Asian Mid-session Update: Shanghai Composite hits 6-year high as Premier Li signal more stimulus in the pipeline
***Economic Data***
- (CN) China Ministry of Finance (MoF): China Jan-Feb Fiscal Rev CNY2.57T, +3.2% y/y, Fiscal Spending CNY1.89T, +10.5% y/y
- (AU) AUSTRALIA FEB NEW MOTOR VEHICLE SALES M/M: +2.9% V -1.9% PRIOR; Y/Y: 4.1% V +0.2% PRIOR
- (NZ) NEW ZEALAND FEB PERFORMANCE SERVICES INDEX: 55.6 V 57.8 PRIOR
- (UK) UK MAR RIGHTMOVE HOUSE PRICES M/M: 1.0% (3-month low) V 2.1% PRIOR; Y/Y: 5.4% V 6.6% PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.1%, S&P/ASX -0.3%, Kospi +0.1%, Shanghai Composite +1.0%, Hang Seng +0.2%, Jun S&P500 -0.1% at 2,041
***Commodities/Fixed Income***
- Apr gold flat at $1,158/oz, Apr crude oil -1.5% at $44.32/brl; May copper flat $2.67/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.3 tonnes to 750.7 tonnes; Lowest since Jan 26th
- (KR) South Korea sells KRW1.06T in 10-yr govt bond, avg yield at 2.350%, bid-to-cover: 3.25x
***Market Focal Points/FX***
- Asian indices traded mixed to flat with the exception of the mainland, where Shanghai Composite set fresh 6 1/2-year highs above the key 3,400 level. Outsized gains are attributed in large part to China Premier Li who warned that achieving 7% GDP target will be challenging but also added there is "relatively big" room for policy response since the more recent "short term" policies were not particularly strong. Outside of casting a wide safety net, Li expressed determination to tackle pollution, called on Japan to take responsibility for its history in order to repair China relationship, and promised to address housing shortage with 1M new affordable units. Outside of the Li comments, CSRC spokesperson welcomed China pension funds' push to invest funds directly in the stock market, while the NEA reported Jan-Feb YTD power consumption slowing to 2.5% from 3.8% for the entire 2014.
- USD majors are in particularly narrow ranges in the absence of meaningful economic data over the weekend and going into the crucial FOMC policy statement on Wednesday. EUR/USD opened below 1.0480 before rising above 1.0520, USD/JPY traded in 121.25-45 range, and AUD/USD tracked the morning session recovery from early lows to trade up about 50pips above 0.7650. Note that the latest CFTC data showed speculators have built up a record net short position in the Aussie.
- In Europe, Greek Fin Min Varoufakis noted that the Syriza govt may be willing to compromise its promises to the electorate in order to build up trust with its creditors and justifying the decision by pointing to the 4-year timeframe for the promised program. PM Tsipras also parried earlier German press reports claiming Greek civil servants should brace themselves for downsized salaries and pensions this month, stating there were absolutely no problem with liquidity in Greece.
- In Russia, Friday's rumors that Kremlin requested for media to stay put for the weekend in the absence of President Putin proved to be inaccurate. While there was still no resurfacing by the Russian leader, press reports indicated he was either treated for a flu or for back pain. Kremlin spokesperson also said the topic related to his mysterious disappearance is "closed." In Ukraine, Pres Poroshenko declared the ceasefire with pro-Russia rebels is "not working" as rebels continue to attack government positions on a daily basis, "often more than 60 times a day". Oil prices took an early tumble below $44/brl in electronic trade but quickly pared those loses. Saudi advisor al-Muhanna said it was too early to say if OPEC will keep production unchanged at its next meeting, adding prices are stabilizing around $60/brl and demand was strengthening.
***Equities***
US markets:
- GE: Vrde Partners, KKR and Deutsche Bank Consortium Purchase GE Capital's Consumer Finance Business in Australia and New Zealand for A$8.2B
- WBA: To join the NASDAQ-100 Index prior to market open on March 23, replacing EQIX
- EQIX, SLG, HBI and HSIC added to S&P500; CELG, KMI, ACT added to S&P100
Notable movers by sector:
- Consumer Discretionary: FAW Car 000800.CN -2.2%, Tianjin FAW Xiali Automobile 000927.CN -1.7% (chairman probed)
- Financials: Evergrande Real Estate Group 3333.HK +2.1% (FY14 guidance)
- Materials: Toyo Tire & Rubber 5105.JP -11.5% (speculation on falsified performance data)
- Energy: Beach Energy BPT.AU -4.0%, Woodside Petroleum WPT.AU -2.3% (crude trades lower)
- Utilities: Energy Developments ENE.AU +3.9% (shareholder raises stake)