Australia Trade Balance in deficit for 11th month

Asian Mid-session Update: Australia Trade Balance in deficit for 11th month; Hong Kong PMI returns to contraction

Economic Data

- (AU) AUSTRALIA FEB TRADE BALANCE (AUD): -1.3B V -1.3BE (11th consecutive deficit, biggest deficit in 5 months)

- (AU) AUSTRALIA MAR TD SECURITIES INFLATION M/M: 0.4% V 0.0% PRIOR (11-month high); Y/Y: 1.5% V 1.3% PRIOR

- (AU) AUSTRALIA DEC-FEB JOB VACANCIES Q/Q: 0.8% V 2.6% PRIOR

- (HK) HONG KONG MAR HSBC PMI: 49.6 V 50.7 PRIOR

- (JP) JAPAN MAR MONETARY BASE Y/Y: 35.2% V 36.7% PRIOR; MONETARY BASE END OF PERIOD: ¥295.9T V ¥278.9T PRIOR

- (NZ) NEW ZEALAND MAR ANZ COMMODITY PRICE M/M: 4.6% V 4.2% PRIOR

- (KR) SOUTH KOREA FEB CURRENT ACCOUNT: $6.4B V $6.6B PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +1.3%, S&P/ASX +0.6%, Kospi +0.3%, Shanghai Composite +0.3%, Hang Seng +0.5%, Jun S&P500 -0.2% at 2,051

Commodities/Fixed Income

- Jun gold -0.1% at $1,203/oz, May crude oil flat at $49.57/brl, May copper 0.1% at $2.75/lb

- (CN) PBoC to inject CNY25B in 7-day reverse repos (11th consecutive injection); Injects net CNY5B this week v injected CNY10B prior (2nd week of injection); Offer yield at 3.55%, unchanged

- (JP) Japan investors bought net ¥1.02B in foreign bonds v bought net ¥788B in prior week; Foreign investors sold net ¥35B in Japan stocks v sold net ¥352B in prior week

Market Focal Points/FX

- Regional indices are mixed despite more moderate selling on Wall St, where S&P500 joined the Dow to YTD losses, even though key March 11th support levels in both are still holding. Nikkei225 is outperforming with an over 1% rally even though the yen pairs are little changed. Shanghai Composite and the Kospi are up a modest 0.3%.

- AUD/USD was the biggest mover among the dollar majors, falling over 30pips below $0.7580 as Australia trade balance hit its biggest deficit in 5 months. Import growth slowed to 2% and export growth was unchanged at 1%. Shipments of iron ore were little changed and crude oil shipment value actually rose to A$596M v A$553M prior, but coal exports fell sharply to A$3.06B v A$3.33B prior as China regulators reined in the coal industry for its pollutants. Pressure is building for RBA to cut next week, with one survey publishing unanimous forecast by analysts that rates will fall to 2.00% either as of April or May. Late in the session, JPMorgan warned there's a chance Australia will lose its AAA rating because of falling commodity prices if it does not changes its course on the budget.

- In China, PBoC net injection for the week was reduced to CNY5B from CNY10B, but offering yield stayed on hold at 3.55% this week after two straight weeks of lower yield. Some analysts are still calling for fresh easing by the central bank, particularly as markets head into Easter holiday weekend. Also of note, Fitch warned the latest property market stimulus via reduction in downpayment requirements may have limited impact since it will not alleviate excess housing supply. Hong Kong PMI also fell back into contraction as employment continued to decline - sentiment that matched the latest concern over labor in yesterday's China PMIs.

- After yesterday's miss in Japan Tankan manufacturing, today's quarterly Tankan survey on prices saw companies forecast inflation at just 1.4% within a year and 1.6% in 3 years - well below the official 2% target expected to be reached in FY15/16. Recent slowdown was also apparent in the latest Japan Center for Economic Research projections, with Feb GDP estimated at -2.1% m/m, the first decline in 3 months. Recall overnight comments from a ruling party official Yamamoto calling for fresh BOJ easing as soon as this month.

- With the yields on Greek 10-yr bonds rising another 20bps to 11.5% and funds flowing out of the banking system, ECB offered another €700M to local banks in ELA funding. Greek cabinet official also diffused the latest reports of blackmail by Athens, announcing the govt will repay IMF debt due next week and also clarifying the state remains solvent through April.

Equities

US equities/ADRs:

- XON: Signs Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute (NCI); +2.4% afterhours

- DENN: Approves $100M increase to share buyback program (10% of market cap); establishes $250M credit facility; +0.3% afterhours

- HLF: Pershing Square: Herbalife operates in violation of China's direct selling and pyramid sales laws; -0.8% afterhours

- MU: Reports Q2 $0.81 v $0.77e, R$4.17B v $4.16Be; Guides Q3 Rev $3.80-4.05B v $4.29Be - earnings slides; -1.3% afterhours

Notable movers by sector:

- Consumer Discretionary: Adastria Holdings 2685.JP +4.0% (raises guidance)

- Financials: QBE Insurance Group QBE.AU +4.3% (to raise dividend; provides update); Shanghai Pudong Development Bank 600000.CN +1.0% (said to plan to acquire a local bank); Country Garden Holdings 2007.HK +5.4% (Ping An Insurance said to have acquired stakes)

- Materials: BC Iron BCI.AU -4.2% (iron ore trades below $50/tonne)

- Industrials: Bradken BKN.AU +10.8% (receives bid); Lend Lease Corp LLC.AU +2.1% (receives project approval); Austal ASB.AU +2.0% (receives orders); BYD 1211.HK +2.9% (President's forecast on 2015 vehicle sales)

- Healthcare: Takeda Pharmaceutical 4502.JP +1.4% (considers to shut down a plant); Nippon Kayaku 4272.JP +2.2% (speculation on FY15/16 results)

- Utilities: Mitsubishi Electric 6503.JP +1.8% (speculation on FY14/15 results)