China retail sales growth disappoints while industrial output and asset investment top forecasts
US Session Highlights
(US) President Trump to meet with auto execs in Detroit on Weds regarding review of vehicle emissions regulations – press
(LY) Libya crude output said to have declined to 609K bpd from 620K bpd on Friday – press
(KW) Kuwait govt would support extension of OPEC cuts agreement past June, but it’s still early for a decision from OPEC – Kuwaiti press
(US) Atlanta Fed confirms selecting Raphael Bostic as new president to replace Dennis Lockhart; to take office June 5th – press
(US) New York Fed Consumer Expectations Feb survey: 1 -year food inflation forecast is at record low of 4.4%
US markets on close: Dow -0.1, S&P500 flat, Nasdaq +0.2%
Best Sector in S&P500: Materials
Worst Sector in S&P500: Healthcare
Biggest gainers: CTXS +6.8%, WYNN +4.8%, DPHI +4.0%, CPK +3.5%, RIG +2.9%
Biggest losers: URBN -3.8%, AAL -3.5%, UAL -3.4%, GPS -3.0%, NRG -3.0%
At the close: VIX 11.4 (-0.3 pts); Treasuries: 2-yr 1.38% (flat), 10-yr 2.61% (+3bps), 30-yr 3.19% (+2bps)
US movers afterhours
RT: Reports prelim Q3 R$225.7M (no ests), SSS -4.0%; To Explore Strategic Alternatives; +17.8% afterhours
PPHM: Reports Q3 -$0.04 v -$0.03e, R$10.7M v $14.0Me; -8.9% afterhours
VRX: Pershing Square sold its entire 27.2M share stake at $11.00/shr and Ackman to leave the board; -9.7% afterhours
TLYS: Reports Q4 $0.22 v $0.21e, R$160.2M v $160Me; Guides Q1 -$0.15 to -$0.07 v -$0.04e; SSS to decrease by a low to mid single-digit percentage; -12.5% afterhours
Politics
(US) CBO scores American Health Care Act (AHCA): 14M more people would be uninsured in 2018 and 24M more by 2026
(US) Speaker Ryan (R-WI): recognizes concerns about access to health care coverage following CBO report
(FR) France former PM Valls planning to endorse Macron – French press
Asia Key economic data:
(CN) CHINA JAN-FEB RETAIL SALES Y/Y: 9.5% V 10.6%E (multi-year low)
(CN) CHINA JAN-FEB INDUSTRIAL PRODUCTION Y/Y: 6.3% V 6.2%E (6-month high)
(CN) CHINA JAN-FEB FIXED ASSETS EX RURAL YTD Y/Y: 8.9% V 8.3%E (8-month high)
(AU) AUSTRALIA FEB NAB BUSINESS CONFIDENCE : 7 V 10 PRIOR; CONDITIONS: 9 (3-month low) V 16 PRIOR
(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.1 v 113.9 prior
Asia Session Notable Observations, Speakers and Press
Asia equity markets are seeing compressed volatility as the quiet before the Wednesday FOMC decision envelops sentiment. Oil remains under pressure near 3-month lows, while US airline stocks hit some turbulence ahead a massive snowstorm bearing down on the northeast. Dollar majors were similarly contained in narrow ranges – AUD/USD saw the most notable decline after a retreat in NAB business confidence/conditions from multi-month highs last month.
Jan-Feb economic data from China were the key risk events for the session, coming in mixed. Retail sales growth disappointed with a multi-year low of 9.5%, despite recent comments from Beijing that economy is making progress in transition to consumption-driven growth. Industrial output rise hit a 6-month high however, with 6.3% increase in power generation, 5.8% rise in crude steel production, and 8% decline in crude oil output. Fixed Asset investment hit an 8-month high rate of growth, driven by 8.9% rise in property investment amid 26% increase in property sales value. Speaking after the data release, NBS noted business environment is still much better as fundamentals of economy are improving. Stats bureau also noted consumption will remain stable this year and CPI will rebound after last month’s surprise decline.
