Asian Market Update: Strong China export numbers revive risk appetite after disappointing Australia home financing data; Crude shrugs bearish API figures on China demand


ECONOMIC DATA

- (NZ) NEW ZEALAND Q4 TERMS OF TRADE: 5.7% V 1.2%e (biggest increase since Q1 of 1995)

- (AU) Australia MAR Westpac Consumer Confidence: 0.2% v -2.6% prior

- (JP) JAPAN JAN MACHINE ORDERS M/M: -3.7% V -3.5%E, Y/Y: -1.1% V -0.6%E (highest since Jun 2008)

- (JP) JAPAN FEB DOMESTIC CGPI M/M: 0.1% V 0.1%E, Y/Y: -1.5% V -1.5%E (highest since Jan 2009)

- (AU) AUSTRALIA JAN HOME LOANS M/M: -7.9% V 2.0%E (multi-year low); INVESTMENT LENDING M/M: 0.9% V 1.6% PRIOR; VALUE OF LOANS M/M: -5.0% V -4.2% PRIOR

- (PH) Philippines JAN Total Exports y/y: 42.5% v 30.2%e

- (KS) South Korea JAN Money Supply M2 y/y: 9.3% v 9.3% prior; L: 10.6% v 11.4% prior; Bank Lending: KRW407.3T v KRW407.6T prior

- (CH) CHINA FEB TRADE BALANCE: $7.6B V $7.6BE (lowest since Mar 2007); EXPORTS Y/Y: 45.7% V 38.5%E (3-yr high); IMPORTS Y/Y: 44.7% V 38.9%E (3-month low)

- Asian equity markets are treading water in a similar fashion to US indices, with mixed economic data from Australia and China offering conflicting signals throughout the session. Aussie Jan home loans fell at the quickest pace in years at -7.9% v 2.0% increase expected, highlighting the impact of recent RBA rate hikes on financing activity while weighing on the outlook for further April tightening as implied by fixed income markets. Early risk aversion receded later in the session however following a strong set of China February trade data, with export growth marking a 3-year high against a 3-month low in the pace of imports growth. Entering the final hour of Tokyo trading, Nikkei225, Korea's Kospi, Sydney's S&P/ASX, and Taiwan's Taiex are all near unchanged levels. Shanghai Composite is the only decliner with a 0.6% loss, weighed down by pressure on the property index on some hawkish commentary by central bank officials. Front-month S&Ps are also near par, reversing early session weakness after Chinese trade numbers.


SPEAKERS/PRESS

- In notable Chinese speakers, PBoC Assistant Gov Guo suggested that "moderately loose" monetary policy pledged by Premier Wen last week may be more difficult to implement than in 2009 given the need to contain high levels of recent bank lending. Separately, China Securities Journal reported that Feb new yuan loans figure would be around CNY700B and will not exceed CNY750B, down from CNY1.4T in Jan. Additionally, PBoC Dep Gov Su noted that economic recovery has probably stabilized in the prior month. Note, the remainder of China February economic data is expected for tomorrow's session, with industrial production and retail sales metrics back on line after being omitted in January.

- Over in Australia, early-session comments from RBA Deputy Governor Lowe put economic growth estimates at or above average over next couple years, with the main task for policy said to meet expansion of supply side without creating inflation. Lowe also suggested that labor market would remain strong with less space capacity in economy than initially thought, and forecasted further external demand for the resource sector. AUD/USD hit 7-week high above 0.9150 and 2-yr govt bond yields rose to multi-week high of 4.78% as well. Those gains were subsequently pared following disappointing Jan home loans figure, with fixed income market probabilities for April RBA tightening falling about 5% to just above 30% chance of a 25bp move.

- Elsewhere in the region, Japan's cabinet continued to sound off on coordination with the central bank to deal with deflation. In turn, BOJ member Suda acknowledged that consumer spending remains flat, with upside and downside risks to the economy still balanced. Recall Japanese press has recently speculated the central bank could implement additional QE as early as this month's decision. In Taiwan, the central bank also noted it would maintain "loose" monetary policy, while Singapore central bank survey saw a higher 2010 GDP outlook at 6.5% vs 5.5% prior.


EQUITIES

- In individual names, Toyota denied press reports it was considering additional Prius recalls after yesterday's California freeway police chase was attributed to failed accelerator on the model. Also in Tokyo, local press cited President of Casio forecasting the company will return to profit in the next fiscal year. In Sydney, Australian Financial Review reported that NAB may need to raise up to A$3B for purchase of Axa Asia holdings and 320 branches sold by RBS, with current reserves only big enough for one of the two bids. In Taiwan tech, Commercial Times said Q1 forecasts for UMC and TSM are being revised higher following US clients Texas Instruments and Xilings boosting their shipment forecasts.


CURRENCIES/FIXED INCOME/COMMODITIES

- European majors traded predominantly sideways, consolidating early US session losses after renewed sovereign debt concerns followed overnight warning by Fitch. EUR/USD ranged in 13590-3610 band, while Sterling traded between 1.4960 and 1.5010. Commodity FX of Australian and New Zealand were modestly higher, testing session's best levels after China trade data. AUD/USD hit 7-week high above 0.9160, NZD/USD reached one month high above 0.7065 ahead of tomorrow's RBNZ decision, and AUD/NZD cross retreated to a 1-week low.

- In commodities, the key focus of markets was China's Feb imports data. In Feb, China's iron ore imports rose to 49.4M tons vs. 46.6M m/m, while Feb shipments of iron ore to China from Australia's Port Hedland declined to 8.7M tons from 11M tons in Jan. China's Feb copper imports increased to 322K tons from Jan's 292K tons, while crude oil imports rose to 18.5M barrels vs. 17.1M in Jan. Following the Chinese data, crude oil, spot gold and copper prices are all trading near the session's best levels. Crude oil prices are trading above $81.40/bbl, after initially being weighed down by bearish weekly US API inventories data (API PETROLEUM INVENTORIES: CRUDE: +6.5M V +1.8ME). Later today, the US Dept of Energy will release its weekly inventories data. Spot Gold has gained over 0.20% and is trading near $1,125/oz, supported by the advance in XAU/GBP.