Aussie Energy Index Drops Over 5% As WTI Crude Futures Trade At Lowest Level Since 1999

General Trend:

• Aussie refiner Caltex noted merger with Canadian firm will not proceed, cited coronavirus impact
• Decliners in Japan include Real Estate and Retail firms
• Shanghai Composite rises by less than 0.5% during morning session; Telecom Services firms rise as China pledged to accelerate investment related to 5G
• Shanghai Stock Exchange to examine volatility related to large cap health care index
• Chinese airlines report over 70% declines in March passenger traffic
• Chinese iron ore futures rise amid cut in Vale’s production guidance
• PBOC cuts loan prime rates (LPRs) as expected
• New Zealand Q1 CPI rose to the highest level since 2011, data impacted by higher cigarette prices and rents
• NZD rises as PM announced plan to ease lockdown
• RBA again cuts daily bond purchases under QE program
• US Treasury Dept confirms 90-day deferral of certain tariff payments, move aimed at providing relief to US companies
• Japan’s March exports to the US declined at the sharpest rate since 2011
• US President Trump: Expects help for hotels to be discussed

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.0%
• (NZ) NEW ZEALAND Q1 CPI Q/Q: 0.8% V 0.4%E; Y/Y: 2.5% (Highest since Sept 2011) V 2.1%E
• S32.AU Reports Q3 manganese production 1.31Mt v M y/y; alumina 1.28Mt v 1.20Mt y/y; suspends share buyback program
• (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$85.8B v A$87.3B prior
• (AU) Reserve Bank of Australia (RBA) adds A$1.35B to banking system through repos v A$1.52B prior
• (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$450M in gov’t bonds v NZ$450M sought as part of QE operations v NZ$600M prior
• (AU) Australia sells A$3B v A$3.0B indicated in 2.25% Nov 2022 bonds, avg yield 0.2544%, bid to cover 4.19x
• (AU) Reserve Bank of Australia (RBA) Gov Lowe: Australia shouldn’t be concerned about its escalating govt debt in response to the coronavirus crisis because of the long record of responsible fiscal policy, if ever there was a time for individuals to borrow it is now
• (AU) Reserve Bank of Australia (RBA) offers to buy total of A$500M in bonds v A$750M prior; Offers to buy Apr-Nov 2029 bonds
• (AU) Australia Treasurer Frydenberg: RBA yield curve control is working well
• (NZ) New Zealand Q1 RBNZ Sectoral Factor Model Inflation Index y/y: 1.7% v 1.8% prior; Sectoral Factor Model Non-Tradable Core Y/Y: 2.7% v 2.8% prior
• (NZ) New Zealand PM Ardern: New Zealand will move out of lockdown in 1-week, Apr 27th; Virus transmission rate is now 0.48%; New Zealand has one of the lowest mortality rate in the world

Japan

• Nikkei 225 opened -1.0%
• (JP) Japan Cabinet approval rating -2ppt to 41%; Disapproval rating +4ppt to 42% (1st time disapproval rating is above approval rating in 13-months) – Mainichi
• (JP) According to draft, Japan Govt Revises Stimulus package to ¥117.1T from ¥108.2T, Extra Budget revised to ¥25.6T from ¥16.8T; to raise issuance of JGBs by more than ¥5T to ¥152-153T, extra bond sales to fund stimulus – press
• (JP) Japan Foreign Min Motegi: Cabinet to decide on extra budget this afternoon
• (JP) Japan Mar Trade Balance: ¥4.9B v ¥459.9Be; Adj Trade Balance: -¥190.0B v -¥115.0Be; Exports y/y: -11.7% v -9.4%e; Imports y/y: -5.0% v -8.7%e; Exports to China -8.7%; US -16.5% y/y, EU -11.1% y/y
• (JP) Japan Securities Dealers Association (JSDA): In March global funds sold record levels of 10-year JGBS

