Asian Market Update: Risk assets extend rally on strong China trade components
***Economic Data***
- (CN) CHINA MAR TRADE BALANCE (CNY TERMS): 194.6B V 203.7BE; Exports (CNY) Y/Y: +18.7% v +14.9%e (1st rise in 9 months); Imports (CNY) Y/Y: -1.7% v -4.8%e
- (AU) AUSTRALIA APR WESTPAC CONSUMER CONFIDENCE INDEX: 95.1 V 99.1 PRIOR, M/M: -4.0% V -2.2% PRIOR
- (JP) JAPAN MAR M2 MONEY STOCK Y/Y: 3.2% V 3.1%E; M3 MONEY STOCK Y/Y: 2.6% V 2.5%E
- (JP) JAPAN MAR PPI M/M: -0.1% V 0.0%E; Y/Y: -3.8% V % -3.5%E
- (NZ) NEW ZEALAND MAR FOOD PRICES M/M: +0.5% V -0.6% PRIOR
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE UNCHANGED AT 3.50%; AS EXPECTED
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +2.4%, S&P/ASX +1.3%, Kospi +0.6%, Shanghai Composite +2.1%, Hang Seng +2.4%, Jun S&P500 +0.3% at 2,060
***Commodities/Fixed Income***
- Apr gold -0.6% at $1,254/oz, May crude oil -0.9% at $41.78/brl, May copper +0.5% at $2.16/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 815.1 tonnes
- (US) Weekly API Oil Inventories: Crude: +6.2M v -4.3M prior; largest build in 3 weeks
- (CN) China MoF sells 5-yr bonds at yield 2.58% v 2.50%e; bid-to-cover ratio 1.73x
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4591 V 6.4616 PRIOR; strongest Yuan setting since Apr 1st; 3rd straight firmer setting
- (CN) PBOC to inject CNY40B in 7-day reverse repos
- (JP) BOJ offers to buy ¥350B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥450B in 5-10yr JGBs
- (AU) Australia sells A$900M in 4.75% 2027 bonds; Avg yield 2.5657%; Bid-to-cover 2.79x
***Market Focal Points/FX***
- Risk appetite on display in US hours that was fanned by dovish comments from Feds Kaplan and recovering inflation prints in Europe has carried over to Asia, where Chinese trade components signify some improvement in global conditions. Although the terms of trade missed expectations, China exports rose for the first time in 9 months while the decline in imports was much less than expected in both CNY and USD term. Imports of iron ore, copper, and crude oil all saw sequential increases. In the wake of the release, Shanghai Composite approached a 3-month high of 3,100, AUD/USD hit a 2-week high above $0.77, copper spiked up to 2-week high of $2.18, and USD/JPY tested 109 handle in an apparent confirmation of a double-bottom.
- Australia's basic materials / metals led the rally in Sydney with China's Dalian iron ore futures up some 5%, though Fortescue Metals was particularly strong on a slight y/y increase in shipments during Q3. FMG also maintained its FY16 capex forecast. Westpac consumer confidence was a dud, particularly in light of a strong NAB business index overnight, registering its 2nd straight sub-100 print. Resident economist said the recent rise in AUD could generate headwinds to economic transition from mining to services sectors such as tourism.
- Flows from US bonds into equities has helped the dollar to recover against Japanese Yen - a relief to some of the recent worries in Tokyo about adverse FX volatility. After the IMF cut global economic forecasts overnight, Dep MD Furusawa remarked that Yen moves are not deviating significantly from IMF assessment, adding that future BOJ rate cuts will likely have limits. Furusawa added that fiscal stimulus is the preferred policy action in Tokyo, though also recognizing the positive aspect of negative interest rate policy. BOJ's Harada also chimed it, stating the recovery remains weak, consumption is flat, and GDP rise in Japan is slight. Harada added that prices are still expected to rise as the impact of lower oil dissipates, calling for companies to raise wages in response to improved profits.
***Equities***
US equities / ADRs:
- MDVN: Reportedly rebuffs takeover effort from Sanofi - press; +8.5% afterhours
- CSX: Reports Q1 $0.37 v $0.37e, R$2.62B v $2.73Be; +0.4% afterhours
- VRX: Bond investor Centerbridge reportedly has notified company it intends to call a default - press; -3.9% afterhours
Notable movers by sector:
- Consumer discretionary: Chow Tai Fook Jewellery Group 1929.HK +1.0% (Q4 result); Takashimaya Co 8233.JP -6.1% (FY15/16 result)
- Financials: Shenzhen Investment 604.HK -0.3% (Mar result); Greenland Hong Kong 337.HK +2.0% (YTD result); Investa Office Fund IOF.AU -1.0% (Cromwell Property's acquisition)
- Materials: Sinopec Yizheng Chemical Fibre Co 1033.HK +2.4% (Q1 guidance); Fortescue Metals Group FMG.AU +7.4% (Q1 production)