Asia Mid-Session Market Update: China inflation still weighed down by food prices; BOJ's Kuroda steps up jawboning of exchange rate as Yen rises to fresh 2017 highs
US Session Highlights
(US) Mar NFIB Small Business Optimism: 104.7 v 104.7e
(US) FEB JOLTS JOB OPENINGS: 5.743M V 5.65ME
(US) President Trump tweets: “I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem! North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.”
(US) Fed’s Williams (moderate, non-voter): we need to bring rates back to normal this year and next year; Reiterates there could be three or four rate hikes this year – press interview
US markets on close: Dow flat, S&P500 -0.1%, Nasdaq -0.2%
Best Sector in S&P500: Real Estate
Worst Sector in S&P500: Technology
Biggest gainers: AAL +3.8%; STX +3.1%; JWN +2.6%
Biggest losers: ADS -3.8%; SWN -3.1%; RCL -2.7%
At the close: VIX 15.1 (+1.0pts); Treasuries: 2-yr 1.24% (-2bps), 10-yr 2.30% (-6bps), 30-yr 2.93% (-6bps)
US movers afterhours
NBIX: FDA approves INGREZZA (valbenazine) capsules as the first and only approved treatment for adults with tardive dyskinesia (TD); +19.3% afterhours
DRYS: Declares dividend of $2.5 million (1% of market cap); dividend per share amount to be paid by the Company to be determined later; +6.9% afterhours
TSCO: Guides Q1 $0.45-0.46 v $0.53e, R$1.56B v $1.58Be; SSS -2.2%; -3.5% afterhours
ONVO: Announces CEO transition; -6.6% afterhours
NS: Agrees to acquire Navigator Energy Services, LLC for $1.48B; -6.8% afterhours
Politics
(US) President Trump: US sending a very powerful armada to North Korea – Fox interview
(US) House Fin Services Chairman Hensarling (R-TX): will unveil Dodd-Frank overhaul bill by the end of the month
(US) John Sullivan nominated by Pres Trump as Deputy State Secretary – press
Key economic data
(CN) CHINA MAR CPI M/M: -0.3% (2nd straight decline) v -0.2% PRIOR; Y/Y: 0.9% V 1.0%E
(CN) CHINA MAR PPI Y/Y: 7.6% V 7.5%E; 7th consecutive increase
(AU) AUSTRALIA APR WESTPAC CONSUMER CONFIDENCE INDEX: 99.0 V 99.7 PRIOR, M/M: -0.7% (first decline in 4 months) V +0.1% PRIOR
(JP) JAPAN FEB CORE MACHINE ORDERS M/M: 1.5% V +3.6%E; Y/Y: 5.6% V +2.5%E
(JP) JAPAN MAR PPI (CGPI) M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.4%E
(KR) South Korea Mar Unemployment Rate: 3.7% v 3.8%e; 466K new jobs created, biggest gain since Dec 2015
Asia Session Notable Observations, Speakers and Press
Safehaven flows remain the prevalent theme in Asian trade as geopolitical risks related to conflicts in Syria and saber-rattling by North Korea are not abating. Ahead of his arrival in Moscow, US State Sec Tillerson is calling on Putin to denounce his support for Syria’s Assad, just as Kremlin continues to hint that chemical attacks were actually done by the rebels to garner international sympathy. US President Trump has also tweeted that "North Korea is looking for trouble" and added today that US is "sending a powerful armada", while Pyongyang warned of a nuclear attack on the US at any sign of American aggression. Vix has spiked up to a 2-week high, US benchmark Treasury yield is testing a key long-term support of 2.30%, and Nikkei225 is the worst performing major index on Yen strength (both Nikkei and USD/JPY are at lowest levels since mid-Nov). Gold prices have also extended their gains on safehaven demand, while Dalian Iron Ore price decline is weighing on the high-beta Aussie Dollar currency. AUD/USD has fallen back below $0.75 near its 2 1/2 month lows going into tomorrow’s critical Australia employment data.
China consumer inflation remained underwhelming in March, as m/m CPI fell for the 2nd straight month and y/y was near its 2-year lows below 1%. Food CPI component fell again by over 4%, while non-food rose slightly by 2.3% v 2.2% prior. Recall China has a formal 2017 CPI target of 3%. Conversely, rising input costs have continued to prop up wholesale inflation, with PPI up for the 7th straight month at +7.6% – close to consensus.
