrath", but also voiced support in continuity of the pace of taper, suggesting only a serious drop-off in activity would merit change. Fed's Plosser also said the bar to change the pace of the taper is high, even though the near-term trend of economic growth has been reduced by the GFC to 2.0-2.25%. Plosser also said it will take a couple of months before weather-related factors are filtered out from US economic data.
***Fixed Income/Commodities/Currencies*** - (US) Weekly Fed Balance Sheet Total Assets Week ending Mar 5th: $4.17T v $4.16T prior; Reserve Bank Credit: $4.13T v $4.12T prior; M1: +$14.8B (first rise in 3 weeks) v -$18.8B prior; M2: -$8.2B (first decline in 7 weeks) v +$35.9B prior; M1 and M2 percent change at seasonally adjusted annual rates for last 13 weeks y/y: M1 y/y change: 8.8% v 8.6% w/w; M2 y/y change: 5.6% v 5.6% w/w - (CN) Daily Shibor fixings: O/N: 1.9948% v 2.0547% prior (2nd consecutive decline, lowest since Feb 27th); 1-week: 2.4030% v 2.4860% prior (2nd consecutive decline, lowest since June 2012) - (AU) Australia MoF (AOFM) sells A$800M in 3.25% 2018 Bonds; avg yield: 3.3869%; bid-to-cover: 4.58x - (JP) BOJ offers to buy ¥110B in JGB with maturity lower than 1-yr and ¥180B in JGB with maturity over 10-yr as well as ¥2.0T in T-bills
***Equities*** US markets: - CMTL: Reports Q2 $0.32 v $0.26e, R$85.5M v $80.3Me; +4.3% afterhours - HRB: Reports Q3 -$0.78 v -$0.08e, R$199.8M v $531Me; cites delayed opening of IRS e-file; -3.4% afterhours - SWY: Safeway and Albertsons Announce Definitive Merger Agreement at approx $40/shr ($32.50/shr in cash and other considerations); -3.6% afterhours - GPS: Reports Feb SSS -7.0% v +1.0%e; -4.8% afterhours - APP: Reports prelim FY13 Rev $634M v $642Me; Feb SSS -5% v +5% y/y, cites recent cold weather; -8.9% afterhours - PRGS: Reports prelim Q1 $0.27-0.28 v $0.31e, R$74-75M v $81.5Me; -11.7% afterhours - NVTL: Reports Q4 -$0.16 v -$0.08e, R$65.3M v $74.6Me; -18.6% afterhours
Notable movers by sector: - Consumer staples: China Modern Dairy 1117.HK +0.8% (positive profit alert) - Financials: Sinolink Securities 600109.CN +6.0% (Feb Op results); Haitong Securities 6837.HK +2.4% (Feb Op results); CITIC Securities 6030.HK +1.0% (Feb Op results); China Vanke 000002.CN -0.3% (FY13 results); Ping An Bank 000001.CN +0.2% (FY13 results) - Industrials: Xuzhou Handler Special Vehicle 300201.CN +2.8% (Q1 guidance); BYD Company 1211.HK +4.0% (E6 model selected into subsidy list); Great Wall Motor 2333.HK -3.7% (Feb auto sales); Boart Longyear BLY.AU -3.4% (S&P Downgrade) - Technology: Eternal Asia Supply Chain Management 002183.CN +3.0% (invests in supply chain management business) - Healthcare: Shenzhen Neptunus Bioengineering 000078.CN +10.0% (progress in anticancer drug) - Telecom: NTT DoCoMo 9437.JP -0.6% (CFO comments) - Energy: Tap Oil TAP.AU -1.1% (to sell oil, gas blocks)