Chinese press speculates room to loosen policy

Asia Market Update: Equities track overnight weakness; Chinese press speculates room to loosen policy; Takeda improves offer for Shire

General Trend:

-Asian equities track declines in the US

-Canon Inc declines ahead of expected Q1 earnings report

-Takeda declines over 9% after again raising bid for Shire

-LG Display moves between gains and losses; Q1 results below ests, cut Capex forecast

-Komatsu declines over 4% after results and comments from Caterpillar

-Taiwan officials comment on recent declines in the equity market

-Recently announced China PBoC RRR cut took effect today

-Chinese press continues to speculate about further RRR cuts

-PBoC drained liquidity in OMO in order to ensure ‘reasonable and stable’ bank liquidity

-Standard Chartered HK unit said to raise term deposit rates in the face of higher money market rates

-Various automakers comment at the Beijing auto show

- South Korea Q1 prelim GDP data due for release on Thursday

- Bank of Japan (BoJ) 2-day policy meeting begins on Thursday, decision and forecasts expected on Friday (April 27th)

 

Headlines/Economic Data

Japan

-Nikkei 225 opened -0.7%; closed -0.2%

-TOPIX Electric Appliances index -1.1%, Iron & Steel -0.7%, Securities -0.7%

-Automakers outperform as USD/JPY moved above ¥109

- Kobe Steel, 5406.JP Japanese prosecutors have begun investigating Kobe Steel's quality data scandal, which could lead to charges - Nikkei; later confirmed by the company

- (JP) Japan LDP Official: Dissolving lower house is an option - Japan press

-(JP) JAPAN FEB ALL INDUSTRY ACTIVITY INDEX M/M: 0.4% V 0.5%E

Korea

-Kospi opened -0.8%

- (KR) South Korea Apr Consumer Confidence: 107.1 v 108.1 prior (1-yr low)

-LG Display, 034220.KR Reports Q1 (KRW) Net loss 59.5B v loss 9.5Be; Op loss 98.3B v profit 12.7Be; Rev 5.7T v 6.0Te

-(KR) South Korea Finance Ministry reiterates will take measures if herd behavior is seen in FX, FX rate to be determined by market

China/Hong Kong

- Hang Seng opened -0.5%, Shanghai Composite -0.5%

- Hang Seng Information Tech Index -2.3%, Telecom -1.3%, Financials -0.6%

- (CN) China does not need 'overly loose' monetary policy, domestic economy has no big downturn risks in 2018 - China Securities Journal

- (CN) China official sees 'big room' for future RRR cut, sees 600-800 bps in RRR cuts in 3 years - Chinese Press

- US President Trump confirms Mnuchin will visit China

- (CN) China PBoC Open Market Operation (OMO): skips OMO v injects CNY30B in 7-day reverse repos prior; Net: drains CNY150B v CNY30B prior

- (CN) China PBoC sets yuan reference rate at 6.3066 v 6.3229 prior

- (CN) China PBOC: RRR cut effective today, will offset impact of maturity; Reminder April 17th: (CN) CHINA PBOC CUTS RESERVE RATIO REQUIREMENT (RRR) BY 100BPS FOR QUALIFIED BANKS (targeted cut); effective Apr 25th

- Techcomp,[+59%], 1298.HK Holders to sell ~44.4% stake to Baodi International Investment; to resume trading on April 25th

-(CN) China officials are drafting guidelines on promoting imports as part of bid to balance foreign trade - CSJ

-(CN) Chinese press looks at comments from Politburo meeting noting that they reiterated monetary policy was stable and neutral but did not mention controlling M2 credit growth like the prior work report - CSJ

Australia/New Zealand

-ASX 200 closed for holiday

Other Asia

- (ID) Indonesia Central Bank urges companies to hedge FX needs beyond regulatory minimum to help maintain Rupiah stability

- (ID) Indonesia Central Bank sells $179.5M in 6 and 9 month FX bills

-(TW) Taiwan Central Bank Gov Yang: Chance to raise key rate in June isn't high

North America

-US equity markets ended lower: Dow -1.7%, S&P500 -1.3%, Nasdaq -1.7%, Russell 2000 -0.6%

-S&P500 Industrials -2.8%, Materials -2.7%

- Southwest Airlines LUV Completed all engine inspections under emergency order; continuing additional voluntary engine reviews; Declines comment on the results of the inspections of engine fan blades

- (US) Weekly API Oil Inventories: Crude: +1.1M v -1.0M prior

- (CA) Canada Foreign Min Freeland: NAFTA negotiations to continue tomorrow; prepared to respond to new proposals

-(CA) China rating agency Dagong Global Credit cuts Canada sovereign outlook to Negative

-(US) Republican Lesko wins special election for Arizona US House Seat (as expected) - US Press

Europe

- (DE) Reportedly Germany to lower 2018 GDP growth outlook to 2.3% from 2.4% - press

- (IT) Italy 5-Star Party leader Di Maio: talks with the Northern League have ended; idea of a coalition govt with the center-right has passed

- Shire, SHP.UK Takeda makes revised proposal in cash and shares totaling £49/shr (£27.26 in new Takeda shares and £21.75 in cash) for total value of £46B

-(UK) EU said to be prepared to offer Britain a better trade deal if the UK decides to stay inside the customs union after Brexit - financial press

- Kering [KER.FR]: Reports Q1 Rev € 3.12B v €2.80Be

- OSRAM [OSR.DE]: Reports preliminary Q2 rev €1.01B, adj EBITDA margin 15.1%; cuts FY18 guidance

- Iberdrola [IBE.ES]: Reports Q1 Net €838M v €810Me, EBITDA €2.32B v €2.25Be, Rev €9.34B v €8.3B y/y

 

Levels as of 02:00ET

- Hang Seng -1.0%; Shanghai Composite -0.4%; Kospi -1.0%

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

- EUR 1.2239-1.2211; JPY 109.08-108.79; AUD 0.7606-0.7571;NZD 0.7117-0.7090

- Jun Gold -0.4% at $1,327/oz; Jun Crude Oil -0.1% at $67.61/brl; May Copper -0.2% at $3.13/lb