Korea

• Kospi opened -0.3%
• (KR) South Korea Govt: To maintain social distancing guidelines with less intensity until May 5th – Yonhap
• 020560.KR Announces self rescue plan: Extends unpaid leave for employees, implementing measures to safeguard operations until they return to more normal
• (KR) South Korea reports people who tested positive again for COVID-19 after making full recoveries at 179 (2.2% of those who have recovered from the coronavirus)
• (KR) South Korea Govt Expected to announce next steps for Airlines and Refineries during this week – Yonhap
• (KR) Bank of Korea (BOK) sells 6-month Monetary Stabilization Bonds (MSB); avg yield 0.70% v 0.65% prior
• (KR) South Korea sells 20-year Treasury Bonds; avg yield 1.55% v 1.795% prior

China/Hong Kong

• Hang Seng opened +0.5%; Shanghai Composite opened +0.1%
• (CN) CHINA SETS 1-YEAR LOAN PRIME RATE (LPR) AT 3.85% V 4.05% PRIOR (3.85%E); SETS 5-YEAR LPR AT 4.65% V 4.75% PRIOR (4.65%E)
• (CN) China Politburo: Need to be more proactive with fiscal policies, like using special govt bondst and increasing the issuance of local govt; monetary policy should be more flexible and balanced and instruments such as RRR cuts, interest rate reductions and reloans should be fully leveraged – Xinhua
• (CN) China National Health Commission Coronavirus Update for April 19th: 12 additional cases (8 imported) v 27 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases 49 v 54 prior
• (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 13th consecutive session; Net CNY0B v CNY0B prior
• (CN) China PBOC sets Yuan reference rate: 7.0657 v 7.0718 prior
• (CN) China NDRC: To roll out more forceful and targeted fiscal, financial and employment policies with relevant departments; China still has ‘very large room’ for macro hedging policy to work with; CPI will continue to decline
• (CN) China Finance Ministry Official: China will appropriately increase Budget Deficit ratio; Pressure on local govt to safeguard operations and wages will ease as economy and revenues improve; To sell additional CNY1.0T in local govt special bonds in near term

North America

• (US) Pres Trump: the coronavirus surge seems to be over; some states have been too tough regarding stay at home orders; states could get the same results by doing less – Friday evening press conf
• (US) Congress democrats and Administration close to $450B economic relief package for small business, include billions for the Paycheck Protection Program (PPP), hospitals and expansion for more testing – financial press
• (US) Follow Up: House Maj Leader Hoyer (D-MD):House could meet Wednesday on relief loan plan
• (US) Treasury Sec Mnuchin and House Speaker Pelosi said to be “very close” to a deal for second round of small business loans – CNBC tweet
• (US) Banks asked the Fed to change terms of Main Street Lending Program, saying minimum of $1.0M loan is too large for most companies, should be reduced to $50-100K minimum loan amount – press
• BA Germany expected to announce order for 45 fighter aircrafts, to replace Tornado jets – German press
• (US) US Treasury announces 90-day deferral of some tariff payments, does not apply to anti-dumping and countervailing duties; does not apply to section 201, 232, 301 trade remedies

Europe

• (UK) Apr Rightmove House Prices M/M: -0.2% v +1.0% prior; Y/Y: 2.1% v 3.5% prior
• (ES) Spain Govt authorizes drones to be used to disinfect different types of facilities for coronavirus via “aerial procedures” like fogging – Spanish press

Levels as of 1:15ET

• Hang Seng -0.2%; Shanghai Composite +0.3%; Kospi -0.3%; Nikkei225 -1.2%; ASX 200 -1.2%
• Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax +0.2%; FTSE100 -0.1%
• EUR 1.0878-1.0857; JPY 107.89-107.50; AUD 0.6367-0.6336; NZD 0.6060-0.6009
• Commodity Futures: Gold -0.1% at $1,696/oz; Crude Oil -5.4% at $23.68/brl; Copper +0.1% at $2.35/lb