Ahead of tomorrow’s employment data, Australia Westpac Consumer Confidence index registered its first decline in 4 months to 99.0 from 99.7 – implying contracting conditions. Westpac economist still remarked that confidence is holding up well media attention over housing affordability and growing geopolitical tensions globally.
China
(CN) China Banking Regulatory Commission (CBRC) urges banks to reduce exposure
(CN) China Insurance Regulatory Commission (CIRC) vice chairman Chen Wenhui: Insurance industry exposed to solvency, liquidity, corporate governance, and external risks – press
Japan
(JP) BOJ Gov Kuroda: BOJ easing not aimed at FX level; Further weakening in Yen would help to meet CPI target sooner
(JP) Japan Fin Min Aso: Drafting free trade rules is a key goal for US-Japan dialogue
(JP) US said to be planning to talk about trade deficit with Japan – Nikkei
Australia/New Zealand
(NZ) New Zealand’s Aon Hewitt: 1-year inflation expectations unchanged at 1.7%; 4-year unchanged at 2.0%
Korea
(US) President Trump: US sending a very powerful armada to North Korea – Fox interview
(KR) South Korea presidential frontrunner Jae-In Moon: to draft extra budget immediately if getting elected
(KR) Japan Foreign Ministry issues short-term alert on South Korea travel due to North Korea nuclear tests
Asian Equity Indices/Futures (23:30ET)
Nikkei -1.2%, Hang Seng -0.1%, Shanghai Composite -0.3%, ASX200 flat, Kospi +0.1%
Equity Futures: S&P500 -0.2%; Nasdaq -0.2%, Dax -0.2%, FTSE100 -0.3%
FX ranges/Commodities/Fixed Income (23:30ET)
EUR 1.0595-1.0615; JPY 109.25-109.75; AUD 0.7485-0.7510; NZD 0.6930-0.6960
June Gold +0.2% at 1,277/oz; May Crude Oil +0.3% at $53.54/brl; May Copper -0.3% at $2.60/lb
(US) Weekly API Oil Inventories: Crude: -1.3M v -1.8M prior; second straight draw
SPDR Gold Trust ETF daily holdings rise 4.1 tonnes to 842.4 tonnes; highest since Mar 2nd
iShares Silver Trust ETF daily holdings rise to 10,208 tonnes from 9,862 tonnes prior; First rise since Mar 20th
(CN) PBOC SETS YUAN MID POINT AT 6.8940 V 6.8957 PRIOR; 2nd straight firmer fix
(CN) PBoC skips open market operations for 13th straight session; drains net CNY40B
(CN) China MoF sells 5-yr Govt bonds at 3.1264% v 3.12%e; bid-to-cover 1.62x
(AU) Australia MoF (AOFM) sells A$800M in 1.75% 2020 Bonds; avg yield: 1.8675%; bid-to-cover: 3.74x
(JP) BOJ announces amounts to buy in upcoming QE operation: cuts 3-5yr to ¥350B (prior ¥380B)
Asia equities / Notables / movers
Australia
NST.AU Northern Star +2.1%, SAR.AU Saracen +4.9%, RSG.AU Resolute Mining +1.8% (gold price gains)
SPK.NZ Spark NZ +2.6% (offer to buy TeamTalk has lapsed)
TLS.AU Telstra -6.8% (TPG plans rival Australian mobile network)
SFR.AU Sandfire Resources -2.4% (Morgans Financial downgrade)
Japan
8028.JP FamilyMart Uny -4.5% (annual result)
6502.JP Toshiba Corporation -1.5% (may need govt support, 9-month result)
7752.JP Ricoh Co +1.6% (to shrink camera business)
6796.JP Clarion Co -6.4- (annual result speculation)
6146.JP Disco Corp -3.4% (annual result speculation)
2726.JP Pal Co +5.4% (annual result)
7649.JP Sugi Holdings % (annual result)
9948.JP Arcs Co -3.7% (annual result)
2670.JP ABC-MART -5.5% (annual result)
Hong Kong
2009.HK BBMG Corp +0.2% (guidance)
6837.HK Haitong Securities -0.9% (Mar result)
6030.HK CITIC Securities -0.6% (Mar result)
1888.HK Kingboard Laminates Holdings -5.3% (shareholder placement)
China
000507.CN 600185.CN Gree Real Estate +10.0% (SMBC upgrade)
600340.CN China Fortune Land Development +2.2% (Xiongan new district)
