Asian equities follow US down on higher UST yields

Asia Market Update: Asian equities follow US down on higher UST yields; Further losses and currencies downdraft accelerated by weak Yuan fix and mixed CN data; CB interventions (but not JP); NZ CPI, CN FDI tomorrow.

General trend

- Following general weakness in US equities in the latter half of NY trading (Nvidia -2.5% in regular trading, another -0.4% a/h), Asia followed suit; Kospi, Nikkei, ASX, Hang Seng all down >-2.0%; Chip-relateds down heavily: SK Hynix -4.8%, Samsung Electronics -2.9% Tokyo Electron -3.6% Advantest -4.0% Renesas -3.0%. China property stocks also down -4.2%, the most since February.

- In the past 3 weeks Australia’s ASX 200 has now erased its entire 2024 prior gains.

- JP 5-yr JGB yields +1.5bps highest since 2011, with JP 2-years hitting 2009 highs.

- Despite the yen breaking down to 154.4 overnight only the usual ‘watching FX closely’ comments out of Japanese officials today, with some analysts saying that the drop was more to do with strong US retail sales than anything Japan-specific. JPY/USD steady in Asian session though near the 34-year lows.

- Korean Won dropped to a 1.5 year low, and Pound Sterling hit a 5-month low as currencies across the board hit multi-month lows and the Taiwan dollar at 2016 lows

- CB FX intervention seen from India, Indonesia and China (via state-owned banks), with FX concerns expressed by officials in Philippines and South Korea.

- China March new and used home prices yet again weaker. Separately developer Times China (-41%) had a winding-up petition filed against it in HK by Hang Seng Bank. (Signs of contagion from property to finance sector?)

- China POBC set the Yuan at the weakest level since Mar 1st (below 7.10 level), with CNH immediately dropping to 7.28 against USD, touching lows last seen in Nov 2023. China state banks seen selling dollars for onshore Yuan (CNY) shortly thereafter.

- China’s ‘data dump’ Q1 GDP beat estimates, but Industrial Production and Retail Sales both much weaker than estimates.

- With BOJ monetary settings seen on hold, for hints on when the next rate hike may arrive market participants are said to be focusing less on inflation and instead in favor of BOJ's fresh quarterly growth and price projections due at its April 25-26 policy meeting.

- US equity FUTs -0.2% during Asian trading

Looking ahead (Asian time zone)

- Wed Apr 17th New Zealand Q1 CPI, Japan Balance of Trade, China YTD FDI (Wed eve UK CPI)

- Thu Apr 18th Australia employment, RBA Bulletin,

- Friday Apr 19th Japan National CPI, (Fri eve UK Retail Sales)

Holidays in Asia this week

- Tue Apr 16th Thailand

- Wed Apr 17th India

- Thu Apr 18th Vietnam

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,774.

- New Zealand Mar REINZ House Sales Y/Y: 8.0% v 37.9% prior.

- New Zealand Treasury says gloomy business mood helps ease price pressure - NZ press.

China/Hong Kong

- Hang Seng opens -1.4% at 16,367; Shanghai Composite opens -0.5% at 3,043.

- China NBS comments on Q1 and Mar data: Economic conditions still not stable; external environment is complex, uncertainty is rising.

- CHINA Q1 GDP Q/Q: 1.6% V 1.5%E; Y/Y: 5.3% V 4.8%E.

- CHINA MAR INDUSTRIAL PRODUCTION Y/Y: 4.5% V 6.0%E.

- CHINA MAR RETAIL SALES Y/Y: 3.1% V 4.8%E.

- CHINA MAR YTD FIXED URBAN ASSETS Y/Y: 4.5% V 4.0%E.

- China Mar Surveyed Jobless Rate: 5.2% v 5.2%e.

- China Mar New Home Prices M/M: -0.3% v -0.4% prior.

- Times China 1233.HK (-23%) Comments on winding-up petition filed at HK High Court by Hang Seng Bank (filed Apr 15th).

- China Q1 Air Passenger Numbers: ~180M trips, +37.7% y/y – State media.

- China financial regulators asked banks to support consumption boosting efforts – China Economic Daily.

- China to hold NPC Standing Committee Meeting Apr 23-26 - China state media.

- China PBoC Financial Stability Meeting: To optimize risk monitoring mechanism [overnight update].

- EU reportedly set to launch China probe on medical device procurement – press [overnight update].

- Reportedly Russian Copper Company (RCC) and Chinese firms have avoided taxes and skirted the impact of Western sanctions by trading in new copper wire rod disguised as scrap – press [overnight update].

- (DE) Germany Chancellor Scholz: It is good there is competition in European car market but there must not be dumping, overproduction or infringement of copyrights - comments from Shanghai [overnight update].

- China PBOC sets Yuan reference rate: 7.1028 v 7.0979 prior (weakest fix since Mar 1st).

- China state banks seen selling dollars for onshore Yuan, according to traders (timing uncertain).

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

Japan

- Nikkei 225 opens -1.2% at 38,750.

- Japan 5-year JGB yield rises to the highest since Apr 2011, with JP 2-years hitting 2009 highs.

- Japan BOJ Gov Ueda to visit Washington April 16-21 for G20, IMF - Japanese press.

