China/US trade remains focus but no new actions

Asia Market Update: China foreign reserves rise; China/US trade remains focus but no new actions; N. Korea offers denuclearization talks

General Trend:

-Asian equity markets trade generally higher amid rebound in US equity futures

- Chinese equities gain after 2-day break

-US soybean futures rise over 1.5%

-Upside capped on concerns of more countermeasures out of China regarding trade

-Aluminum producer Rusal declines over 40% in HK after US announces sanctions on Russian elites

-Chinese LCD company TCL and rail equipment firm CRRC comment on the impact of trade on their businesses

-Press reports speculate about whether China President Xi Jinping will discuss trade at this week’s Boao Forum

-PBoC injects liquidity for the first time in 10 sessions, in the face of maturing monetary tools

-Japan Feb Trade and Current Account data below ests

-In Feb, Japanese net sold US Treasuries for 5th straight month; net purchased German and French sovereign debt

-Australian money market rates resume gains

-Korean Won (KRW) gains over 0.4%: US official confirmed North Korea’s leader is prepared to discuss denuclearization

 

Headlines/Economic Data

Japan

-Nikkei 225 opened -0.2%; closed +0.5%

-TOPIX Real Estate index +1.1%

-Mega-banks trade broadly higher

- Toshiba, 6502.JP Largest lenders urging the company to move forward with the ¥2T sale of its memory chip business, despite calculations by activist shareholder Argyle Street that the unit is worth more than twice that amount - FT

- (JP) Japan Feb Current Account Balance: ¥2.08B v ¥2.19Te; Adj Current Account: ¥1.02T v ¥1.39Te

- (JP) Japan Feb Trade Balance (BoP Basis): ¥188.7B v ¥249.7Be

- (JP) In March, Japan bought net ¥1.60T in foreign bonds; Foreigners sold net ¥4.04T in Japan stocks in March; Japanese sell US sovereign debt for 5th consecutive month – MOF

- (JP) Japan Foreign Min Kono: Must keep pressure on North Korea for denuclearization; will discuss with South Korea before North/South summit

Korea

-Kospi opened -0.2%

- (KR) North Korea confirms Leader Kim Jong Un prepared to discuss denuclearization of the Korean Peninsula – US financial press

- (KR) Analysts saying the sharp rise in South Korea minimum wage this year is fueling inflationary pressure and concerns of public charge hikes going forward that can increase the burden on ordinary people - Korean press

- (KR) Bank of Korea (BOK): 2017 real interest rates offered by South Korean lenders fell into minus territory (second lowest in history, 1st time in 6-yrs reached negative)

- (KR) Bank of Korea (BOK) sells KRW1.35T in 1-yr Monetary Stabilization Bonds (MSB) at 1.88%

- (KR) South Korea sells KRW1.7T v KRW1.7T indicated in 5-yr govt bond at 2.395%

China/Hong Kong

-Hang Seng opened +0.9%, Shanghai Composite -0.2%

-Hang Seng Telecom index +2.1%, Consumer Goods +2%, Info Tech +1.8%, Financials +1.7%

- (CN) China Mar Foreign Reserves: $3.143T v $3.147Te (increase after last months decline)

- (US) On Sunday, US Treasury Sec Mnuchin said ‘don’t expect there will be a trade war’, reiterated that the US’ intention is to continue to have talks with China – CBS

- (CN) China government think tank China Academy of Social Sciences (CASS) said China is NOT likely to use US Treasures as ‘trade war weapon’; unlikely to sell Treasuries at 'large scale' in trade dispute – US financial press

- Rusal [-25%], 486.HK Comments on impact of US sanctions on individuals from Russia; initial assessment is that it is highly likely that the impact may be materially adverse to the business and prospects of the group

- (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v Skips prior (1st injection in 10 sessions); Net: CNY30B drain v CNY0B drain prior

- (CN) China PBoC sets yuan reference rate at 6.3114 v 6.2926 prior

- (CN) CNY110B in PBoC monetary tools are expected to mature this week - US financial press

- (CN) PBOC Policy Adviser: China's debt problem is serious but wont cause a financial crisis, will take time to stabilize leverage levels; China should invest more in real assets, rather than investing in Us debt - speaking at Boao conference

- (CN) China iron ore prices hit lowest level in 10 months, trade concerns among factors cited – financial press

- (CN) PBOC adviser Sheng Songcheng: a trade war should not extend to a financial war, not in favor of yuan manipulation - Chinese press

- (CN) China NDRC Researcher Wang Changlin says China-US trade friction impact on economy is limited - China News

Australia/New Zealand

-ASX 200 opened -0.1%

-ASX 200 Telecom index +0.6%, Utilities +0.6%, Consumer Discretionary +0.5%, REIT +0.5%, Financials +0.2%; Energy -0.3%, Resources -0.2%

- NAB.AU Lays off more than 20 bankers from central credit risk department under plan to reduce headcount by 6,000 - AFR

- (AU) Australia PM Turnbull's Coalition trails Labor for the 30th straight survey – financial press

-Atlas Iron [+47%], AGO.AU Confirms stock merger proposal from Mineral Resources; shareholders to receive 1 share of Minerals Resources for every 571 Atlas shares (implied price of 3.02 cents/shr, premium 59%)

- STO.AU Shareholder ENN to start talks with Habour Energy on Santos takeover; See uncertainty on deal completing due to price and timing

-(NZ) New Zealand Fin Min Robertson: Budget will lay out plans for rebuilding services; affirms commitment to debt reduction targets

Other Asia

- (PH) Philippines said to plan interest rate swap – Philippines Press

North America

- (US) No deal 'in principle' related to NAFTA is expected to be announced at the upcoming summit in Lima - financial press

- (US) White House and certain Republicans in Congress are seeking to revise some of the federal spending measures approved under the $1.3T spending bill – US financial press

- (US) Pentagon: Denies reports of US strike in Syria

- (JP) Japan Food Safety Commission: Will start procedures to ease US beef import restrictions

-(US) Fed's Evans (non-voter, dove): US economy is very strong; optimistic about hitting 2% inflation target

Europe

- DBK.DE Expected to replace CEO John Cryan with current co-deputy CEO Christian Sewing - financial press; Follow Up: Confirms current co-deputy CEO Sewing to become CEO, effective immediately

-Barclays [BARC.UK]: Preparing to split euro rates trading team in response to Brexit, planning to move part of the unit that trades government bonds and interest rate swaps away from its main London trading floor - FT

-Royal Mail [RMG.UK]: CEO Moya Greene expected to resign - UK Media

- (HU) Hungary PM Orban wins re-election

-(NO) Norway private sector trade union reached agreement for a 2.8% wage increase for 2018; averts April 8th strike – financial press

 

Levels as of 02:00ET

- Hang Seng +1.3%; Shanghai Composite +0.2%; Kospi +0.4%; ASX +0.3%

- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.8%, Dax +0.7%; FTSE100 +0.8%

- EUR 1.2287-1.2266; JPY 107.07-106.80; AUD 0.7696-0.7671;NZD 0.7303-0.7262

- Jun Gold +0.0% at $1,336/oz; May Crude Oil +0.4% at $62.30/brl; May Copper +0.8% at $3.06/lb