Asian Market Update: Yen hits new 17-month highs; Samsung Electronics tops estimates; China FX reserves on tap
***Economic Data***
- (JP) JAPAN MAR OFFICIAL RESERVE ASSETS: $1.26T v $1.25T PRIOR
- (JP) Japan Mar Tokyo Avg Office Vacancies 4.3% v 4.0% prior; 2nd straight increase
- (AU) AUSTRALIA MAR AIG PERFORMANCE OF CONSTRUCTION INDEX: 45.2 V 46.1 PRIOR; 13-month low; 4th month of contraction
- (NZ) New Zealand Mar ANZ Truckometer Heavy M/M: +2.5% v +1.7% prior; 2nd straight increase
- (TW) TAIWAN MAR CPI Y/Y: 2.0% V 1.4%E; WPI Y/Y: -4.9% v -4.6%E
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 -0.3%, S&P/ASX +0.3%, Kospi -0.1%, Shanghai Composite -0.8%, Hang Seng flat, Jun S&P500 -0.1% at 2,059
***Commodities/Fixed Income***
- Apr gold +0.3% at $1,227/oz, May crude oil +1.1% at $38.15/brl, May copper flat at $2.14/lb
- CME cuts WTI crude oil margin requirements by 2.9%
- GLD: SPDR Gold Trust ETF daily holdings rise 4.2 tonnes to 819.6 tonnes
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4707 V 6.4754 PRIOR
- (CN) PBOC to inject CNY10B in 7-day reverse repos
- (JP) Japan investors sold net ¥1.6T in foreign bonds v bought ¥1.2T in prior week; Foreign investors bought net ¥415B in Japan stocks v sold ¥359B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian equity markets are mixed with investors processing the latest set of minutes from the FOMC while looking ahead to pivota FX reserves data for China expected to be released late in the day. Shanghai Composite saw the most pronounced losses in the morning session as PBoC's open market operations of CNY10B injection was relatively small. ASX200 is up slightly, once again benefiting from a bounce in energy and commodities. Nikkei225 is surprisingly resilient with a marginal decline despite new 17-month low in USD/JPY around 109.20. In other USD majors, AUD/USD traded sideways around the $0.76 handle while NZD/USD was supported by $0.68 level. Yuan fix was slightly firmer after 2 straight days of weaker settings.
- Latest meeting minutes from the Fed showcased the growing polarization on the FOMC, with a couple members calling for a hike in March and several already looking at April as too soon to add to tightening measures. Committee once again discussed strong employment growth against persistent sub-2% inflation outlook. Later in the US session, Fed's Kaplan said there has been some progress on inflation, but the Fed will remain on a gradual and cautious path. Fed's Bullard - a voter known for his often hawkish views - said the economy is showing improvement but the Fed would remain data dependent given the tepid US economic growth.
- In China, traders await the release of Mar FX reserves amid speculation that the figures could show the first increase after 4 months of decline due to stabilization of Yuan and reduced volatility. A press report also noted that NDRC has requested that issuers of corporate bonds and underwriters assess default risks, while CEO of HSBC warned that rising bad debt levels in China will remain a challenge with the clearing of those loans to be slow. Recall overnight China financials NPL ratio was reported to have risen above 2% as of the end of February.
- Volatility in Japanese Yen has persisted, as USD/JPY pair hit new 17-month lows below 109.20. Govt spokesperson Suga remarked that FX markets are becoming one-sided, that the govt is watching exchange rate with vigilance and is prepared to act if necessary. However, traders were also quick to note that sentiment being unchanged from similar remarks of recent days and continued to test the govt's tolerance of Yen appreciation. There is also some speculation that time may be on the side of the Yen bulls, with authorities holding off on the next round of monetary easing until the BOJ decision at the end of the month.
- South Korea's Samsung Electronics guided Q1 well above official consensus at Op profit KRW6.6T v KRW5.5Te, Rev KRW49.0T v KRW48.8Te. As always, these are the "skeleton" estimates for the tech giant without any supporting material, all of which will be presented at the end of the month with the final Q1 release. The beat has been speculated in Korean press some time ago, and Samsung shares are down slightly on profit-taking. Separately, Korea Finance Ministry official noted that the economy does not yet warrant a supplementary budget, with early signs of improvement.
***Equities***
US equities / ADRs:
- VRX: Reportedly a majority of creditors agree to back loan amendment - press; +5.1% afterhours
- APOG: Reports Q4 $0.69 v $0.63e, R$262M v $265Me (1 est); +4.7% afterhours
- BBBY: Reports Q4 $1.85 (ex items) v $1.80e, R$3.42B v $3.38Be; Initiates $0.125 dividend (implied yield 1.0%); +4.5% afterhours
- S: Signs $2.2B deal for the sale and lease-back of certain existing network assets; +3.1% afterhours
- TEX: Zoomlion said to be working to provide Terex with assurances that it can get approvals for and complete a merger deal - press; +2.7% afterhours
- APOL: Reports Q2 -$0.31 adj v -$0.10e, R$465.3M v $471Me; -2.1% afterhours
Notable movers by sector:
- Consumer discretionary: Intime Department Store Group Co 1833.HK -2.8% (Q1 result); Skylark Co 3197.JP -7.3% (March result); McDonald's Holdings Co Japan 2702.JP +0.8% (March result)
- Financials: Greentown China 3900.HK -1.0% (March result); Shanghai Pudong Development Bank 600000.CN -1.1% (FY15 result)
- Industrials: Great Wall Motor 2333.HK -0.8% (March result); Virgin Australia VAH.AU +2.0% (Singapore Airlines buys 6.8M share stake)
- Technology: ZTE Corp 763.HK -8.3% (FY15 results and US investigation); Samsung Electronics 005930.KR -1.6% (prelim Q1 result)
- Materials: Chongqing Iron & Steel Co. 601005.CN +1.1% (set up JVs); St Barbara SBM.AU +0.5% (raises guidance)