General Trend:
- Tourism-sensitive stocks in Japan decline after the government’s recently announced quarantine measures
- Early decliners in Shanghai include property, financial and IT companies
- Decliners in Hong Kong include property developers and airlines
- Financial sector leads declines in Australia
- Government bond yields move lower in Asia as equities decline; US 10 and 30-year Treasury yields decline to record lows; China 10-yr yield hits lowest since 2002.
- China is scheduled to release Jan-Feb trade data on March 6-7th (US time)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.4%
- (AU) AUSTRALIA JAN RETAIL SALES M/M: -0.3% V 0.0%E
- (NZ) NEW ZEALAND Q4 VOLUME OF ALL BUILDINGS Q/Q: -0.8% V +0.6%E
- (AU) IMF Article IV consultation: Sees Australia 2020 GDP at 2.0%, noting economy is at risk from US China trade war picking up against, sharp tightening of global financial conditions and coronavirus
- NEU.AU Reports compelling results from dose ranging study of NNZ-2591 in a model of Phelan-McDermid syndrome
- (AU) Australia PM Morrison: Announces joint partnership with states to share healthcare costs related to coronavirus, estimates total cost at A$1.0B
Japan
- Nikkei 225 opened -1.5%
- (JP) JAPAN JAN LABOR CASH EARNINGS Y/Y: 1.5% V 0.2%E; REAL CASH EARNINGS Y/Y: +0.7% V -0.6%E
- (JP) Japan Jan Household Spending y/y: -3.9% v -4.0%e (4th consecutive decline, longest run of declines since 2018)
- 5411.JP CFO: likely to reorganize in next FY20/21, virus outbreak putting pressure on supply chains and increasing market turmoil
- 3382.JP Abandoning Marathon’s Speedway acquisition citing that price was too high – financial press
- (JP) Bank of Japan (BOJ) May take steps to ease financial strain on companies impacted by coronavirus – financial press
- (JP) Japan Feb Official Reserve Assets: $1.359T v $1.342T prior
- (JP) Japan Jan Preliminary Leading Index CI: 90.3 v 91.1e; Coincident Index: 94.7 v 94.1e
Korea
- Kospi opened -1.5%
- (KR) South Korea considering corresponding steps on Japan quarantine measures, South Korea to summon Japan ambassador over the quarantine plan, urges Japan to retract plan – Yonhap
- (KR) South Korea Coronavirus update for last 24-hours: 518 additional cases, total 6,284; death toll 42
- (KR) South Korea says its President Moon exchanged letter with North Korea leader Kim, Kim sent his condolences over coronavirus – Yonhap
- (KR) South Korea Fin Min Hong: Reiterates will take steps on the markets if needed, including preemptive steps in FX
China/Hong Kong
- Hang Seng opened -1.4%; Shanghai Composite opened -1.0%
- (CN) China National Health Commission Coronavirus Update for March 5th: 143 additional cases v 149 prior; Additional deaths 30 v 31 prior; Hubei: 126 additional cases v 134 prior; additional deaths 29 v 31 prior
- (CN) China PBOC sets Yuan reference rate: 6.9337 v 6.9403 prior
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 14th consecutive session, Net CNY0B v CNY0B prior
- (CN) China Commerce Ministry (MOFCOM) official: China’s consumption rebounded in late Feb, consumer market shows positive change recently; Weak global trade in Q1 to pose external pressure (overnight)
- 303.HK Anticipates seeing a loss of approx 1/3 of production capacities in mainland China in first 3 months of 2020, sees China factories returning to normal output in April
North America
- (US) Fed’s Kaplan (dove, voter in 2020): Will be watching the path of diagnosed coronavirus cases and will factor that into the March FOMC meeting decision; Coronavirus increasing risks to outlook, situation around the virus has changed meaningfully over recent weeks; Fed move this week can help offset tighter financial conditions
- (US) Fed’s Kashkari (dove, FOMC voter): Tuesday rate cut was insurance, if virus is really bad we may need to do more
- (US) Fed’s Williams (moderate, voter): Fed rate cut will provide meaningful support to the economy, positions the Fed well to support expansion; Will be flexible with money market interventions
- AMD CEO: Guides Q1 Rev may be in lower part of prior range, but not changing guidance (prior Rev $1.8B +/-$50M v $1.80Be); consumer demand is weaker in China but elsewhere is OK – investor day
- SBUX Issues update on coronavirus situation; expects adverse impact on China results of $0.15-0.18 and $400-430M to revenue in Q2 FY20 versus prior expectations; China Feb SSS -78% y/y – filing
- AMD Provides long-term financial targets; Rev ~20% CAGR, gross margin >50%, operating margin mid-20%s, FCF margin >15% – investor day
- COST Reports Q2 $2.10 v $2.07e, Rev $38.3B v $38.4Be; Sees Feb sales benefit of ~3% from coronavirus concerns
- (US) California trade association: Coronavirus is causing a backlog of exports to Asia at US ports; some China-bound meat shipments are being temporarily diverted to other countries – press
- JPM CEO Dimon had emergency heart surgery today, he is awake and recovering well after the surgery
- (US) US Vice President Pence: Trump will sign coronavirus funding bill into law on Friday; there are at least 150 coronavirus cases in the US now (70 in Washington State)
- (US) Barclays Issues Investor Guidance on the iPath US Treasury 10-year Bear ETN (Ticker: DTYS), iPath US Treasury Long Bond Bear ETN (Ticker: DLBS) and Barclays Inverse US Treasury Composite ETN (Ticker: TAPR)
Europe
- (UK) BoE Carney: BoE will take all necessary steps to support UK economy and financial system through coronavirus outbreak
Levels as of 00:20 ET
- Nikkei 225, -3.1%, ASX 200 -2.8%, Hang Seng -2.4%; Shanghai Composite -0.9%; Kospi -2.3%
- Equity Futures: S&P500 -1.4%; Nasdaq100 -1.4%, Dax -1.1%; FTSE100 -0.8%
- EUR 1.1248-1.1211 ; JPY 106.34-105.83 ; AUD 0.6624-0.6584 ;NZD 0.6322-0.6291
- Gold +0.2% at $1,671/oz; Crude Oil -0.8% at $45.52/brl; Copper -0.3% at $2.560/lb
