Asian equity markets track Friday’s losses in the US

Asia Market Update: Asian equity markets track Friday’s losses in the US, government bond futures rise after gains in Treasuries and Bunds; US and China to hold trade talks later this week

General Trend:

- Lower government bond yields weigh on Asian financial shares

- Chinese Energy and Financial companies lead declines

- Brokers and big banks decline in Japan, Softbank drops over 4%

- Regional bank Aozora declines over 6% in Japan after profit warning

- Thai Baht (THB) rises after recent elections

- Fed’s Evans: Don't expect rate increase until H2 2020

- US politicians react to release of Mueller report on Trump probe

- US/China due to hold trade talks in China on March 28-29th.

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.9%

- (NZ) New Zealand Shadow Board: Continues to recommend no change to RBNZ rates

- WBC.AU Guides H1 negative impairment on cash earnings of A$260M due to provisions from customer remediation programs

- (AU) Australia MoF sells A$500M v A$500M indicated in 2.75% 2024 bonds; avg yield 1.4465%; bid to cover 5.6x

Japan

- Nikkei 225 opened -1.7%

- 8304.JP Cuts FY18/19 Net profit forecast to ¥36.0B v ¥43.0B prior; cites lower transaction revenues and poor trading results; Announces capital increase for GMO Aozora Net Bank (subsidiary)

- (JP) Bank of Japan (BOJ) Gov Kuroda: During a future policy exit, BOJ earnings will decline but yields should also rise, raising BOJ bond earnings; BOJ has been preparing savings to prepare for JGB fall

- (JP) Former BOJ Official Nakaso: Policies likely to remain accommodative for longer; Renewed accommodation is good for the short term but could be negative in long-term due to more risk

- (JP) According to Nikkei poll, BOJ Tankan business conditions index for large manufacturers is expected to fall 5 points in March

- (JP) Japan Jan All Industry Activity Index M/M -0.2% v -0.4%e

Korea

- Kospi opened -1.3%

- (KR) Bank of Korea (BOK): Domestic consumption has kept expanding but exports growth has declined since December last year due to falling semiconductor prices amid prolonged correction in investment - BOK report

- (KR) Pres Trump withdraws additional sanctions on North Korea – press

- (KR) South Korea FY18 short term time deposits at South Korea banks +17% y/y - Yonhap

- (KR) Bank of Korea (BOK) sells KRW1.26T in 1-yr Monetary Stabilization Bonds (MSB); avg yield 1.81% v 1.82% prior

- (KR) Bank of Korea (BOK) Gov Lee: KRW10T extra budget will have impact on growth - speaking in Parliament

China/Hong Kong

- Hang Seng opened -2.1%; Shanghai Composite opened -1.5%

- 386.HK Reports FY18 (CNY) 61.6B v 51.2B y/y; Op 82.3B v 71.5B y/y; Rev 2.89T v 2.36T y/y; Guides FY19 CAPEX CNY136.6B

- (CN) US said to note China initial offer related to digital trade was not sufficient; trade talks due to be held in China later this week - FT

- (CN) China plans to reduce the patent review time by 15% in 2019; review time for trademarks to be reduced to 5 months - Xinhua

- (CN) China PBoC Open Market Operation (OMO): Skips for 4th consecutive session; Net drains CNY60B v nil prior

- (CN) China PBoC sets yuan reference rate: 6.7098 v 6.6944 prior

- (CN) China PBOC Deputy Gov Pan: will increase transparency of yuan fixing

- (CN) China Vice Premier Zheng: China will continue to cut import taxes and create a first rate environment for foreign businesses as it opens up the economy - speaking at China Development Forum

- (CN) China Fin Min Liu Kun: Govt will speed up bond sales and the use of the funding to boost domestic demand - speaking at China Development Forum

- (CN) China faces $540B pension shortfall; must educate population about retirement – SCMP

Other

- (SG) Singapore Feb CPI M/M 0.5% v 0.6%e; Y/Y: 0.5% v 0.6%e

- (TH) Thailand Palang Pracharat party (backed by military) is ahead in the first election since 2014 coup, cites prelim result with 92% of the votes counted – Press

North America

- (US) US Attorney General Barr releases special counsel Mueller report findings: Finds no collusion with Russia on 2016 Presidential elections but falls short of calling him innocent; identifies two Russian influences

- TMO Confirms to Acquire Brammer Bio, a Leader in Viral Vector Manufacturing for $1.7B in cash; accretive to adj EPS by $0.10 in first full year

- (US) Fed Evans (dove, voter): Fed policy is neither accommodative nor restrictive at this point; its a good time to be cautious and pause; don't expect rate increase in H2 of 2020; Fed funds rate arguably close to neutral - speaking in Hong Kong

Europe

- (UK) 11 Cabinet Ministers have confirmed they want to replace PM May with her Deputy David Lidington; her behavior is being called into question - London Times

- (UK) Chancellor of the Exchequer Hammond (Fin Min): UK must find a way to leave the EU but replacing PM May will not help; second referendum is a perfectly coherent proposition which deserves to be considered – Sky

- (EU) ECB's Rehn (Finland): Euro zone growth has slowed down significantly and we must be worried; Brexit is the biggest threat to EZ in the short term - German press

- (TR) Turkey President Erdogan: Reiterates stance that those in finance sector who buy foreign currencies on the expectation of a TRY currency (Lira) decline will pay 'very heavy price' - financial press

Levels as of 1:20 ET

- Nikkei 225, -3.2%, ASX 200 -1.1%, Hang Seng -1.7%; Shanghai Composite -1.1%; Kospi -1.7%

- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.7%, Dax -0.1%; FTSE100 -0.1%

- EUR 1.1306-1.1289 ; JPY 110.14-109.70 ; AUD 0.7087-0.7065 ;NZD 0.6886-0.6871

- Gold +0.3% at $1,322/oz; Crude Oil -0.8% at $58.55/brl; Copper flat at $2.848/lb