Asian Market Update: Asian Bourses Pare Early Gains in the Wake of Mounting US Jobs Loss; Nikkei Targets Fresh Multi-Month Low Close After First Current Account Deficit in 13 years; Mixed ECB Messages Leave Much Uncertainty on Next Decision; Oil Extends Gains

- Asian equities showed a comparably mixed response to the latest set of US jobs numbers after uncertainty seen in the US indices on Friday. US unemployment rose to a 25-year high of 8.1% while the economy hemorrhaged some 1.3 million jobs in the last two months alone. As staggering as these employment loss data appear, fears of an even greater February decline prevented a more bearish sentiment on Friday and spurred some early buying in Asia. Front month S&Ps, Nikkei, and ASX opened the week up nearly 1%, while Korea's Kospi traded as much as 2% higher on the day, before paring some of those gains.

- Tokyo markets fared particularly poorly in late session, shedding the early gains and entering the final hour down just about 1%. Traders are monitoring 7,162 level - the lowest multi-month closing low on the Nikkei - that could open the way to a technical slide all the way to intraday low of 6,994. Earlier, Japan registered its first current account deficit in 13 years, when the unadjusted January figure came in -¥172.8B V -¥15.3B expected. Exports contraction of 46.3% - relative to a 31.7% decline in imports - was particularly damaging to the trade-sensitive economy. Japan's automakers were among the more heavily sold Nikkei sectors on poor trade trends and US job loss. Honda and Nissan were down over 3%, while Toyota fell just over 2%. In other notable Nikkei names, Pioneer sold off by over 4% after deciding to forego payment of interim dividend. Among gainers, Sony shrugged the trade implications with a 4% early rally after announcing plans to invest 5B yen to develop its own semiconductor platform for flat panel TVs - a move said to have significant cost-cutting implications.

- Elsewhere in Asia, S&P/ASX and Kospi made up the minority of gainers among regional bourses to trade up 0.3% and 0.7% respectively ahead of session close. Strength in miners boosted Aussie shares, with BHP and Rio trading up 5% amid continued strength in commodity metals. Copper prices put in a 2nd consecutive weekly gain on expectation of a rebound in copper demand to come from China. Pressure on financial sector has eased its grip on Aussie banks, but resurfaced in Hong Kong, where HSBC fell below HK$40/share for the first time in 12 years. South Korea's Kospi shrugged the lowest Producer Price Index - coming in at 4.4% v 4.7% prior - since January 2008, led by the early rally in steelmaker Posco.

- Comments from several ECB speakers hit the wires this weekend, but fell far short of clarity on the next policy decision to follow last week's reluctant 50bp cut. Gonzalez-Paramo appeared to be the most inclined to additional easing, stating that ECB may cut rates below 1.50% depending on assessment of adequate level to secure medium term price stability. Liikanen noted that additional room for rate cuts does exist, but additional easing would have progressively less impact as lending rates approached zero. Stark was even less yielding, reminding that the ECB's single mandate is price stability while suggesting that low rates would be counterproductive and decrease incentive for banks to correct their problems.

- In currencies, EUR/USD gapped above 1.27, but pared those initial gains to trade around 1.2650.
USD/CHF and GBP/USD had also retraced USD selling to trade near final levels of last week near 1.16 and 1.41 respectively. In commodity FX, AUD/USD ranged between 0.6390 and 0.6450, NZD/USD rose as high as 0.5060, and USD/CAD remains contained by Friday's intra-day peak at 1.29. Japanese Yen traded in a narrow band of 98.00-98.50, with cross-rate volatility in EUR/JPY and GBP/JPY similarly subdued. In emerging Asian currency pairs, USD/SGD heeded technical buying at the former resistance turned support 1.54 level, maintaining a near three month long uptrend.

- Crude oil is higher by more than 1%, and at the time of writing trading above $46.00/bbl for the first time since late Jan. During the Friday session in NY, oil prices gained more than 4% at close of floor trading. Some are citing expectations regarding a supply cut from OPEC for the recent gains in oil prices. In terms of OPEC related news, Iraq's oil minister said that OPEC should lower output at its March 15. The official added that non-OPEC countries should also lower output. Additionally, Iran's Oil minister said that non-OPEC oil producing countries need to work together to support the energy market. The calls by OPEC members for cooperation with non members has risen since the cartel's President recently noted that the organization is seeking solidarity from non-OPEC members in order to increase oil prices. In demand related news, the most recent Lundberg survey showed that average US regular gasoline prices rose by 0.90% in the past two weeks to $1.96/gallon and this was the 4th consecutive price increase reported by the survey. Spot Gold is lower, after gaining more than $14 on Friday's session in NY. In terms of gold demand, the SPDR Gold Trust ETF disclosed that its holdings of bullion declined by 0.3 tons to 1,029 tons as of March 8. This was the first time that the ETF's holdings of gold declined since Jan 8.