Asian Market Update: Abe plans to front-load stimulus; Aussie drops on flat retail sales
***Economic Data***
- (AU) AUSTRALIA FEB RETAIL SALES M/M: 0.0% V 0.4%E; Y/Y: 3.7% (weakest since Sept 2013)
- (AU) AUSTRALIA FEB BUILDING APPROVALS M/M: 3.1% V 2.0%E; Y/Y: -9.0% (4th straight decline) V -9.0%E
- (AU) AUSTRALIA MAR ANZ JOB ADVERTISEMENTS M/M: 0.2% V -1.2% PRIOR
- (AU) AUSTRALIA MAR TD SECURITIES INFLATION M/M: 0.0% V -0.2% PRIOR; Y/Y: 1.7% (7-month low) V 2.1% PRIOR
- (JP) JAPAN MAR MONETARY BASE Y/Y: 28.5% v 29.0% PRIOR; MONETARY BASE END OF PERIOD: ¥375.7T v ¥358.8T PRIOR
- (KR) SOUTH KOREA Q1 FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 19.3% V 82.5% PRIOR
- (NZ) NEW ZEALAND Q1 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 104.8 V 101.5 PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX +0.6%, Kospi +0.1%, Shanghai Composite closed, Hang Seng closed, Jun S&P500 +0.1% at 2,066
***Commodities/Fixed Income***
- Jun gold -0.4% at $1,219/oz, May crude oil -1.1% at $36.38/brl, May copper -0.2% at $2.16/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 818.1 tonnes; 3rd straight decline
- SLV: iShares Silver Trust ETF daily holdings rise to 10,344 tonnes from 10,276 tonnes prior; Highest since Dec 2014
- (JP) BOJ offers to buy ¥350B in 1-3year JGBs, ¥440B in 3-5yr JGBs,¥220B in 10-25year JGBs and ¥180B in JGBs with maturity over 25-year
***Market Focal Points/FX***
- Asian equity markets are modestly higher with limited participation, as China/Hong Kong indices are closed for holiday. Investors are digesting a fairly solid US jobs report on Friday that saw the change in non-farm payrolls beat, hourly wages recover from prior month's poor showing, and unemployment to tick up on a slight expansion in labor force. S&P/ASX 200 is leading the way despite the selloff in key mining/energy names while Nikkei225 is sustaining gains despite the late-session rally in JPY. Among FX majors, USD/JPY was down nearly 50pips from the highs around 113.30, EUR/USD was rangebound around 1.14, and AUD/USD sold off some 40pips to 0.7630 on weak Aussie retail sales data.
- Australia retail figures came in flat m/m and up 3.7% y/y - the weakest annual growth rate since mid-2013 - with the most pronounced gains coming in clothing/footwear segment. Other Aussie data were more benign, as building approvals sequential growth topped consensus and ANZ Jobs ads returned to positive. Going into tomorrow's RBA rate decision, market consensus is firmly in expectation of a rate hold, however futures markets still anticipate more easing later this year because of recent dovishness out of the FOMC boosting AUD currency against the greenback.
- In Japan, more data from the BOJ's Tankan survey revealed corporates reducing their expectations for inflation with a 1-year time horizon to just 0.8% from 1.0%. 3-year outlook was cut to 1.1% from 1.3% and 5-year to 1.2% from 1.4%. Govt spokesperson Suga reiterated that only a calamity on the scale of global financial crisis or a natural disaster would lead to postponing the 2nd round of consumption tax increase, even with a Yomiuri poll indicating that 65% of respondents do not support the sales hike to 10% scheduled for April of next year. Later in the session, PM Abe was reportedly preparing to outline the specifics of frontloading FY16 budget at a cabinet meeting tomorrow. Among notable developments in the M&A landscape, Sharp was up nearly 5% headed toward close after reports late on Friday that it reached an agreement with banks on loan terms as part of the Hon Hai bailout.
***Equities***
US equities / ADRs:
- VA: Follow Up: Alaska Air deal to buy Virgin America thought to be for $2.5B cash - financial press
- SPLS: Said to have offered to freeze prices for 3 years in order to secure $6.3B takeover of ODP - NY Post
- PBR: Announces new voluntary layoff program as part of overall cost-cutting initiative; Expects 12K workers to leave (about 21% of workforce) - financial press
Notable movers by sector:
- Sharp 6753.JP: Reaches agreement with banks on loan terms as part of Hon Hai bailout; Plans to reduce borrowing costs by ¥7.4B in FY16/17; +4.8%
- Posco 005490.KR: Said to consider building a wire-rod processing plant in the US - Korean press; +2.1%
- MQG.AU: Reaffirms FY16 to be higher y/y; As expected H2 to be lower than H1; FY16 H2 lower y/y - slides; +1.3%
- Eisai; 4523.JP: Halaven(Eribulin) Receives Positive CHMP Opinion in Advanced Liposarcoma Following Significant Phase III Data; +0.9%
- Investa IOF.AU: Mirvac said to be less interested in Investa Office bid - Australian press; +0.5%
- 005380.KR: Hyundai/Kia group reports Mar US sales -0.2% y/y to 133.6K units v 130.6Ke; -3.0%