Japan trade balance still in surplus as exports and imports declines recede

Asian Market Update: Japan trade balance still in surplus as exports and imports declines recede; PBoC chief economist warns about credit growth

 

Economic Data

- (JP) JAPAN MAR TOTAL MERCHANDISE TRADE BALANCE: ¥755.0B V ¥835BE (2nd consecutive trade surplus); ADJUSTED TRADE BALANCE: ¥276.5B V ¥450BE

- (AU) AUSTRALIA MAR SKILLED VACANCIES M/M: -1.2% V -1.2% PRIOR

- (AU) AUSTRALIA MAR WESTPAC LEADING INDEX M/M: -0.1% V -0.2% PRIOR

- (KR) South Korea Mar PPI Y/Y: -3.3% v -3.4% prior

 

Index Snapshot (as of 04:30 GMT)

- Nikkei225 +0.2%, S&P/ASX +0.4%, Kospi flat, Shanghai Composite -2.6%, Hang Seng -1.1%, Jun S&P500 -0.3% at 2,088

 

Commodities/Fixed Income

- June gold -0.1% at $1,253/oz, June crude oil -2.3% at $41.51/brl, May copper -0.5% at $2.21/lb

- (NZ) Fonterra Global Dairy Trade auction: Dairy Trade price index: +3.8% v +2.1% prior; 2nd straight increase; biggest increase in 6 months

- (US) Weekly API Oil Inventories: Crude: +3.1M v +6.2M prior; 2nd straight build

- GLD: SPDR Gold Trust ETF daily holdings fall 7.5 tonnes to 805.0 tonnes; lowest since Mar 16th

- (KU) Kuwait oil workers union has decided to cancel their strike after 3 days of output disruption - financial press

- (CN) China MoF sells 7-yr bonds at yield 2.94% v 2.83% on Jan 19th

- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4579 V 6.4700 PRIOR; strongest Yuan setting in 4 months

- (CN) PBOC to inject CNY250B in 7-day reverse repos; largest injection since Feb 26th

- (JP) BOJ offers to buy ¥350B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥450B in 5-10yr JGBs

- (AU) Australia MoF (AOFM) sells A$1.2B in 2.75% 2027 Bonds; avg yield: 2.666%; bid-to-cover: 2.79x

 

Market Focal Points/FX

- Asian equity markets are trading mixed, though the modest gains observed in Australia and Japan are overshadowed by outsized losses in China. US equity futures are also pointing to a slightly lower open, while energy prices are down markedly after reports that Kuwait oil workers union has completed its strike. In FX, commodity currencies were under pressure with AUD/USD down about 40pips toward the $0.7780 level while NZD/USD retreated about 50pips to $0.70. Risk-off theme also sent USD/JPY down about 40pips to 108.90 session lows.

- In China, Shanghai Composite hit a 3-week low in the afternoon session below 2,950 with a decline of over 3% after the break. Comments from PBoC chief economist Ma Jun contributed to the caution as he called on govt to restrain lending and prevent company leverage ratios from overheating. Other reports noted Chinese companies sought cash to help pay their tax burdens.

- In Japan, the latest merchandise trade figures were again "less bad". Terms of trade remained in surplus - albeit a smaller one than expected - while the declines in exports (-6.8% v -7.0%e) and imports (-14.9% v -16.6%e) components were both smaller than anticipated. Demand from Europe was especially surprising as exports rose for the 2nd straight month by 12%. Shipments to US were down over 5% and China by over 7%.

- Elsewhere in Japan, ruling LDP party policy chief Inada hinted that the economic impact from the earthquake over the weekend could require a slower pace of sales tax increases - perhaps an incremental 1pt rise instead of the 2pts planned for Apr 2017. Govt spokesperson Suga shrugged off those remarks, stating that the situation after the earthquake this weekend is not similar to 2011 earthquake, and that there is no change of plan to raise sales tax in April 2017. BOJ Gov Kuroda spoke at length once again, reiterating that price trends are improving, economy is showing some recovery, and that there was no technical limit to lowering BOJ's negative rates. Kuroda also said there is great capacity for additional bond purchases. Speculation over expanded QE late this month has been increasingly more prevalent as traders test policymakers' patience by nudging USD/JPY further below 110 level.

- In Australia, Moody's warned that while economy will stay resilient, subdued commodities prices are starting to challenge some sectors. Moody's also noted elevated property prices and Australia's dependence on external financing. BHP reported its Q3 results and joined Rio Tinto in lowering its outlook for iron ore shipments this year. BHP's Q3 production of 53M tons was below 55Me and also down 10% y/y, as mining giant cut FY16 iron ore production to 229Mt from 237Mt. Petroleum output was down 3% y/y and copper down 12%. Nonetheless, shares traded higher since the reduced output guidance was attributed to bad weather and rail network maintenance as investors anticipate lower supply in the environment of steady demand for the rest of the year.

 

Equities

US equities/ADRs:

- VMW: Reports Q1 $0.86 v $0.84e, R$1.59B v $1.57Be; to repurchase up to $1.2B of class A common stock (6% of market cap); +8.8% afterhours

- IBKR Reports Q1 $0.51 (adj) v $0.45e, R$489M v $391Me ; +3.8% afterhours

- DFS: Reports Q1 $1.35 v $1.30e, R$2.22B v $1.76Be; +2.8% afterhours

- ISRG: Reports Q1 $4.42 v $4.30e, R$595M v $586Me; +2.3% afterhours

- LLTC: Reports Q3 $0.52 v $0.50e, R$361M v $359Me; +1.5% afterhours

- GPN: To enter S&P 500 index, replacing GME after the close of trading on Friday, April 22; KKD enters S&P SmallCap 600 index; +1.3% afterhours

- YHOO: Reports Q1 $0.08 v $0.07e, R$859M (ex TAC) v $846Me; +1.1% afterhours

- CPE Announces Midland Basin acquisitions; Establishes new core operating area for total consideration of $220M in cash and 9.3M shares of common stock; -1.5% afterhours

- INTC: Reports Q1 $0.54 v $0.49e, R$13.8B v $14.0Be; Announces 12K in jobs cuts (as speculated; ~11% of workforce); announces CFO transition; -2.1% afterhours

Notable movers by sector:

- Industrials: China Cosco Holdings Co 1919.HK +1.3% (sets up alliance); Taisei Corp 1801.JP -0.5% (FY15/16 result speculation); Doosan Heavy 034020.KR -1.8% (Q1 result)

- Technology: Asahi Glass Co 5201.JP +2.3% (Q1 result speculation)

- Materials: BHP Billiton BHP.AU +3.9% (Q3 result)

- Energy: Idemitsu Kosan Co 5019.JP +6.7% (guidance); Woodside Petroleum WPL.AU -1.1% (Q1 result)