- Japan Fin Min Suzuki: Confirms will attend G-20, G7, IMF and World Bank meetings in Washington; Reiterates closely watching FX moves.

- Japan Chief Cabinet Sec Hayashi: Reiterates excessive FX moves are not desirable; important for FX to be stable and reflect fundamentals.

- Japan sells ¥599B v ¥600B indicated in 10-yr, 20-yr, and 30-yr JGB's in liquidity enhancement auction: Avg accepted spread -0.001% v -0.001% prior, bid-to-cover: 3.13x v 2.90x prior.

- Bank of Japan (BoJ) reportedly may put less emphasis on inflation in setting policy – sources [overnight update].

- Japan Top FX Diplomat Kanda: In frequent contact with FX officials abroad [overnight update].

South Korea

- Kospi opens -1.0% at 2,644.

- South Korea Mar Import Price Index M/M: 0.4% v 1.0% prior; Y/Y: -0.7% v -0.4% prior.

- South Korea Feb M2 Money Supply M/M: 0.1% v 0.2% prior.

- Samsung and Hynix reportedly resume memory capacity expansion plans; cites market rumors - Digitimes [update].

- South Korea requests savings banks to improve finances - Korean press.

- South Korea Vice Fin Min: Reiterates to take bold measures if market volatility rises.

Other Asia

- India confirms raises crude oil windfall tax.

- Indonesia Central Bank (BI): Conducting 'triple intervention'; Indonesia Rupiah hits lowest since 2020 (post one week holiday reopening).

- Philippines Central Bank (BSP) Gov: China sea tensions are impacting the Peso currency - interview.

- (US) House Intel Chair Mike Turner (R-Ohio): Expects the House to pass Ukraine-Israel-Taiwan aid this week (update).

North America

- Microsoft plans to invest $1.5B in G42 for a minority stake and join board - NYT.

- (US) Fed's Daly (voter): Recent inflation data and "bumps along the way" are not particularly surprising - US financial press.

- (US) House to pass aid bills to Israel and Ukraine; Also offering bill regarding Tiktok ban - press.

- (US) MAR ADVANCE RETAIL SALES M/M: 0.7% V 0.4%E; RETAIL SALES (EX-AUTO) M/M: 1.1% V 0.5%E; Retail Sales (control group): 1.1% v 0.4%e.

- (US) APR EMPIRE MANUFACTURING: -14.3 V -5.0E; Prices Paid: 33.7 v 28.7 prior (highest since May 2023); New Orders: -16.2 v -17.2 prior.

- (US) Fed's Williams (voter): My own view is rate cuts will likely start this year; Monetary policy is in a good place and working; Do not think last CPI reading is a turning point.

- (US) FEB BUSINESS INVENTORIES: 0.4% V 0.4%e.

- (IL) US President Biden: US is committed to Israeli security and to a ceasefire that will bring hostages home and prevent a widening conflict.

- (US) White House's Kirby: It is false that Iran provided an early warning to Israel; Iran's intent was clearly to cause significant destruction.

Europe

- UBS (CH) Swiss Finance Min says Co. requiring ~$15-25B additional capital requirements is 'plausible' – paper.

- EU Leaders are expected to revive Capital Markets Union plan - FT.

- China President Xi: Bilateral ties will continue to develop as long as both sides respect each other [comments to German Chancellor Scholz].

- (IR) Iran Foreign Min confirms that Iran has no intention of escalating the situation - China state media.

- (IR) Follow up: China Foreign Min Wang: In phone call with Iranian counterpart notes Iran's statement saying Iran's actions were limited and it exercised rights of self-defense against attack on Embassy.

- (EU) ECB's Kazimir (Slovakia, hawk): Door is opening for a rate cut in June; ECB is not committing to any policy path following June.

- (EU) ECB's Rehn (Finland): ECB rates can be cut in June if inflation slows as expected.

- (RU) Reportedly Russian oil refinery capacity percentage, idled by drones, decreased from 14% to 10% of total over last three weeks - press.

- (EU) ECB’s Lane (Ireland, chief economist): Seen less progression with domestic inflation compared to broader Euro Zone.

- (IR) Iran Foreign Min Hossein Amir-Abdollahian tells UK Foreign Min: Tehran does not favor increased tension, but it will respond instantly and stronger than before if Israel retaliates.

- (IL) Israel Military Chief of Staff: There will be a response to Iran's missile and drone attack.

- (IR) China Foreign Minister Wang: Believes Iran is capable of avoiding escalating tension with Israel; Pledges cooperation with Iran.

Levels as of 01:20 ET

- Nikkei 225 -1.8%; ASX 200 -1.8%; Hang Seng -1.8%; Shanghai Composite -0.9%; Kospi -2.3%.

- Equity S&P500 Futures: -0.2%; Nasdaq100 -0.2%, Dax -0.4% ; FTSE100 -0.5%.

- EUR 1.0606-1.0629; JPY 154.13-154.43 ; AUD 0.6408-0.6445 ; NZD 0.5874-0.5907.

- Gold +0.9% at $2,403/oz; Crude Oil +0.7% at $86.00/brl; Copper -0.4% at $4.3613/lb.