NAB business conditions hit a 3-month low after printing a 9-year high last month. NAB noted it is more concerned about the longer term picture as contributions from LNG exports and construction activity fade, forecasting another RBA rate cut this year.
Japan’s Toshiba was down over 7% after press reports swirled that the company will again delay earnings that were expected out today as auditing firms compute the impact of Westinghouse write-down. Shares were off their lows late in the day, as the company affirmed delay in Q3 release but also affirmed write-down amount of ¥712.5B and disclosed consideration for sale of overseas nuclear operations.
China
(CN) China Stats Bureau (NBS): Fundamentals of real economy are improving, business environment much better than this time last year; PPI may have peaked in Feb
(CN) PBoC Official: seeing slower home mortgage growth – Chinese press
Japan
(JP) Japan Fin Min Aso: Financial regulations and taxation will be topics at G20; plan to explain Japan’s economy and listen to others opinions
Australia
(AU) RBA Assistant Gov Bullock: Calming effect of tighter rules on housing lending might be fading; ready to impose more restrictions if necessary to head off risks in the market
Korea
(CN) China military plans to counter THAAD deployment in South Korea with anti-radar equipment – Chinese press citing former deputy commander of China’s Nanjing Military Region
(KR) South Korea Ministry of Employment and Labor: Feb manufacturing jobs fell 1.7K to 3.58M, declining for 3rd straight month – Korean press
(KR) South Korea Finance Ministry: Prepared to take market stabilizing measures in the event of volatility following Fed meeting – press
Asian Equity Indices/Futures (00:00ET)
Nikkei -0.1%, Hang Seng +0.1%, Shanghai Composite +0.1%, ASX200 -0.1%, Kospi +0.7%
Equity Futures: S&P500 -0.1%; Nasdaq flat, Dax flat; FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.0645-1.0660; JPY 114.75-115.00; AUD 0.7550-0.7575; NZD 0.6910-0.6930
Apr Gold flat at $1,203/oz; Apr Crude Oil +0.1% at $48.43/brl; May Copper +0.2% at $2.63/lb
SPDR Gold Trust ETF daily holdings rise 6.8 tonnes to 832.0 tonnes; first rise since Mar 2nd
(CN) China to cut retail gasoline and diesel prices by CNY85/tonne, effecitve March 31st
USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.9118 V 6.8988 PRIOR
(CN) PBOC to inject combined CNY40B v CNY30B prior in 7,14, and 28-day reverse repos
(JP) Japan’s MoF sells ¥1.0T in 0.7% (0.6% prior) 20-year JGBs; Avg yield: 0.673% v 0.669% prior; bid-to-cover: 3.78x v 4.05x prior
(AU) Australia sells A$150M in 2.5% inflation indexed 2030 bonds; avg yield 1.1256%; bid-to-cover 3.37x
Asia equities / Notables / movers by sector
Consumer discretionary: BGR.NZ Briscoe Group +0.2% (FY16 result); DMP.AU Domino’s -3.8% (Citi cuts to rating); 7733.JP Olympus Corp +0.6% (Macquarie raises rating)
Financials: 604.HK Shenzhen Investment +2.9% (Feb result); ABP.AU Abacus Property Group -1.0% (Shaw & Partners cuts rating)
Industrials: 3399.HK Guangdong Yueyun Transportation Co -5.4% (FY16 result); 7011.JP Mitsubishi Heavy Industries +5.9% (considers spinoff); 5108.JP Bridgestone Corp -1.1% (Daiwa cuts rating)
Technology: 6502.JP Toshiba Corporation -7.3% (delays earnings)
Materials: 2233.HK West China Cement -0.9% (FY16 result); BKW.AU Brickworks +6.8% (Raises at Bell Potter); FMG.AU Fortescue +1.5%, RIO.AU Rio Tinto +0.7%, BHP.AU Billiton +0.7% (iron ore rises); 2168.HK Yingde Gases -1.6% (Origin water sold stake)
Energy: ORG.AU Origin Energy +2.7% (Credit Suisse raises rating)
Healthcare: 1177.HK Sino Biopharmaceutical -4.2% (FY16 result)
