China official PMIs strike multi-month highs
Asia Mid-Session Market Update: China official PMIs strike multi-month highs; Japan jobless rate at 23-year lows
US Session Highlights
(US) INITIAL JOBLESS CLAIMS: 258K V 247KE; CONTINUING CLAIMS: 2.05M V 2.03ME
(US) Q4 FINAL GDP PRICE INDEX: 2.1% V 2.0%E; CORE PCE Q/Q: 1.3% V 1.2%E
(US) Q4 FINAL GDP ANNUALIZED Q/Q: 2.1% V 2.0%E; PERSONAL CONSUMPTION: 3.5% V 3.0%E
(US) Fed’s Mester (hawkish, non-voter): reiterates support for starting to trim bond portfolio this year; supports further rate hikes but not at each meeting
(US) Trump administration draft letter seeks changes to NAFTA, but not scrapping deal altogether – Washington Post
(US) WEEKLY EIA NATURAL GAS INVENTORIES: -43 BCF VS. -41 TO -43 BCF EXPECTED RANGE
US markets on close: Dow +0.3%, S&P500 +0.3%, Nasdaq +0.3%
Best Sector in S&P500: Financials
Worst Sector in S&P500: Utilities
Biggest gainers: COP +8.8%, FTR +5.5%, FCX +4.6%, STX +3.2%, COF +2.9%
Biggest losers: AKAM -4.6%, CF -3.9%, CBT -3.7%, VF -3.7%, PRGO -3.1%
At the close: VIX 11.5 (+0.1 pts); Treasuries: 2-yr 1.29% (+1bps), 10-yr 2.42% (+3bps), 30-yr 3.03% (+3bps)
US movers afterhours
VJET: Reports Q4 net -€3.0M v -€2.4M y/y, Rev €6.3M v €8.3M y/y; Guides Q1 Rev €4.25-4.75M v €4.9M y/y; +3.9% afterhours
EGLE: Reports Q4 -$2.96 v -$42.37 y/y, R$41.9M v $25.7M y/y; +2.9% afterhours
NH: Reports Q4 -$0.18 v -$0.18e, R$24.1M v $29.5Me; +1.2% afterhours
Politics
(ZA) South Africa Pres Zuma fires Gordhan appoints Malusi Gigaba as new Fin Min
(US) White House advisor Navarro: Pres Trump to sign Executive Order on Friday to strengthen collections of anti-dumping and anti-subsidy duties on imports – press
(US) Former National Security Advisor Mike Flynn makes an offer to FBI and Congressional investigators to testify in exchange for immunity from prosecution – press
(US) US Pres Trump: Meeting with China to be a difficult one amid concerns over trade deficits and jobs; appealing Hawaii judge ruling who blocked his Executive Order travel ban – press
(US) Commerce Sec Ross: hopes to trigger 90-day NAFTA consultation period before spring congressional recess; NAFTA negotiations could start in August – CNBC
Asia Key economic data:
(CN) CHINA MAR MANUFACTURING PMI (GOVT OFFICIAL): 51.8 (highest since Apr 2012) V 51.7E; NON-MANUFACTURING PMI: 55.1 (highest since May 2014) V 54.2 PRIOR
(JP) JAPAN MAR TOKYO CPI Y/Y: -0.4% (biggest decline in 6 months) V -0.2%E; CPI EX-FRESH FOOD Y/Y: -0.4% (biggest decline in 3 months) V -0.2%E
(JP) JAPAN FEB NATIONAL CPI Y/Y: 0.3% (5th consecutive increase) V 0.2%E; CPI EX FRESH FOOD (CORE) Y/Y: 0.2% (22-month high) V 0.2%E
(JP) JAPAN FEB OVERALL HOUSEHOLD SPENDING Y/Y: -3.8% V -1.7%E; 12th consecutive decline, biggest decline in 6 months
(JP) JAPAN FEB PRELIMINARY INDUSTRIAL PRODUCTION M/M: 2.0% V 1.2%E; Y/Y: 4.8% V 3.9%E
(JP) JAPAN FEB JOBLESS RATE: 2.8% V 3.0%E; lowest since June 1994
(NZ) NEW ZEALAND MAR ANZ ACTIVITY OUTLOOK: 38.8 V 37.2 PRIOR; BUSINESS CONFIDENCE: 11.3 V 16.6 PRIOR
(NZ) NEW ZEALAND FEB BUILDING PERMITS M/M: +14.0% V +2.1% PRIOR (8-month high)
(NZ) NEW ZEALAND Q1 WESTPAC EMPLOYMENT CONFIDENCE INDEX: 109.9 v 112.7 PRIOR
(KR) SOUTH KOREA FEB INDUSTRIAL PRODUCTION M/M: -3.4% V -0.3%E; Y/Y: 6.6% V 7.2%E
Asia Session Notable Observations, Speakers and Press
Asian indices are mixed following modest gains on Wall St, where rising interest rates and more gains in the oil patch sent Financials and Energy sectors higher. Nikkei225 is among the leaders, helped by weaker Yen, while Shanghai Composite has backed away from 2-week lows in the wake of multi-month highs in China manufacturing and non-manufacturing PMIs.
