General Trend:
- Shanghai Composite rises during morning session, banks rise as PBOC left rates unchanged
- Japan markets are closed today for holiday
- Kospi rises over 4% after declining by over 8% on Thursday; BOK and Fed announced FX swap agreement
- Sectors moving higher in Australia include Energy and Financials
- Aussie rises as RBA announced first bond purchases under QE program; Aussie bonds rise after volatility seen on Thursday’s session
- RBA purchased the maximum of A$5.0B in bonds in first QE operation (purchased bonds due in 2022, 2023, 2027 and 2028)
- USD/JPY drops amid holiday in Japan, Fed announced multiple currency swap agreements with central banks; California has issued statewide ‘shelter in place order’
- PBOC unexpectedly left its loan prime rates unchanged [also left the 1-year MLF rate unchanged on March 16th]
- PBOC fixed yuan reference rate at weakest level since March 2008
- South Korea said to be considering measures for commercial paper market (press)
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +1.5%
- (AU) Reserve Bank of Australia (RBA) purchases A$5.0B in 2-8-year bonds (1st bond buying operation)
- (NZ) Reserve Bank of New Zealand (RBNZ): Offering NZ$2.0B in 3 or 6 month term loans to banks via the TAF Facility
- (NZ) Reserve Bank of New Zealand (RBNZ) lends NZ$200M under prior announced NZ$2.0B TAF facility
- (AU) Reserve Bank of Australia (RBA) adds A$4.25B to banking system through repos v A$12.7B prior
- (NZ) Reserve Bank of New Zealand (RBNZ): committed to ensuring smooth market function; financial system remains sound
- VAH.AU CEO Joyce: Nationalizing Virgin would create an unfair advantage in the sector and reward Virgin for previous mismanagement – Aussie press
- (AU) Reserve Bank of Australia (RBA): Surplus cash at exchange settlement (ES) accounts at A$30.12B (record high) v ~A$18.8B prior
- (AU) Australian Banking Association: Banks to defer loan repayments for 6-months for small business amid coronavirus; banks to alos consider emergency relief for mortgages
- (AU) Australia Finance Ministry: To stop bond buybacks follow RBA announcement to buyback bonds (yesterday)
- TLS.AU Guides FY20 Underlying EBITDA at bottom end of guidance; will not announce any further job cuts over the next 6 months
- (AU) Reserve Bank of Australia (RBA) establishes $60B FX swap agreement with US Fed
- (AU) Australia PM: Will not hand down budget until Oct 6th [delayed from May 12th], idea that you can put together forecast around economy at this time is not sensible
- (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: we are already buying small amount of bonds to ease tension; RBNZ made it clear next stimulus tool is QE
Japan
- Nikkei 225 opened closed for holiday
- (JP) Japan Gov, ruling party and opposition all met yesterday to consider a “record breaking” stimulus package – Nikkei
- 7751.JP Canon Medical to begin development of a rapid genetic test for COVID-19 in partnership with Nagasaki University
- 9984.JP Said to be seeking $10B to shore up its vision fund, amid crisis – press
Korea
- Kospi opened +2.8%
- (KR) Bank of Korea (BOK): to immediately inject dollar liquidity to onshore markets using $60B bilateral currency swap with US
- 005380.KR Hyundai and Kia Motors both halt production in US and Europe due to coronavirus
- (KR) South Korea Feb PPI Y/Y: 0.7% v 1.1% prior
- 005930.KR Due to travel restrictions imposed by Vietnam, production of the newest Galaxy Note smartphones may be negatively impacted – Nikkei
- (KR) Bank of Korea (BOK) Gov Lee: Ready with all measures on the table; swap line with Feb expected to help stabilize FX markets
- (KR) South Korea reports 84 additional coronavirus cases in the last 24-hours; Total 8,652
- (KR) South Korea FSC: Banks have agreed to participate in KRW10T bond fund and will help expand it if needed
- (KR) South Korea met with brokerage firms on commercial paper – local press
China/Hong Kong
- Hang Seng opened +2.0%; Shanghai Composite opened +0.9%
- (CN) CHINA PBOC SETS 1-YEAR LOAN PRIME RATE (LPR) AT 4.05% V 4.05% PRIOR (4.00%E); SETS 5-YEAR LPR AT 4.75% V 4.75% PRIOR (4.70%E)
- (CN) PBoC adviser Ma Jun: Have relatively large room for further broad and targeted RRR cuts; Can ramp up open market operations if needed
- (HK) Macau cuts 2020 gaming Rev outlook to MOP130B due to coronavirus – press
- (CN) China National Health Commission Coronavirus Update for March 19th: 39 additional cases v 34 prior; Additional deaths: 3 v 8 prior; Hubei: 0 additional cases v 0 prior; additional deaths: 2 v 8 prior
- 1.HK Reports FY19 (HK$) Net 39.8B v 39.0B y/y, Total Rev 439.9B v 453.2B y/y
- (CN) China PBOC sets Yuan reference rate: 7.1052 v 7.0522 prior (weakest fix since March 2008)
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 23rd consecutive session, Net CNY0B v CNY0B prior
Other Asia
- (TW) Taiwan Central Bank to stop guiding overnight rate at the open, to allow the market to set it
North America
- (US) Sen McConnell coronavirus relief plan reportedly includes direct payments of $1,200 per person, $2,400 per couple
- (US) US Treasury Sec Mnuchin: Goal is to get ‘bill’ passed and signed by Trump on Monday (March 23rd); Mnuchin and White House Adviser Kudlow are expected to meet with US Senators on Friday (March 20th) regarding stimulus
- (US) Federal Reserve Board encouraged by increase in discount window borrowing to support the flow of credit to households and businesses
- AAL Announces will operate cargo only flights to help keep business operating with currently grounded passenger plans between US and Europe
- (US) NIH’s Fauci: There is no magic drug for coronavirus (reference to malaria drug that could be a possible treatment) – CNN
- (US) FEDERAL RESERVE ESTABLISHES $30-60B DOLLAR SWAP LINES WITH ADDITIONAL CENTRAL BANKS
- (US) California Gov has issued statewide shelter in place order
- (US) President Trump said to have asked states to delay releasing jobless claims data – NYT
- (US) Pres Trump: I will get involved in the oil market dispute at the appropriate time; Low oil prices are devastating to Russia
Europe
- (ES) ECB’s De Guindos (Spain): ECB will prevent economic crisis from becoming financial crisis; ECB can always do more; reiterates European fiscal response is needed
TV interview
- (ES) Spain government has ordered hotels and lodging establishments to close due to coronavirus – US financial press
Levels as of 1:20 ET
- Nikkei 225, closed, ASX 200 +0.7%, Hang Seng +2.6%; Shanghai Composite +0.2%; Kospi +5%
- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.8%, Dax +1.5%; FTSE100 flat
- EUR 1.0749-1.0652 ; JPY 111.36-109.98 ; AUD 0.5911-0.5662 ;NZD 0.5807-0.5608
- Gold +0.3% at $1,484/oz; Crude Oil +3.7% at $26.85/brl; Copper -0.8% at $2.135/lb
