Spread of violence to more towns in east Ukraine

Asian Market Update: Stocks fall as emergency session of UN Security Council fails to resolve Ukraine tensions

Economic Data

- (NZ) NEW ZEALAND MAR PERFORMANCE SERVICES INDEX: 58.3 V 52.8 PRIOR (6-year high)

- (SG) SINGAPORE Q1 ADVANCED GDP Q/Q: 0.1% V 0.4%E; Y/Y: 5.1% V 5.4%E

- (AU) AUSTRALIA FEB CREDIT CARD PURCHASES: A$21.4B V A$21.4B PRIOR; CREDIT CARD BALANCES: A$50.2B V A$49.1B PRIOR

- (UK) UK APR RIGHTMOVE HOUSE PRICES M/M: 2.6% V 1.6% PRIOR; Y/Y: 7.3% (highest since Oct 2007) V 6.8% PRIOR

Market Snapshot (as of 03:30 GMT):

- Nikkei225 -0.1%, S&P/ASX -1.0%, Kospi +0.1%, Shanghai Composite

-0.4%, Hang Seng +0.1%, Jun S&P500 -0.2% at 1,808, Jun gold +0.6% at $1,327, May crude oil +0.6% at $104.31/brl

Highlights/Observations/Insights

- Spread of violence to more towns in east Ukraine, including reports of a skirmish between local law enforcement and pro-Russian separatist forces that led to 1 death and 9 wounded in Slavyansk, has further magnified tensions in financial markets. Earlier this weekend, Ukraine Acting Pres Turchynov announced the govt will launch full-scale "anti-terrorist operations" in eastern Ukraine involving armed forces on Monday amid pervasive speculation that Russian agents are becoming more actively involved in local provocation. Subsequently, Russian Foreign Ministry called the order "criminal", requesting an emergency meeting of the UN Security Council Sunday evening. Representatives from Ukrainian and Russian sides traded terse accusations at the meeting producing no progress in the standoff, although both sides acknowledged it is high time to deescalate, with Turchynov's 06:00GMT deadline drawing closer.

- Euro slid about 40pips against the greenback at the open following hints from ECB officials that more easing may be required over the weekend. ECB Pres Draghi warned the central bank would be more likely to act if the euro continued to strengthen, as that would be even more disinflationary. Draghi said the ECB sees no broad based evidence of inflation but must not become complacent. Separately, ECB's Coeure noted that asset purchases may be an appropriate tool to fight low inflation, adding that further monetary easing is not excluded, but remains contingent on outcomes.

- In China, another press report suggested the govt may be looking to undo some of its property sector curbs. China's Fujian Province was said to be discussing easing home purchasing curbs, including easier mortgage rules on second home purchases. Separately, comments from vice fin min Zhu Guangyao acknowledged the govt is faced with challenges in managing economic slowdown, but also said the outside world appears to be more concerned with the process than the state council. Over the weekend, FT reports reflected on the first failed bond auction in China in a year, as investors demanded higher interest rates to buy govt debt.

- In economic data, Singapore Q1 GDP disappointed expectations and the Singapore Central Bank (MAS) subsequently lowered its FY14 CPI all items inflation outlook to 1.5-2.5% from 2.0-3.0%. Singapore dollar sold off about 40pips on the report, with USD/SGD rising above the S$1.25 handle.

Fixed Income/Commodities/Currencies

- (JP) BOJ offers to buy ¥110 in JGB with maturity less than 1-yr, ¥170B in JGB with maturity over 10-yr as well as ¥1.5T in T-bills

- (KR) South Korea sells KRW2.06T in 5-yr government bonds at 3.160% v 3.195 in Feb, bid to cover: 3.8X

- GLD: SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 804.4 tonnes (lowest since 803.7 on Mar 6th)

- In other USD majors, AUD/USD and NZD/USD ranged in 20pip ranges around $0.9390 and $0.8680. USD/JPY fell about 20pips from Friday close to about 101.40 before coming off the lows, while Chinese yuan weakened slightly above CNY6.21. Precious metals were also notably firmer amid escalating tensions in Ukraine - Gold rose over $10 above $1,328 and silver was up nearly 1% at its highs above $20.10/oz.

Equities

US markets:

- HLF: Responds to media reports, have not knowledge of any formal or informal DoJ investigation; CNBC: Law enforcement sources indicate that at this time, there is no evidence of criminal activity; investigation is ongoing

- TSL: Cuts Q1 module shipments guidance to 540-570 MW from 670-700 MW prior, adjusts gross margin outlook to 18-20% from prior mid-teens percentage

Notable movers by sector:

- Consumer Discretionary: Chongqing Changan Automobile 000625.CN +10.0% (prelim FY13 results); Daphne International Holdings 210.HK +0.9% (Q1 operating results); Coca-Cola Amatil CCL.AU -7.0% (analyst action)

- Financials: Sinolink Securities 600109.CN +1.7% (Q1 results); C C Land Holdings 1224.HK +0.6% (FY13 results)

- Materials: China West Construction Group 002302.CN +3.5% (FY14 guidance); China Minmetals Resources 1208.HK +7.1% (acquires Las Bambas copper mine from Glencore)

- Industrials: Shuangliang Eco-Energy 600481.CN +1.8% (Q1 guidance); Great Wall Motor 2333.HK +2.0% (to launch Haval H8)

- Technology: Shenzhen ZQGame 300052.CN +10.0% (acquisitions); Tencent Holdings 700.HK +1.1% (to launch advertising platform on WeChat); Sharp 6753.JP -8.4% (plans public share offering)