BOJ makes forward guidance more specific, considers ETF lending program

Asia Market Update: BOJ makes forward guidance more specific, considers ETF lending program; Hynix rises on outlook commentary; Japan’s Golden Week and currency talks in focus

General Trend:

- Chinese markets decline as energy, materials, financial and property shares weaken

- Large Chinese steelmaker Baoshan Iron & Steel declines on profit drop

- Japanese equity market supported by chip-related companies; Brokers decline ahead of earnings

- Chipmaker Hynix rises despite weaker Q1 earnings, sees price declines slowing and affirmed shipment forecast

- Hynix share price gains support Asian chipmakers

- Kia Motors declines on revenue miss, sees H2 rebound in China

- UMC rises over 9% in Taiwan on buyback

- Facebook rises over 7% in afterhours trading on better results

- Korean Won (KRW) and bond yields decline on surprise GDP contraction

- AUD/JPY remains heavy after weaker Aussie Q1 CPI, May RBA meeting in focus

- PBOC continues to skip OMOs and drain liquidity amid RRR debate

- China PBoC attempts to clarify policy stance, gov't bond yields decline

- Nintendo expected to report earnings after Nikkei close

- Chinese Q1 earnings starting to pickup

- Japan Fin Min Aso is expected to discuss forex issues with US Treasury Sec Mnuchin this week, Aso is expected to travel to the US on April 25th (Thursday)

- Japan’s Golden Week holiday is approaching. Japan's exchanges are due to be closed between April 27 (Saturday) to May 6th (Monday)

- US companies expected to report on Thursday morning include Bristol-Myers, Cleveland Cliffs, Comcast, Freeport McMoran Copper, Hess, Hershey, International Paper, Southwest Airlines, 3M, Altria, UPS, Valero, Waste Management, Xerox

Headlines/Economic Data

Australia/New Zealand

- ASX 200 closed for holiday

- (AU) China said to maintain Australia coal 'go-slow' until after elections - US financial press

Japan

- Nikkei 225 opened -0.1%

- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; adjusts forward guidance: to keep extremely low rates at least through around Spring 2020, will consider introduction of ETF lending facility

- (JP) BOJ Quarterly Outlook for Economic Activity and Prices: Cuts GDP and core CPI outlooks, initiates FY21/22 guidance

- (JP) Japan PM Abe calling for deeper cooperation in the economy and defense during summit with Italy PM Conte - Nikkei

- 7201.JP Cuts FY18/19 Net ¥319B; Op ¥318B; Rev ¥11.57T (prior Net ¥410.0B; Op ¥450.0B; Rev ¥11.6T); cites adverse Q4 operating environment

- 4217.JP Hitachi Ltd to start taking acquisition bids for Hitachi Chemical in May; the unit could fetch ¥600-700Be – Nikkei

- (JP) Japan Chief Cabinet Sec Suga to visit the US from May 9-12th

Korea

- Kospi opened -0.2%

- (KR) SOUTH KOREA Q1 PRELIMINARY GDP Q/Q: -0.3% V 0.3%E (weakest since Q4 2008); Y/Y: 1.8% V 2.5%E; to host emergency meeting on GDP report

- (KR) South Korea Fin Min Hong: Expect Korea GDP recover Q2 and onwards on fiscal spending; H2 to be stronger than H1; will still try to reach growth target (2.5%)

- (KR) North Korea leader Kim has replaced Kim Yong Chol, blaming him for failed summit with US in Vietnam – Nikkei

- 000660.KR Reports Q1 (KRW) Net 1.1T v 1.1Te, Op 1.37T v 1.5Te; Rev 6.77T v 6.5Te

- (KR) Bank of Korea (BOK) Official: Latest BOK forecast downgrade reflected GDP, no need to be pessimistic on economy

- (KR) FX dealers suspect South Korea regulators taking smoothing operations to curb Won's weakness

China/Hong Kong

- Hang Seng opened -0.5%; Shanghai Composite opened -0.3%

- (CN) CHINA PBOC: WILL SET UP POLICY FRAMEWORK TO IMPLEMENT RELATIVELY LOW RRR FOR SMALL AND MEDIUM BANKS; WILL USE FUNDS RELEASED FROM LOWER RRR FOR SMALL AND MEDIUM BANKS TO SUPPORT PRIVATE AND SMALL COMPANIES - Chinese press

- (CN) China National Bureau of Stats (NBS) Chief Ning: Rising pork prices can be controlled; Exports to face risks from downward global demand

- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 4th consecutive session (used TMLF yesterday); Net: CNY80B drain v nil prior

- (CN) China PBOC Deputy Gov Liu Guoqiang: Reiterates prudent monetary policy is overall appropriate, neither tight nor loose; policy stance has not changed

- (CN) China PBOC thought to pause in RRR cuts, better GDP has reduced urgency for action - financial press

- (CN) China PBoC sets yuan reference rate: 6.7307 v 6.7205 prior

- (CN) China Premier Li: Reiterates that domestic economy faces downward pressure (overnight)

- (CN) China Mar Swift Global Payments CNY: 1.9% v 1.9% prior

- (CN) China Fin Min Liu: China must balance finance access and debt sustainability

- (CN) China PBOC Gov Yi Gang: Will keep building open market finance systems for belt and road initiative (BRI)

- (CN) Former China PBOC adviser Li: Economic recovery momentum basically stable; will have to wait and see if another RRR cut is needed

Other Asia

- (PH) Philippine govt expected to block bidders from China from the country's largest shipyard, Subic Bay, due to national security concerns - Nikkei

North America

- (US) DOE CRUDE: +5.5M V +0.5ME; GASOLINE: -2.1M V -1ME; DISTILLATE: -0.7M V -1ME

- (IR) Iran Foreign Min Zarif: US Navy ships can pass through Strait of Hormuz; Iran is committed to freedom of navigation

- GOOG Subsidiary, Wing, first to be awarded FAA certification to begin drone deliveries in the US – press

- (CN) US official: Confident China will be able to find alternative suppliers to smooth transition from Iran oil; also working with South Korea to ensure supply for petrochemical companies, confident US oil quality issues can be resolved

Europe

- CBK.DE Deutsche Bank and Commerzbank not likely to announce intention to merge this week, notes resistance from parties including investors and unions - US financial press

Levels as of 1:20 ET

- Nikkei 225, +0.5%, ASX 200 closed, Hang Seng -0.1%; Shanghai Composite -0.4%; Kospi -0.5%

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

- EUR 1.1162-1.1144 ; JPY 112.24-111.84 ; AUD 0.7024-0.7003 ;NZD 0.6608-0.6584

- Gold -0.1% at $1,277/oz; Crude Oil -0.2% at $65.73/brl; Copper +0.1% at $2.912/lb