Japan 10-yr yield falls below Zero on safehaven flows

Asian Market Update: Risk aversion carries into Asia as banks, energy names lead the selloff; Japan 10-yr yield falls below Zero on safehaven flows

Economic Data

- (AU) AUSTRALIA JAN NAB BUSINESS CONFIDENCE: 2 V 2 PRIOR; CONDITIONS: 5 (9-month low) V 6 PRIOR

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 111.4 v 111.2 prior

- (NZ) NEW ZEALAND JAN QV HOUSE PRICES Y/Y: 12.6% V 14.2% PRIOR; 4-month low; 2nd straight month of decline

- (NZ) New Zealand Jan ANZ Truckometer Heavy M/M: -4.3% v 2.8% prior

- (JP) JAPAN JAN M2 MONEY STOCK Y/Y: 3.2% V 3.1%E; M3 MONEY STOCK Y/Y: 2.5% V 2.5%E

- (UK) JAN BRC LFL SALES Y/Y: 2.6% V 0.3%E (largest rise since Sept 2015)

Index Snapshot (as of 04:30 GMT)

- Nikkei225 -5.1%, S&P/ASX -2.8%, Kospi closed, Shanghai Composite closed, Hang Seng closed, Mar S&P500 -0.8% at 1,838

Commodities/Fixed Income

- Apr gold +0.2% at $1,193/oz, Mar crude oil -0.2% at $30.09/brl, Mar copper flat at $2.09/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 5.0 tonnes to 703.5 tonnes; highest since Jul 16th; 6th straight increase

- JGB: (JP) Japan's MOF sells ¥726B in 1.4% 30-year bonds; Avg yield: 1.068% v 1.224% prior; Bid to cover: 3.04x v 3.73x prior (weakest demand since July)

- JGB: Yield on 10-year JGB falls to 0%; all-time low

- (AU) Australia MoF sells A$150M 2040 indexed bonds at avg yield 1.0126%; bid-to-cover 2.61x

Market Focal Points/FX

- Much of Asia remained closed for Lunar New Year, though there was still little to celebrate in the financial markets. Among the key indices that opened, Australia was down nearly 3% in the final hour of trade while Nikkei225 fell a whopping 5% as USD/JPY plunged to 15-month low of 114.20. Japan govt debt was also the beneficiary of seemingly indiscriminant risk selling, with the benchmark 10-yr JGB yield joining shorter dated maturities below zero. In other USD majors, AUD/USD was down as much as 70pips from Asia highs at 0.7020. NZD/USD fell as much as 50pips to 0.6575, extending early session thrust lower after reports of a 5.7 magnitude earthquake near South Island.

- In economic data, Australia Jan NAB business conditions hit a 9-month low, though resident economist noted the resilience in the non-mining component of the data while forecasting the RBA to remain on hold for the foreseeable future. New Zealand property space also showed more evidence of retreat, as y/y price growth slowed for the 2nd straight month to a 4-month low. Japan money supply held steady in spite of BOJ's increasingly more aggressive efforts to reflate the economy.

- Among notable speakers, Japan Econ Min Ishihara continued to attribute recent gains in JPY to "external factors" while cheering the progress being made on the rate of inflation, adding the decision by the BOJ shows determination to end deflation. Ishihara added the decline in interest rates will eventually lead in a rise in CAPEX, but this requires time. Note that other reports were more skeptical of the BOJ decision to engineer recovery, and the associated risks of dislocation in govt fixed income and negative impact on the overall financial system are prevailing in Japan's trading sentiment today. Separate comments from Fin Min Aso suggested the govt is still paying close attention to FX rates, calling recent moves "volatile."

Equities

US equities/ADRs:

- MXL: Reports Q4 $0.46 v $0.43e, R$98.9M v $99.0Me; +5.3% afterhours

- BSX: Confirms Medicare Will Cover WATCHMANLeft Atrial Appendage Closure Device; +3.6% afterhours

- GPS: Reports Q4 prelim $0.56-0.57 v $0.52e; R$4.39B v $4.47Be, Jan SSS -8% v -3.5%e; +3.3% afterhours

- RBC: Reports Q4 $1.17 v $1.12e, R$774M v $839Me; -1.3% afterhours

- FOXA: Reports Q2 $0.44 (adj) v $0.45e, R$7.38B v $7.42B y/y; -4.4% afterhours

- QLYS: Reports Q4 $0.21 v $0.17e, R$44.4M v $44.6Me; Guides initial FY16 $0.74-0.79 v $0.80e, R$195.6-198.6M v $200Me; -6.3% afterhours

Asia movers on news:

- Australia gold miners NCM +8.1%, EVN +6.2%

- Australia energy co's WPL -2.8%, STO -5.0%

- Japan banks Mizuho -5.7%, MUFJ -8.2%, Nomura -9.4%

- BRS.AU: Ferrovial said it will consider options on BRS; change adversely impacts valuation; -12.2%

- 4661.JP Raises admission prices by ¥500 or 7.2% to ¥7.4K effective Apr 1st - Nikkei; +2.8%