Asian stocks follow US to hit new highs post-FOMC, NZ GDP shows technical recession

Asia Market Update: Asian stocks follow US to hit new highs post-FOMC; NZ GDP shows technical recession; AU$ up on strong jobs data; USD/JPY corrects just shy of 2022 highs; Gold spikes to record high; Focus on BOE rate decision tonight.

General trend

- Asia stocks followed new highs in the US to hit their own fresh record highs in Japan & Taiwan with Australia also close to striking fresh highs and Korea indices at 2 year highs.

- New Zealand entered a technical recession with the second consecutive quarter of negative growth confirmed. NZ 10-year bonds initially fell 12bps. Kiwi dollar, however, rose slightly as the result was overshadowed by the earlier US Fed meeting deemed dovish by the markets. (NZ yields later pared to fall only ~5bps).

- A tier 1 bank in NZ described the NZ recession as “a policy-induced slowdown that's part of the necessary transition from too much fiscal and monetary stimulus in the wake of the pandemic, and added colorfully, “This is what paying the piper looks like, and if we don't pay up, the inflation rats will take over the whole economy,".

- Micron outperformed estimates, +18% A/H. Asia tech stocks followed suit with Korea’s Kospi up more than 2.8% (Samsung Electronics +2.6, SK Hynix +8%, while in Tokyo chip-relateds Tokyo Electron +5%, Advantest +1.8%, Renesas +2.8.

- Nikkei broke new records to approach 41K, up on a broad-based rally with Fast Retailing +3% and Toyota 4% to a fresh record high and Softbank +4%.

- Japanese repo rates turned positive for first time in 8 years as the JPY/USD corrected just short of falling below its 2022 low of 152.

- Australian unemployment fell to its lowest level in six months and the Aussie dollar breaking back above 66c.

- On the back of the weaker dollar Gold spiked as high as $2,225/oz, with Bitcoin rebounding +8% from recent lows.

- US equity FUTs +0.4% to +0.6% during Asian trading.

Looking ahead (Asian time zone)

- Thu Mar 21st (Thu evening BOE rate decision).

- Fri Mar 22nd JP CPI (Fri eve UK Retail Sales).

Holidays in Asia this week

- Wed Mar 20th, Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 7,708.

- AUSTRALIA FEB EMPLOYMENT CHANGE: +116.5K V +40.0KE; UNEMPLOYMENT RATE: 3.7% V 4.0%E.

- AUSTRALIA MAR PRELIMINARY PMI MANUFACTURING: 46.8 V 47.8 PRIOR (2nd month of contraction).

- Australia Dep PM Marles: AUKUS nuclear submarine pact progressing 'at pace' - Australian press.

- Australia and Great Britain sign new defence and security cooperation pact.

- NEW ZEALAND Q4 GDP Q/Q: -0.1% V 0.1%E; Y/Y: -0.3% V 0.0%E (enters technical recession.

- Reserve Bank of New Zealand (RBNZ): Feb Credit Card Spending +1.7% m/m (+2.2% y/y).

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2031 and 2033 bonds.

China/Hong Kong

- Hang Seng opens +1.3% at 16,762.

- Shanghai Composite opens +0.2% at 3,084.

- China banks' interest margin to fall as loan rates fall - PBOC-backed China press in front-page report.

- China PBOC Dep Gov Xuan: Reiterates there is room for the RRR to decline, China monetary policy has ample room.

- China Finance Ministry: Jan-Feb Fiscal Rev -2.3% y/y [ex special factors +2.5% y/y]; fiscal expenditures +6.7% y/y.

- China NDRC Vice Chairman: Reiterates to accelerate approval of investment projects; total bond funds for government.

- China confirms to issue CBNY23B 50-year bonds.

- China policymakers in ‘wait-and-see’ mode on easing; cites brokerage firm analyst – US financial press [update].

- China said to issue special ultra-long bonds mainly via public auctions in the interbank market rather than through targeted sales; Bond issuance to start from Q2 at soonest – press [overnight update].

- US House bill aims to end capital gains tax breaks for China stocks – press.

- China Feb Swift Global Payments (CNY): 4.0% v 4.5% prior.

- PPD (owns Temu) Reports Q4 (CNY) 17.32 adj v 8.34 y/y, Rev 88.9B v 39.8B y/y; Notes it saw growing demand driven by encouraging consumer sentiment [overnight update] Stock up 3.5%.

- Tencent (700.HK) Reports Q4 (CNY) Adj Net 42.7B v 42.0Be, Rev 155.2B v 157.4Be; Intend to at least double the size of its share repurchases from HK$49B to over HK$100B in 2024 (~3.7% of market cap) [overnight update] Stock up 3% today.

- China PBOC sets Yuan reference rate: 7.0942 v 7.0968 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net drains CNY1B v Net CNY0B prior (least amount of gross 7-day repos injected since Aug 11, 2023).

Japan

- Nikkei 225 opens +1.3% at 40,511 (new intra-day record high).

- JAPAN FEB TRADE BALANCE: -¥379.4B V -¥785.0BE.

- JAPAN MAR PRELIMINARY PMI MANUFACTURING: 48.2 V 47.2 PRIOR (10th month of contraction).