In FX, USD/JPY pair was the most volatile among the dollar majors, rising to 1-week high above 112, as USD remained bid in US hours on higher US interest rates. In EM currencies, South African Rand fell over 2% through 13.60 late in Asia after Pres Zuma sacked the corruption-crusading Fin Min Gordhan, appointing Minister of Home Affairs Malusi Gigaba as his replacement. Focus will now fall on ratings agencies review of South Africa as it deals with its economic and political turmoil.
In notable political news stateside, WSJ reported that former National Security Advisor Mike Flynn has reached out to FBI and Congressional investigators to testify in exchange for immunity from prosecution, though follow-up statement from his counsel did not suggest that he has incriminating information but rather wants protection given "a highly politicized, witch-hunt environment."
PBoC has skipped open market operations for the full week now, claiming liquidity in the system is ample. There was also some tough talk from US President Trump ahead of his meeting with China leaders next week, expecting the summit to be "difficult in that we can no longer have massive trade deficit and job losses." China foreign ministry official response was that China will push for greater balance in trade. Separately, White House Advisor Navarro said Trump will sign an Executive Order on Friday to strengthen collections of anti-dumping and anti-subsidy duties on imports
Economic data out of China and Japan were mostly positive. China official manufacturing PMI hit a 5-year high while non-manufacturing was a near 2-year high. Employment component of manuf PMI marked a notable bounce into expansion, even as input prices declined. In Japan, unemployment rate fell to a 23-year low, though labor force participation rate declind to 59.6% from 60.0% while total number of employed persons fell for 81 straight month. Japan National CPI was slightly hotter than expected on the headline, though the forward looking Tokyo region inflation fell deeper in the red.
China
(CN) China vice foreign minister Zheng Zeguang : Trade and business relation with US good for both countries and win-win; Will push for greater balance in trade
(CN) US Pres Trump: Meeting with China to be a difficult one amid concerns over trade deficits and jobs – press
(CN) BoCom: China Mar CPI seen at 0.8% y/y, unchanged from 0.8% in Feb – Chinese press
Japan
(JP) Japan ruling LDP security research commission recommends to PM Abe that Japan obtains capability of striking enemy bases – Nikkei
(JP) Japan Fin Min Aso: Private banks have money but not willing to lend; North Korea situation more serious than portrayed in the press
Australia/New Zealand
(AU) According to one survey, analysts are unanimous in expectation for RBA to leave rates on hold next week – press
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.5%, Hang Seng -0.5%, Shanghai Composite +0.3%, ASX200 -0.2%, Kospi flat
Equity Futures: S&P500 -0.1%; Nasdaq -0.1%; Dax -0.1%; FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.0670-1.0690; JPY 111.70-112.20; AUD 0.7640-0.7660; NZD 0.6980-0.7005
June Gold -0.4% at $1,244/oz; May Crude Oil -0.3% at $50.20/brl; May Copper flat at $2.67/lb
SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 832.3 tonnes
(CN) PBOC SETS YUAN MID POINT AT 6.8993 V 6.8889 PRIOR
(CN) PBoC skips open market operations for 6th straight session; Said to drain CNY30B v CNY40B prior
(AU) Australia MoF (AOFM) sells A$600M in 5.75% 2021 Bonds; avg yield: 2.077%; bid-to-cover: 6.89x
Asia equities / Notables / movers by sector
Consumer discretionary: 670.HK China Eastern Airlines +0.7%, 1055.HK China Southern Airlines +2.5% (FY16 result); 1886.HK China Huiyuan Juice Group -1.6% (FY16 results); FXJ.AU Fairfax -3.6% (potential LBO difficult to justify)
Consumer staples: 168.HK Tsingtao Brewery Co -1.3% (FY16 results); 3349.JP Cosmos Pharmaceutical Corp +2.1% (Mizuho initiates with buy)
Financials: 6881.HK China Galaxy Securities +1.0%, 6818.HK China Everbright Bank -2.1%, 1398.HK ICBC -0.4%, 6886.HK Huatai Securities -0.7% (FY16 results); BOQ.AU Bank of Queensland +1.7% (JPMorgan raises rating)
Industrials:7 53.HK Air China -1.0% (FY16 results); 390.HK China Railway Group -5.7%, 1157.HK Zoomlion Heavy Industry Science and Technology -4.9% (FY16 results); 7951.JPYamaha Corp +2.8% (Daiwa initiates with outperform)
Technology: 1296.HK Guodian Technology & Environment Group +3.8% (FY16 results); NXT.AU Nextdc +3.7% (new buy at Canaccord); 6502.JP Toshiba Corporation +5.9% (Apple may be among bidders for chip unit)
Materials: 3993.HK China Molybdenum +8.7% (FY16 results)
Energy: 857.HK PetroChina Co -1.2% (FY16 results)
