Asia Market Update: China sets 2018 GDP growth forecast in line with market speculation; reiterates current monetary and fiscal policy stances, pledges to cut taxes for businesses
***Headlines/Economic Data***
General Trend: Asian equities trade mostly lower as steel makers remain weaker
-Euro rises then pares gains amid release of Italy election results: No majority is expected (in line with prior market speculation), while support for Five Star Party rises
-Precious metals outperform in the commodities space: Silver gains over 1%
-Tuesday is a busy day for Australia: Q4 Current Account and Net Export Contribution expected to be released, along with Jan Retail sales and RBA decision
-Japan bond yields decline amid drop in Treasury yields and rise seen on Friday after BoJ Gov Kuroda’s remarks
-USD/JPY declines ahead of upcoming BoJ confirmation hearings
-US Feb Nonfarm Payrolls and Avg Hourly Earnings data due for release on Friday, March 9th
Australia/New Zealand
-ASX 200 opened flat: closed -0.7%
-ASX 200 Utilities Index -2.3%, Materials -1.2%, Resources -1.1%, Financials -1%
-Retail Food Good [RFG.AU]: Drops over 35% after reporting H1 impairment losses and declining to provide FY outlook
-(AU) Australia Jan Building Approvals M/M: 17.1% v 5.0%e; Y/Y +12.0% v -0.6%e
-(AU) Australia Q4 Company Operating Profit Q/Q: 2.2% v 1.5%e; Inventories Q/Q: 0.2% v 0.5%e
-(NZ) New Zealand Treasury: Expects jobless rate to be broadly flat in 2018; evaluating several ways to estimate natural rate of unemployment
China/Hong Kong
-Shanghai Composite opened flat, Hang Seng -0.2%
-Hang Seng Telecom Index -1.8%, Financials -1.2%, Services -1.1%
-Shanghai Composite Property Index rises over 1%, then pares some of gain
-China Mobile [941.HK]: Declines over 2% as China announced plans to cut mobile internet rates and cancel mobile internet roaming fees.
-(CN) China Feb Caixin PMI Services: 54.2 v 54.3e (first m/m decline since Sept); Composite: 53.3 v 53.7 prior
-(CN) PBOC SETS YUAN REFERENCE RATE AT 6.3431 V 6.3334 PRIOR
-(CN) China PBoC Open Market Operation (OMO): Skips v CNY90B injected combined in 7-day, 28-day and 63-day reverse repos prior: Net drain CNY100B v CNY20B drain prior
-(CN) China sets 2018 GDP growth target around 6.5% v 6.9% growth rate in 2017 (as speculated); to maintain 'prudent and neutral' monetary policy and 'proactive' fiscal policy in 2018 – Xinhua
-(CN) China commented on fiscal policy measures for 2018: To adjust minimum wage reasonably; To reduce tax in manufacturing and transportation industries; To cut taxes for enterprises and individuals by CNY800B; To cap end of 2018 outstanding sovereign bonds at CNY15.7T.
-(CN) China commented on plans for property market in 2018: To push forward property tax legislation.
-(CN) China comments on trade policy for 2018: Expects trade to show good trend amid stable development; To lower import tariffs on vehicles and consumer goods
Japan
-Nikkei225 opened -0.6%; closed: -0.7%
-TOPIX Iron & Steel Index -2.2%, Real Estate -2.1%, Electric Appliances -1.8%, Securities -1.6%
-Japan mega-banks trade broadly lower
-Steel and Auto Manufacturers extend losses amid trade protectionism concerns
-Nikkei weighted Fast Retailing gains over 1% after reporting Feb domestic SSS +5.1% y/y
-Japan Feb Services PMI: 51.7 v 51.9 prior; Composite: 52.2v 52.8 prior
- Bank of Japan (BoJ) Dep Gov Nominee Wakatabe: Expects continued monetary easing to push up real wages; notes inflation is distant from 2% target and that Japan not fully out of deflation
- BoJ Dep Gov Nominee Amamiya: Domestic economy making steady progress toward hitting BoJ's price goal; financial conditions have maintained stability
Looking Ahead: BoJ Gov Kuroda Upper House confirmation hearings set for Tuesday March 6th; The confirmation hearings for the Dep Gov Nominees (Amamiya and Wakatabe) set for March 7th
Korea
-Kospi opens +0.2%
-South Korea Finance Min: Reiterates not appropriate for government to intervene into Bank of Korea (BoK) interest rate decisions
- In related news, Bank of Korea (BoK) Gov Lee-Ju-yeol is said to be reappointed for another term as central bank gov, according to a report released on Friday, March 2nd; If Lee is reappointed it would be the first time since the 1970s that a BoK governor was appointed to a 2nd term.
-South Korea Special Envoy Chung: To deliver President Moon's strong will for denuclearization to North Korea [**Note: South Korea's President Moon is expected to send a special envoy to North Korea 'soon', said a local press report from March 1st]
-South Korea sells 3-year government bond: avg yield 2.34% v 2.275% prior
Other Asia
-(HK) Hong Kong Feb PMI: 51.7 v 51.1 prior
-(IN) India Feb PMI Services: 47.8 v 51.7 prior (1st contraction in 3 months)
-(SG) Singapore Feb PMI: 55.3 v 53.6 prior
North America
-XL Group [XL]: Reportedly Axa is in late stage talks to acquire XL Group – press
-Qualcomm [QCOM]: US Dept of Treasury CFIUS issues interim order to the company to postpone its March 6th annual stock holders meeting and postpone election of directors by 30 days
-Looking Ahead: OPEC reportedly schedules meeting with US shale producers in Houston on Monday, March 5th - press
Europe
-(IT) Italy Berlusconi led Centre-Right bloc seen leading 5-star in the Italian elections; suggests hung parliament (in line with final poll ahead of the elections from Feb 16th); Support rises for 5-Star party - exit poll
-(EU) EC Pres Juncker: we are preparing import duties on US products; Confirms preparing import duties on Levi's jeans, Harley Davidson motorcycles, and bourbon
-UAE Oil Min Al Mazrouei: No talks yet about extending OPEC production cut into 2019
***Levels as of 01:00ET***
- Hang Seng -1.4%; Shanghai Composite -0.2%; Kospi -0.9%
- Equity Futures: S&P500 -0.6%; Nasdaq 100 -0.5%, Dax -0.6%; FTSE100 -0.6%%
- EUR 1.2299-1.2365; JPY 105.41-105.69; AUD 0.7740-0.7776 ; NZD 0.7206-0.7251
- Feb Gold +0.3% at $1,327/oz; Feb Crude Oil +0.4% at $61.48/brl; Mar Copper -0.2% at $3.127/lb