Asian Market Update: Asian Bourses Propelled Higher as Another UK Bank Sees Recovery; RBA Minutes Reveal Close Call, Possibly Paving the Way for Additional Rate Cuts; China's FX Reserves Rumored to Decline by Record Amount; USD, JPY Fall on Rising Risk Appetite

- Asian equity markets, trending higher for much of the session on rising bullish momentum, went into hyperdrive after yet another UK bank hinted at signs of improvement. After Barclays reflected on business performing well in the prior session, shares of Standard Chartered traded in Hong Kong jumped over 1.5% on CEO comments that the bank's first two months of 2009 were strong, no job cuts were planned, and that the capital position was solid. The broader indices remained responsive to the recent bounce in sentiment from global financials extending their gains following STAN.UK comments, with the Nikkei and S&P/ASX gaining 2.9% and the Kospi rising 2.0%.

- RBA Policy Meeting Minutes were the prime macro event in an otherwise light economic calendar session, revealing a close call at the last decision to leave rates unchanged and possibly paving the way for renewed easing in lieu of the recently poor Aussie fundamentals from employment and housing sectors. Fittingly, policy-makers noted that the rate pause leaves flexibility for future meetings, remaining downbeat on the prospects for global recovery in the near term and noting the recession's impact on Australia's domestic activity, retail conditions, and terms of trade. In 2nd tier economic data, Japan's January Tertiary Industry Activity Index came in above estimates of -0.5% at +0.4% - registering its first positive figure since October 2008.

- In China, January FX reserves were rumored to have posted the largest drop on record since the start of data series in 2000, exceeding last October's $25.9B record decline. The fall in reserves was attributed to the impact of stronger USD on non-dollar denominated assets, coming on the heels of fund repatriation by investors reeling from the financial crisis. Recall the recent weeks saw Asian press speculating on China using its reserves to diversify away from US Treasuries and also had comments from PBOC's Vice Governor steering sentiment away from the possibility of China using reserves to purchase overseas natural resources. The official reserve level numbers are expected to be released sometime in the 2nd week of April.

- South Korea had a decent share of good news, with financial names shoring up fiscal capacity to address the feared repatriation-driven March crisis. Bank of Korea had reportedly provided $3B to banks in the swap market. Meanwhile, South Korean Press reported that the government had reached a tentative agreement on an extra spending package worth KRW29.4T aimed at low-income population segment aid - a measure estimated to add 2% to South Korea's GDP.

- Ahead of the US session open, traders will likely heed the 80% dividend cut from troubled Dow component Alcoa, whose shares traded down over 10% in afterhours session in the wake of the announcement. Counterbalancing the Alcoa news, US Senators Kaufman and Isakson were said to planning to introduce legislation to restore the short-selling uptick rule, which has been lauded by other congressional leaders and monetary authorities. Late last week, it was announced that the SEC had reportedly set an Apr. 20th meeting date for consideration of uptick measures. Front-month S&Ps picked up steam late in the session toward gains of 0.3%.

- In currencies, the greenback and Japanese Yen were modestly weaker amid resurging risk appetite, with downtrodden Cable reaping the most benefit amid positive UK banking sentiment.
GBP/USD rallied nearly 80 pips above 1.41 handle, while EUR and CHF ranged within 50 pip bands against the dollar around 1.30 and 1.1850 respectively. In commodity FX, the Aussie recovered above 0.66 from initial post-RBA minutes weakness that carried implications of further rate-cuts through falling government bond yields. New Zealand's Kiwi and Canada's Loonie were marginally stronger as well, consolidating broader gains seein the course of the US session. Japanese Yen saw a moderate selloff against the dollar as well, pushing to intrasession highs above 98.50 in USD/JPY and falling even further against the surging GBP.

- Crude oil prices are lower by more than 0.40%, after gaining more than 2% during the NY floor session. The NY session oil price gains came despite the decline in US equities and the weaker than expected US Feb industrial production data. According to some traders, yesterday's interview of the Fed Chairman Bernanke had a positive impact on oil markets. In terms of OPEC commentary, the OPEC President/Angola Oil Minister noted that it was too early decide to cut production in May, while noting that Angola has complied with its production quota. Spot Gold prices are marginally lower at the time of writing, after declining by more than $8 during the NY session. Despite the decline in gold prices, the SPDR Gold Trust ETF increased its holdings of the metal by 12.2 tons and to a new record level of 1,069 tons as of March 16.