- Japan Feb Tokyo Condominiums for Sale Y/Y: -27.6% v 56.6% prior.

- Japan repo rate turns positive for first time since 2016 - financial press.

- Japan BOJ Gov Ueda: Inflation target has come within sight - Parliamentary testimony.

- Japan Fin Min Suzuki: Reiterates it is important for currencies to move in a stable manner; Watching FX levels with a 'high sense of urgency'.

- Bank of Japan said to consider timing of next rate hike; Central bank watchers suggest next move could come in July or Oct – Nikkei.

- Japan Chief Cabinet Sec: Will keep closely watching impact on Japan and global economy [asked about US Fed decision].

- Bank of Japan (BOJ): Japan Household Assets: ¥2,141T v ¥2,121T prior - Quarterly Flow of Funds Report.

- Former Japan MOF official Sakakibara ('Mr Yen'): Japanese authorities may intervene if the yen sinks to 155 to 160 against the dollar – CNBC [overnight update].

- Japan sells ¥499.6B v ¥500B indicated in 10-yr, 20-yr, and 30-yr JGB's in liquidity enhancement auction: Avg accepted spread -0.001% v -0.015% prior, bid-to-cover: 2.90x v 4.48x prior.

South Korea

- Kospi opens +1.5% at 2,731.

- South Korea Mar 1-20th Exports Y/Y: +11.2% v -7.8% prior; Imports Y/Y: -6.3% v -19.2% prior.

- Kepco (015760.KR) Confirms to freeze Q2 power prices.

Other Asia

- Philippines NEDA Chief Balisacan: Philippines GDP growth target to be reviewed Friday - financial press.

- India Mar Preliminary PMI Manufacturing: 59.2 v 56.9 prior (33rd month of expansion and highest since Feb 2008).

- INDONESIA CENTRAL BANK (BI) LEAVES BI RATE UNCHANGED AT 6.00%; AS EXPECTED [overnight update].

- Philippines Central Bank (BSP) Gov Remolona: RRR cut may not coincide with rate cut. Still studying timing and extent of RRR cut [overnight update].

- Vietnam President Vo Van Thuong resigns – press [overnight update].

North America

- (US) Fed Chair Powell: Our general sense is we will start to slow the pace of balance sheet run off fairly soon, we made no decisions today - press conf.

- (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 5.25-5.50%; AS EXPECTED: DOES NOT EXPECT TO CUT RATE UNTIL IT HAS GREATER CONFIDENCE INFLATION IS MOVING SUSTAINABLY TO 2% TARGET.

- (US) FOMC SUMMARY OF ECONOMIC PROJECTIONS (SEP) FOR MARCH: Raises long run rate forecast for first time in over 2 years; Affirms median forecast for 75bps of rate cuts in 2024.

- MU Reports Q2 $0.42 v -$0.27e, Rev $5.82B v $5.33Be (+18% A/H).

- Comparative Analysis of current vs Jan FOMC statements: Only revision was that "job gains have remained strong" (vs "moderated since early last year"); Still seek "greater confidence" that inflation is moving toward target.

- (US) Congressional Budget Office (CBO) 10-year outlook: Raises GDP growth forecast to 2.1% over 2024-2033 (prior: 1.8%).

- National Retail Federation (NRF): US retail sales expected to rise 2.5-3.5% this year; See pace of real GDP near 2.3% for 2024.

- (US) DOE CRUDE: -2M V 0ME; GASOLINE: -3.3M V -1.5ME; DISTILLATE: +0.6M V 0ME.

- AAPL DoJ to file long awaited antitrust case against Apple in Federal court as soon as tomorrow - press.

Europe

- Portugal President names Montenegro [Center-Right Leader] as the new PM.

- (EU) ECB’s Makhlouf (Ireland): Hopeful that ECB rates at top of the ladder.

- (IE) Ireland PM Leo Varadkar confirms to resign, effective when new leader is announced (as speculated).

- ECB's Nagel (hawk, Germany): ECB continuously getting closer to 2% inflationary target.

- ECB's Kazaks (Latvia) stated that he was comfortable with current market pricing on three rate cuts in 2024.

- UK Chancellor of the Exchequer (Fin Min) Hunt commented that an October General Election timing was up to PM to decide.

- EURO ZONE MAR ADVANCE CONSUMER CONFIDENCE: -14.9 V -15.0E.

- (UK) FEB PPI INPUT M/M: -0.4% V 0.2%E; Y/Y: -2.7% V -2.7%E.

Levels as of 00:20 ET

- Nikkei 225 +2.0%, ASX 200 +1.1%, Hang Seng +1.8%; Shanghai Composite -0.1%; Kospi +2.9%.

- Equity S&P500 Futures: +0.4%; Nasdaq100 +0.7%, Dax +1.0; FTSE100 +0.9%.

- EUR 1.0918-1.0939; JPY 150.27-151.30; AUD 0.6579-0.6629; NZD 0.6059-0.6101.

- Gold +2.0% at $2,205/oz; Crude Oil +0.7% at $81.82/brl; Copper +0.4% at $4.1067lb.