US Equity FUTs Trade Limit Down As Fed Announces Zero Rates And Asset Purchases

General Trend:

• Early decliners in Shanghai include Telecom Services and IT firms, property index rises
• Telecom ZTE declines 10% in China, US said to investigate the company for alleged bribery
• Australian banks decline by over 8% as RBA said it stands ready to purchase gov’t bonds; Consumer Discretionary and Energy names in Australia also drop by over 8%
• RBA and RBNZ comment on QE; RBNZ Gov said some domestic banks were not ready for negative interest rates
• BOJ increases planned purchases of ETFs, corporate bonds and commercial paper (as speculated) at emergency policy meeting, will no longer hold regularly scheduled meeting on March 18-19th
• Fed Chair Powell reiterated his opposition to negative rates, after Fed again held emergency meeting and cut rates 150bps and announced additional asset purchases
• Large global central banks announced a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.
• G7 expected to hold video conference call at 14:00 GMT
• US retailers and casino operators announce temporary closures on coronavirus impact

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -1.3%
• (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE (OCR) BY 75BPS TO 0.25% (OUT OF SCHEDULE MEETING); delays higher capital requirement for banks; OCR to remains at 0.25% for at least a year
• (NZ) New Zealand Fin Min Robertson: A multi-billion dollar fiscal package will be announced March 17th, govt is working closely with Treasury and RBNZ; RBNZ steps are welcome support for the economy
• (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Our mandate remains the same; not considering negative rates, QE would be most effective tool for more stimulus – (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Gov Bascand: Expect severe impact on the economy, and spill into business failures and job losses
• (AU) Reserve Bank of Australia (RBA): To conduct 1-month, 3-month operations until further notice and 6-months or longer as least weekly; until further notice
• (AU) Reserve Bank of Australia (RBA) adds A$5.9B to banking system through market repo operations
• AIR.NZ Announces further reduction to capacity by 85% over the next few months, will operate on minimal schedule; warns that layoffs are likely
• (AU) Australia Council of Financial Regulators (CFR): Substantial financial buffers are available to be drawn down if required to support the economy; meeting with major lenders later this week on support
• (AU) RESERVE BANK OF AUSTRALIA (RBA) STANDS READY TO PURCHASE AUSTRALIA GOVT BONDS; WILL ANNOUNCE FURTHER POLICY MEASURES THURSDAY
• (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: Rate cut and other measures announced give bank sufficient time to reassess situation; stopping at 0.25% gives signal that RBNZ is not looking to go to zero or below; will not announce a limit of cap on any particular unconventional tool
• (NZ) Reserve Bank of New Zealand (RBNZ) Chief Economist Yuong Ha: bond purchase program to be ready for May if needed; would like to set weekly or monthly purchase targets

Japan

• Nikkei 225 opened +0.9%
• (JP) BANK OF JAPAN (BOJ) LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED FROM -0.10%; DOUBLES PURCHASES OF ETF AND J-REIT PURCHASES (intra-meeting move)
• (JP) There is speculation that the government of Japan may cut the fixed-asset tax for small firms – Japanese press
• (JP) JAPAN JAN CORE MACHINE ORDERS M/M: +2.9% V -1.0%E; Y/Y: -0.3% V -1.1%E
• (JP) Japan PM Abe: G7 video conference to be held starting at 23:00JST (14:00GMT)
• (JP) Japan Cabinet Office (Govt) March Monthly Economic Report: downgrades assessment (as expected)
• (JP) Japan PM Abe: Govt will inject “necessary and sufficient” funds into the economy and use “unprecedented ideas” to bring back growth – Nikkei
• (JP) Japan PM Abe: Will take economic policies that carry a strong message with firm commitment – responding to question about lowering sales tax; Will compile additional virus support measures this week – speaking from parliament
• 5423.JP Cuts April Hot rolled prices to ¥62.0K from ¥67K; Cuts H-beam prices to ¥76.0K from ¥83K
• (JP) Japan Health Ministry notes ‘cluster’ injections of coronavirus identified in 15 locations around Japan – local press

Korea

• Kospi opened +1.9%
• (KR) South Korea Vice Fin Min Kim: To take stern and quick steps in case of one sided moves, to strengthen FX liquidity checks to stabilize swaps
• (KR) South Korea reports 74 additional coronavirus cases in 24-hours; No new deaths (1st time since Feb 15th); total cases 8,236
• (KR) Bank of Korea (BOK) sells 6-month Monetary Stabilization Bonds (MSBs): yield 0.900% v 1.10% prior
• (KR) South Korea sells 10-year bonds; avg yield 1.525% v 1.665% prior

