Markets enjoy broad support, China-US political tensions remain in focus

Asia Market Update: Markets enjoy broad support; China-US political tensions remain in focus; PBOC was a bit hawkish?; US ISM Services due later.

General trend

- Following on from the rally in the US markets overnight, markets across Asia also enjoyed gains as the bullish data releases [China PMIs] of the past few days continued.

- Nikkei 225 outperforms [Fast Retailing (largest index component) rises on monthly sales figures].

- US equity FUTs remained lower during Asia.

- Hang Seng pared gains amid PBOC comments.

- The Shanghai Composite was a bit more subdued after large gains earlier in the week, but still opened slightly higher.

- However, political tensions ratcheted further between China and the US.

- US targets 28 entities from China with alleged ties to the Iran military, these entities were added to the US Commerce Dept's 'Entity List' - US financial press.

- PBOC Gov Yi Gang: China real interest rates at appropriate level now.

- PBOC Dep Gov Pan: China property transaction activity has improved; property support measures are gaining traction.

- PBOC Dep Gov Liu Guoqiang: Some structural tools will be extended, some tools will exit.

- With all the expectations built into the markets around a strong China reopening, it should be noted that all eyes for China are on this weekend's National People's Congress, [aka the "Two Sessions" annual meeting of China's Parliament and Political Advisory Board, starting March 5. 2023 is the first live session to take place since the COVID-19 outbreak started.]

- Significant policies have often been announced at these events. The nation's GDP target is also likely to be set, with expectations of a target above 5% for 2023, and associated policies.

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens +0.3% at 7,277.

- (AU) Australia Jan Home Loans Value M/M: -5.3% v -3.0%e.

- (AU) Australia Feb Final PMI Services: 50.7 v 49.2 prelim.

- (NZ) New Zealand Feb Consumer Confidence: 79.8 v 83.4 prior.

- (NZ) RBNZ Gov Orr: Early signs of price pressures easing - NZ Economic Forum comments (echos prior statements).

China/Hong Kong

- (HK) Hang Seng opens +1.3% at 20,703.

- (CN) Shanghai Composite opens +0.1% at 3,314.

- (HK) Hong Kong Jan Retail Sales Value Y/Y: 7.0% v 4.5%e; Retail Sales Volume Y/Y: 5.1% v 2.2%e.

- (HK) Hong Kong Feb PMI (Whole economy): 53.9 v 51.2 prior [2nd straight expansion].

- (CN) CHINA FEB CAIXIN PMI SERVICES: 55.0 V 54.5E.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY18B v CNY73B prior in 7-day reverse repos: Net drains CNY452B v drains CNY227B prior.

- (CN) China PBOC sets Yuan reference rate: 6.9117 v 6.8808 prior.

- (CN) US targets 28 entities from China with alleged ties to the Iran military, these entities were added to the US Commerce Dept's 'Entity List' - US financial press [update].

- (CN) China National People's Congress (NPC) Deputy Li Yihu: China will speed up its reunification plan for Taiwan.

- (CN) China PBOC Gov Yi Gang: Reiterates to implement targeted and forceful monetary policy, will keep yuan exchange rate stable.

- (CN) China PBOC Dep Gov Liu Guoqiang: Will adjust monetary policy at appropriate timing; will adjust monetary policy in a timely way.

- (CN) China PBOC Dep Gov Pan: China property transaction activity has improved; property support measures are gaining traction.

- (CN) China Commerce Ministry (MOFCOM) spokesperson Shu Jueting: China-US trade has been highly complementary, resilient but restrictive measures hurts the potential.

Japan

- (JP) Nikkei 225 opens +0.7% at 27,683.

- (JP) Japan Feb Final PMI Services: 54.0 v 53.6 prelim (confirms (5th month of expansion).

- (JP) JAPAN FEB TOKYO CPI Y/Y: 3.4% V 3.3%E; CPI (EX-FRESH FOOD) 3.3% V 3.3%E.

- (JP) JAPAN JAN JOBLESS RATE: 2.4% V 2.5%E [lowest since Feb 2020].

- (JP) Finance Minister Suzuki: ETF purchases by the BOJ are part of the easing measures of the BOJ.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

- (JP) Japan 10-year JGB yield rises above the BOJ 50bps ceiling.

- (JP) Japan PM Kishida said to order measures to ease price pressure [details not initially disclosed] - Japanese press.

Korea

- (KR) Kospi opens +0.4% at 2,438.

- (KR) South Korea Finance Ministry on Mar issuance; To sell KRW14,5T in bonds during month.

- During the day the South Korean Won (KRW) strengthened by over 1% against the dollar after recent weakness.

Other Asia

- (PH) Philippines Central Bank (BSP) Gov Medalla: Says "has to do something" in the next [March] meeting if CPI hits 9%; Reiterates whether the next interest rate hike is 25 or 50bps depends on the data.

- (ID) Indonesia stock market to revert to normal hours post-COVID, from March 31, 2023 - financial press.

- (TH) Thai Finance Minister: Additional talks needed for stock trading tax implementation - financial press.

- (TW) Taiwan to ease all COVID restrictions by as early as May - report.

North America

- (US) Market Close Summary: Data pushes US 10-year yield above 4%; Stocks rally on dovish Fed comments.

- (US) Fed's Bostic (non-voter): Fed could be in position to pause by mid-to-late summer.

Europe

- (EU) ECB's Wunsch (Belgium): Sees 4% rates possible if inflation stays 'strong'.

Levels as of 00:20 ET

- Nikkei 225, +1.6%, ASX 200 +0.4% , Hang Seng +0.7%; Shanghai Composite +0.2% ; Kospi +0.1%.

- Equity S&P500 Futures: -0.1%; Nasdaq100 -0.2%, Dax +0.4%; FTSE100 +0.3%.

- EUR 1.0614-1.0595 ; JPY 136.79-136.49 ; AUD 0.6752-0.6725 ;NZD 0.6272-0.6207.

- Gold +0.2% at $1,843/oz; Crude Oil -0.2% at $77.99/brl; Copper +0.4% at $4.0905/lb.