Asian Market Update: Austalia unemployment rate falls to 2013-lows, reducing outlook for more RBA cuts; Singapore central bank eases policy
***Economic Data***
- (AU) AUSTRALIA MAR EMPLOYMENT CHANGE: 26.1K (4-month high) V 17.0KE; UNEMPLOYMENT RATE: 5.7% (lowest since Sept 2013) V 5.9%E
- (AU) AUSTRALIA APR CONSUMER INFLATION EXPECTATION: 3.6% V 3.4% PRIOR
- (NZ) NEW ZEALAND FEB MANUFACTURING PMI: 54.7 V 55.9 PRIOR; 2nd straight month of sequential decline and 5-month low
- (SG) SINGAPORE Q1 ADVANCED GDP Q/Q: 0.0% V 0.0%E; Y/Y: 1.8% V 1.7%E
- (UK) MAR RICS HOUSE PRICE BALANCE: 42% V 50%E; 9-month low
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +3.1%, S&P/ASX +1.2%, Kospi +1.3%, Shanghai Composite +0.1%, Hang Seng +0.9%, Jun S&P500 -0.1% at 2,075
***Commodities/Fixed Income***
- Apr gold -1.1% at $1,234/oz, May crude oil -1.2% at $41.28/brl, May copper -0.3% at $2.16/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 10,396 tonnes from 10,455 tonnes prior; first fall since Mar 23rd
- GLD: SPDR Gold Trust ETF daily holdings fall 5.0 tonnes to 810.1 tonnes; 3rd straight decline
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4891 V 6.4591 PRIOR; weakest Yuan setting since Mar 29th; first weaker setting in 4 sessions
- (CN) PBOC to inject CNY40B in 7-day reverse repos
- JGB: (JP) Japan's MOF sells ¥730B in 0.8% 30-year bonds; Avg yield: 0.388% (record low) v 0.765% prior; Bid to cover: 3.39x v 4.21x prior; Tail: 0.67 (widest since April 2013) v 0.03 prior
- (JP) Japan investors sold net ¥1.2T in foreign bonds v sold ¥1.6T in prior week; Foreign investors bought net ¥147B in Japan stocks v bought ¥415B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian equity markets are generally positive, though investors on the mainland are notably more cautious going into tomorrow's Q1 GDP and March economic data points. Nikkei225 is leading the charge higher amid continued weakness in JPY currency, as USD/JPY has now tested a 1-week high above 109.50. Australia's mining names are also benefiting from the prevalent risk-on sentiment this week, even though commodity prices - precious metals in particular - were lower in electronic trade. Aussie banks are seeing more modest gains amid speculation of bad debt exposure from some of the troubled mining names. In other FX majors, AUD/USD was volatile in a 40-pip range above 0.7620 as Aussie employment report was more mixed than implied in the headline. AUD was also weighed by cautious remarks from Moody's, as was NZD/USD which fell some 80pips below 0.6840.
- A surprise currency policy easing by Singapore central bank was a notable ripple that was also felt in significantly weaker Yuan fix by the PBoC. In its semiannual statement, MAS set the rate of appreciation of SGD nominal effective exchange rate (S$NEER) at 0% effective Apr 14th, thus removing its bias of slight SGD appreciation. Policymakers said this does not signify that MAS prefers SGD depreciation, but also noted that headline CPI would remain negative this year and economic growth would be more modest. This marked the 3rd policy easing by the MAS since 2015, sending USD/SGD pair up well over 100pips above S$1.36, while STI index rose about 1%.
- Australia March employment change above 26K was a 4-month high, and unemployment rate of 5.7% was the lowest since Sept 2013. Initially, the figures sent AUD/USD up over 30pips above 0.7660. However, inside those numbers were a negative full-time employment component (-8.8K v +13.9K prior) as part-time labor growth signified uneven transition in the economy. Participation rate also did not grow as expected, remaining at a 6-month low of 64.9%. Lastly, the aggregate hours worked marked their biggest sequential decline since mid-2012. Nonetheless, fixed income markets reduced the expectations of another RBA cut in May below 20%. Still, AUD promptly retreated from the initial spike on jobs numbers, remaining pressured by earlier comments from Moody's calling for higher taxes in addition to lower spending in order for Australia to retain its AAA rating.
- BOJ Gov Kuroda spoke extensively on the central bank policy, largely remaining optimistic about achieving inflation target with the current policy framework. As usual, Kuroda reiterated that the central bank is prepared to cut rates further, but generally sees underlying trend of inflation improving and economy recovering. He also defended the use of negative rates, stating the economy would have been worse without negative rates. Later in the day, BOJ's Amamiya was somewhat more practical, calling for close monitoring of the impact of negative rate policy on Japanese financial market. The distortions of BOJ's NIRP on JGBs was evidenced by a particularly soft demand in today's 30-year auction, where the average yield of 0.388% was much lower than the 0.8% coupon and the tail was the widest in 3 years.
***Equities***
US equities / ADRs:
- LUB: Reports Q2 -$0.03 v -$0.07 y/y, R$92.1M v $91.0M y/y; +5.4% afterhours
- WYNN: CEO Stephen Wynn buys 72.8K shares at $98.78 - filing; +2.3% afterhours
- PIR: Reports Q4 $0.39 (adj) v $0.21e, R$542M v $533Me; -5.2% afterhours
- STX: Reports prelim Q3 R$2.6B v $2.72Be, gross margin 23% (prior forecast R$2.7B, gross margin 25.6%); -6.2% afterhours
Notable movers by sector:
- Consumer discretionary: China Eastern Airlines 600115.CN +2.3% (guidance); Luk Fook Holdings 590.HK -0.9% (Q4 result); Aeon Mall Co. 8905.JP +4.5% (FY15/16 result); Lawson Inc 2651.JP -3.6% (FY15/16 result); Aeon Co 8267.JP +4.7% (FY15/16 result)
- Financials: COFCO Property Group Co 000031.CN +1.0% (Q1 guidance)
- Industrials: GUD Holdings GUD.AU +7.2% (sells interest in Sunbeam and Jarden business)
- Materials: Whitehaven Coal WHC.AU +12.7% (Q3 production); Sandfire Resources SFR.AU -2.8% (Q3 production)