China/Hong Kong

• Hang Seng opened -3.0%; Shanghai Composite opened +0.3%
• (CN) CHINA PBOC CUTS RESERVES RATIO REQUIREMENT (RRR) BETWEEN 50-100BPS IN A TARGETED RESPONSE; RRR cut to unleash CNY550B to banking system; effective Monday, Mar 16th (Friday)
• (CN) CHINA FEB NEW HOMES PRICES M/M: 0.0% V 0.3% PRIOR; Y/Y: 5.8% V 6.3% PRIOR
• (CN) CHINA FEB INDUSTRIAL PRODUCTION YTD Y/Y: -13.5% V -3.0%E (1st decline since Jan 1990)
• (CN) CHINA FEB FIXED URBAN ASSETS YTD Y/Y: -24.5% V -2.0%E
• (CN) CHINA FEB RETAIL SALES YTD Y/Y: -20.5% V -4.0%E
• (CN) China Feb Property Investment YTD y/y: -16.3% v 9.9% in Dec
• (CN) China Feb Surveyed Jobless Rate: 6.2% v 5.2% prior
• (CN) China Stats Bureau Mao Shengyong: Jan-Feb negatively impacted by coronavirus; Still confident of achieving 2020 economic growth target; will beef up macro policy to counter shocks; key targets for 2020 economic recovery and anti-poverty; need to wait for 2 sessions for 2020 economic targets
• (HK) Hong Kong Monetary Authority (HKMA) cuts base rate 64bps to 0.86%
• (CN) China National Health Commission Coronavirus Update for March 15th: 16 additional cases v 11 March 13th; Additional deaths: 14 v 13 March 13th; Hubei: 4 additional cases v 4 March 13; additional deaths: 14 v 13 March 13
• (HK) Hong Kong Feb Visitor Arrivals y/y: -96% v -53% prior
• (CN) China PBOC monetary policy department chief Sun Guofeng: PBOC will continue to take a variety of measures to promote a decline in loan interest rates, and to support the resumption of production and economic development – SCMP
• (CN) China PBOC sets Yuan reference rate: 7.0018 v 7.0033 prior -(HK) Hong Kong Monetary Authority (HKMA): Will continue to monitor market situation after Fed cut, to ensure HKD stability under currency peg
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 19th consecutive session, Net CNY0B v CNY0B prior
• (CN) CHINA PBOC CONDUCTS CNY100B V CNY200B PRIOR IN 1-YEAR MEDIUM TERM LENDING FACILITY (MLF) OPERATIONS AT 3.15% V 3.15% PRIOR
• 763.HK Being investigated by the US for alleged bribery – press

Other

• ARAMCO.SA Reports FY19 Net $88.2B v $111.1B y/y; Guides FY20 Capex $25-30B v $32.8B y/y
• (TW) Taiwan government may support the local stock market if the Taiex declines to near the 9,000 level – US financial press
• (PH) Philippines Central Bank Gov Diokno: 25bps cut is “most certainty and can certainly go higher”

North America

• (US) FEDERAL RESERVE CUTS FED FUNDS RANGE 150BPS TO 0.00-0.25%; (FOLLOWING UNSCHEDULED MEETING); To increase Treasury holdings by at least $500B, Mortgage Backed Securities (MBS) by $200B
• (US) Fed Chair Powell: Coronavirus is having a profound effect on people in the US; expect to maintain rate near zero until economy improves, do not see negative rates likely; CPI, inflation likely to be held down this year by virus; Bond buying will foster more accomodative conditions – post rate decision press conference; Today’s meeting was held in place of scheduled meeting for Monday,-Tuesday March 16-17th
• (US) President Trump: Markets should be thrilled by Fed rate cut; take it easy on panic grocery buying
• (US) New York City (NYC) Mayor De Blasio: Declares state of emergency, makes it illegal for large gatherings; All schools to be closed starting Monday; Will attempt to reopen schools April 20th, but its possible schools may not reopen this year; will teach teachers how to teach remotely this week
• (US) Financial Services Forum member institutions are Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, State Street, and Wells Fargo to suspend buybacks through Q2 – press
• (US) President Trump has tested negative for coronavirus – press
• UAL Guides March Rev to decline by $1.5B y/y; To cut April and May capacity by 50%; Expects load factors to decline into the 20-30% range
• (US) CDC: Recommends all gatherings over 50 people be postponed, the recommendation is for the next 8 weeks

Europe

• (EU) ECB’s Weidmann (Germany): ECB action helps secure reliable access to US dollar; joint action shows central banks act responsibility
• (UK) Bank of England (BOE): UK banks will be able to withstand severe market disruption
• (EU) ECB to offer weekly dollar operations with 84-day maturity
• (IT) Italy Fin Min Gualtieri: Italy to spend €25B on coronavirus relief
• (IT) Italy Cabinet is due to meet on virus measure decree on Monday at 9 AM local time (8 GMT)
• (CH) Swiss banks said to be considering a $21B program to help small businesses impacted by coronavirus – Swiss press
• (UK) UK March Rightmove House Prices M/M: 1.0% v 0.8% prior; Y/Y: 3.5% v 2.9% prior
• LHA.DE Said to seek a loan from Germany’s state-run Kreditanstalt fuer Wiederaufbau bank; govt could also purchase a stake in Lufthansa as part of a rescue plan – financial press
• (FR) France considering confinement order to fight coronavirus – press

Levels as of 1:15ET

• Hang Seng -3.2%; Shanghai Composite -1.2%; Kospi -1.2%; Nikkei225 +0.5%; ASX 200 -9.7%
• Equity Futures: S&P500 -4.8%; Nasdaq100 -4.6%, Dax -7.9%; FTSE100 -2.4%
• EUR 1.1200-1.1077; JPY 107.56-105.75; AUD 0.6306-0.6097; NZD 0.6153-0.6012
• Commodity Futures: Gold +1.8% at $1,543/oz; Crude Oil -1.9% at $31.51/brl; Copper -2.5% at $2.44/lb