Asian Market Update: BOJ holds policy steady but cuts economic assessment and exempts Money Reserve Funds from NIRP as speculated
***Economic Data***
- (AU) AUSTRALIA FEB NEW MOTOR VEHICLE SALES M/M: -0.1% V +0.4% PRIOR; Y/Y: 2.3% V 5.2% PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 116.4 v 114.8 prior
- (JP) JAPAN JAN TERTIARY INDUSTRY INDEX M/M: 1.5% V 0.3%E
***Index Snapshot (as of 04:15 GMT)***
- Nikkei225 -0.7%, S&P/ASX -1.4%, Kospi -0.2%, Shanghai Composite -1.1%, Hang Seng -0.7%, Jun S&P500 -0.3% at 2,004
***Commodities/Fixed Income***
- Apr gold -0.8% at $1,230/oz, Apr crude oil -0.8% at $36.87/brl, May copper -0.6% at $2.23/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 8.7 tonnes to 790.1 tonnes; lowest since Mar 2nd, biggest decline since Dec 2nd
- (LY) Militants reportedly stage an attack near Sarir - a key oil field in Libya - financial press
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5079 V 6.4913 PRIOR; 2nd straight weaker setting
- (CN) PBOC to inject CNY20B in 7-day reverse repos
***Market Focal Points/FX***
- Asian equity markets tracked a relatively less volatile US session going into the Bank of Japan decision but have since seen some modest selling. The risk-off mode after the BOJ statement was less the result of what they said (much of which was speculated in Japanese press this week) but rather the function of what they didn't say - namely omitting promise to take rates deeper into negative territory as they claimed in January. USD/JPY is down nearly 50pips around 113.30 in the first hour after the decision, SP500 futures down 5pts or 0.3%, and oil is down over 0.5% below $37/brl. In other USD majors, AUD/USD and NZD/USD saw their lows earlier in the day around 0.7490 and 0.6640 - down 50 and 40 ticks respectively. GBP/USD slid about 30pips to 1.4270 after another UK press report survey suggesting a narrow majority of respondents favor a Brexit.
- BOJ policy update in detail included maintained ¥80T annual monetary expansion target and -0.1% rate on excess reserves, however the field of dissenters for the latter winnowed down to 2 from 4. As anticipated, BOJ also announced it will exempt the Money Reserve Funds (MRFs) from negative rates policy as speculated in the Nikkei overnight and promised to review financial institutions' balance, to which 0% rate is applied, to be reviewed every 3 months. Lastly, BOJ also unveiled a new slate of economic assessment and risks to its policy outlook relative to the prior year. Specifically, they cut overall economic assessment for the first time since late 2014 (also as speculated in Japanese press earlier today) to state "Japan continued moderate recovery trend, although exports and production have been sluggish due to slowdown in emerging economies." BOJ was cautious on exports as having recently paused, viewed consumption as resilient, and business investment on moderate increasing trend. In terms of Outlook, BOJ expects exports and production to remain sluggish and CPI still around 0% due to decline in energy prices, while Risks to Outlook section saw notable additions of slowdown in China and developments in US monetary policy.
- Down under, RBA's March meeting minutes did not break any new ground from this month's policy statement that was largely a reiteration of the prior month. Specifically, RBA reiterated low inflation could provide scope for further easing, adding it was too early to determine the extent of market volatility on real economy. Australia also saw some notable cross-border M&A, as Asciano was the target of a joint Qube/Brookfield bid in a A$9.1B proposed deal.
***Equities***
US equities / ADRs:
- CPXX: Phase 3 trial for VYXEOS (CPX-351) demonstrates statistically significant improvement in overall survival; +368% afterhours
- OUTR: To explore strategic alternatives; Raises dividend 100%; +8.1% afterhours
- DOV: Guides Q1 well below prior forecasts; -2.2% afterhours
Notable movers by sector:
- Consumer discretionary: Midea Group Co 000333.CN -1.1% (acquisition speculation)
- Consumer staples: Labixiaoxin Snacks Group 1262.HK -4.0% (guidance)
- Financials: Shanghai Shimao Co 600823.CN +1.3% (private placement)
- Technology: Toshiba Corporation 6502.JP -1.1% (speculation to sell white goods business to Midea); Sony Corp 6758.JP -0.5% (to acquire Sony/ATV Music Publishing); Sunny Optical Technology Group Co. 2382.HK +4.8% (FY15 result)
- Materials: 2393.HK +4.6% (FY15 result)
- Industrials: Asciano AIO.AU Halted (Qube/Brookfield consortium announce A$9.15/shr offer for Asciano in a A$9.1B deal)