Asia Market Update: OPEC+ reaches production cut deal Sunday, though markets perceive it as not enough; S&P Futures lower, while WTI gains; UK PM released from hospital.
General Trend:
- OPEC+ reaches late Sunday deal to cut production by 9.7M bpd for May and June, with cooperation from other oil producers, global oil production expected to be more at 20M bpd, oil futures initially rose on the news before starting to decline, as markets digested the news and consider the deal insufficient; though later in the session WTI rebounded rising as much as 6%
- With US markets closed Friday for holiday and Australia, New Zealand and Hong Kong still closed markets had little catalyst other than OPEC+ deal. In general retail and industrial names continue to decline as social distancing keeps sales low or non-existent and healthcare names seeing some strength as they work on treatments for coronavirus
- Over the weekend US coronavirus deaths surpassed Italy with total deaths nearing 18.8K and in the UK deaths went over 10.6K; UK PM Johnson was released from the hospital to recover at home
- Friday China reported record rise in new yuan loans and M2 money supply. China said it will continue with a strong pace of approving IPOs this year.
- Looking ahead we are on watch for china Mar trade balance figures, either later today or tomorrow. Friday will see the release of China’s Q1 GDP.
Headlines/Economic Data
Australia/New Zealand
- ASX 200 closed for holiday
- WPL.AU CEO Coleman: Opportunity to acquire Oil Search has passed – Aussie press
- VAH.AU Australia Govt considering underwriting domestic flights operated by Virgin and Qantas in order to maintain links between capital cities – SMH
Japan
- Nikkei 225 opened -1.0%
- (JP) Japan Fin Min Aso: Not thinking about cutting sales tax at current point, JGBs risk selloff without govt taking position of repaying debt – speaking to parliament
- (JP) Japan Mar Money Supply M2 y/y: 3.3% v 2.9%e; M3 y/y: 2.7% v 2.5%e
- (JP) Japan Fair Trade Commission (FTC) expected to ask banks to lower interbank transfer fees – Japan press
- 3086.JP Sees FY20/21 having a ¥165B negative impact on sales from coronavirus
- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: unchanged
Korea
- Kospi opened -0.4%
- (KR) South Korea Mar had foreign investors sell net KRW13.45T in domestic stocks (record high) v sold KRW3.23T prior – Yonhap
- (KR) US President Trump rejected tentative defense cost share deal, that would saw South Korea offer to take on additional 13% over last year’s expenses – Yonhap
- (KR) South Korea April 12th coronavirus update: 32 additional cases (2nd consecutive day ~30 cases), total 10,512; recovery rate now ~70%
- (KR) South Korea Mat Auto Exports 210.9K units, +1.3% y/y; Q1 Auto Exports 479.4K units, -17.6% y/y
- (KR) North Korea held parliament meeting Sunday (as expected but 2 days late); Leader Kim was not at the meeting
- 102940.KR Received the notice of lifting clinical hold on osteoarthritis gene therapy Invossa from US FDA on April 11th; will resume phase III clinical trial at the end of this year – Korean press
- 000270.KR Union: have no decided whether to accept company’s plan to suspend operations at 3 domestic plants
- (KR) Bank of Korea (BOK) may announce lending program for brokerages this week – Korean press
- (KR) South Korea Apr 1-10th Exports y/y: -18.6%; Imports y/y: -13.0%; Chip exports -1.5% y/y
- (KR) South Korea reports 25 additional coronavirus cases in the last 24 hours v 32 prior
- (KR) North Korea leader Kim said to have replaced more than 50% of his top govt officials in the State Affairs Commission – press
China/Hong Kong
- Hang Seng opened closed for holiday; Shanghai Composite opened -0.4%
- (CN) China planning to keep IPO normalization plans unchanged; Regulators will approve certain number of IPO applications every week – China Securities Journal
- (CN) China National Health Commission Coronavirus Update for April 12th:108 additional cases (98 imported) v 99 prior; Additional deaths: 2 v 0 prior; Additional Asymptomatic cases 61 v 63 prior
- (CN) China northeastern city of Harbin to implement 28-day quarantine, nucleic acid test and antibody testing on anyone entering from abroad; will lockdown residential units for 14-days where there is confirmed and asymptomatic coronavirus cases have been identified
- (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 8th consecutive session; Net CNY0B v CNY0B prior
- (CN) China PBOC sets Yuan reference rate: 7. 0300 v 7.0354 prior (strongest fix since March 17th)
- (CN) CHINA MAR M2 MONEY SUPPLY Y/Y: 10.1% V 8.8%E (highest since Mar 2017)
- (CN) CHINA MAR NEW YUAN LOANS (CNY): 2.850T V 1.800TE (record rise)
- (CN) CHINA MAR AGGREGATE FINANCING (CNY): 5.15T V 3.14TE
- (CN) China govt said to have suspended talks with car industry officials on tax cuts for auto purchases; – financial press
- (CN) China Mar Excavator sales 49.4K, +11.6% y/y (record high) – Chinese press
- (HK) Hong Kong Financial Sec Chan: Worry that GDP will shrink more than expected, authorities are working to prevent as many companies from going under as possible – press
Other
- OPEC+ countries sign agreement to cut oil production by 9.7M bpd (~10%) for May and June, with cooperation from other oil producers, global oil production expected to be more at 20M bpd – press
- (G20) Said to be close to a deal that would allow lower income countries to pause their govt debt repayments amid pandemic – FT
- (SG) Singapore Deputy PM Heng Swee Keat: We are looking at various indicators to see how much more may be need from past reserves to help the contain the damage from the coronavirus pandemic – local press
- 2330.TW Received additional orders for 5 nanometer chips from Apple, starts production as scheduled – Taiwan press
North America
- (US) Fed’s Kashkari (dove, FOMC voter): US could see 18-months of rolling shutdowns; vaccine, effective therapy are key – press
- (US) Treasury Sec Mnuchin said to have told major airlines he wants them to repay the $25B in cash grants approved by Congress last month; will not require airlines who received $100M or less in payroll assistance to provide compensation – financial press
- (US) President Trump: State governors need to get their state testing “perfected”; we are now testing more than any other country in the world – daily brief
- (CA) Alberta, Canada Premier Kenney: OPEC+ started a fire, now they have to put it out; the oil market faces very low demand and huge inventories
- (US) Energy Sec Brouillette: US could see continued declines in production, US will continue efforts to open SPR for storage; see US production cuts of 1.6-2.0M bpd; Looking at policy options to help oil industry
- Europe
- (UK) PM Johnson has been released from the hospital and will continue to recover from home
- (UK) Health Sec Hancock coronavirus update Apr 12th: Total deaths now more than 10,000 and total cases now more than 85,000
Levels as of 1:15ET
- Hang Seng closed; Shanghai Composite -0.5%; Kospi -0.9%; Nikkei225 -1.1%; ASX 200 closed
- Equity Futures: S&P500 -1.3%; Nasdaq100 -1.4%, Dax closed; FTSE100 closed
- EUR 1.0947-1.0925; JPY 108.53-107.86; AUD 0.6358-0.6327; NZD 0.6093-0.6065
- Commodity Futures: Gold -1.1% at $1,734/oz; Crude Oil +4.6% at $23.82/brl; Copper +1.5% at $2.32/lb
