Equities remain lower

Asia Market Update: Equities remain lower, USD fails to make ground on US political shake up; US may implement stronger tariffs on China

Headlines/Economic Data

General Trend: Asian equity markets trade generally lower: Trade concerns being cited according to press reports

-Financials decline amid drop in bond yields

-Toyota to offer workers total pay increase of 3.3% amid calls for 3% wage hikes by Japan’s government

-China issues Jan-Feb Industrial Production, Lunar New Year impact unclear

- Yesterday saw the first time 10-yr JGBs failed to trade since June 2017

- President Trump fires Sec State Tillerson, replacing him with CIA director Pompeo

Japan

-Nikkei 225 opened -0.9%; closed -0.9%

- Toyota Motor, 7203.JP Planning to raise pay by 3.3% this year – Asahi

-Nikkei-weighted Fast Retailing declines over 2% on below avg volume

- (JP) Participants in the QUICK survey see USD/JPY at ¥106.39 at the end of March v ¥109.99 seen in poll taken in late Feb – Nikkei

- (JP) Japan Jan Core Machine Orders M/M: 8.2% v +5.2%e (fastest pace in 2-yrs); Y/Y: +2.9% v -0.7%e

- (JP) Bank of Japan (BOJ) Jan 22-23rd Policy Meeting Minutes: Markets have become more sensitive to BOJ policy

- (JP) Japan PM Abe: Did not order doctoring of Moritomo documents; Want Fin Min Aso to rebuild ministry of finance

-Nissan, 7201.JP Approves 2.4% wage raise, ¥3,000/month base pay raise - Japan press

- (JP) According to analysts international investors are worried about "Abexit" with $2.1B in funds flowing out of 70 Japan focused funds so far this month – Nikkei

- Honda, 7267.JP Said to tell union that it plans to raise base pay by ¥1,700/month

-(JP) BoJ Gov Kuroda: Reiterates BoJ should not discuss timing and details of stimulus exit at the moment

Korea

-Kospi opened -0.7%

- (KR) According to OECD South Korea likely to maintain 3% GDP through 2018 and 2019 - Korean press

- (KR) South Korea Feb Export Price Index M/M: +1.0% v -0.4% prior; Y/Y: -1.3% v -3.5% prior; Import Price Index M/M: +0.7% v +0.7% prior; Y/Y: +0.4% v -2.4% prior

- (KR) South Korea President Moon: Urges govt to quickly come up with measures to help small and medium-sized enterprises, as well as people and businesses in Gunsan, the region hit by the planned shutdown of the GM Korea plant

- (KR) Pres Trump: something positive will come out of Korea situation

- (KR) South Korea President Moon and North Korea leader Kim may discuss declaring an end to Korean war - Korean press

China/Hong Kong

-Hang Seng opened %, Shanghai Composite %

-Hang Seng Financials Index -1.5%, Information Technology -1.3%

- (CN) Trump admin reportedly considering imposing $60B in tariffs on Chinese goods - press (earlier reports said Trump wanted over $30B in tariffs)

- (CN) China monetary policy must serve high quality economy - China Daily

- (CN) Shanghai plans to encourage state-owned enterprises (SOEs) to list shares - Chinese Press

- (CN) China PBoC Open Market Operation (OMO): Injects CNY50B v CNY60B prior in 7 and 28-day reverse repos; Net injection CNY50B v CNY60B prior

- (CN) PBOC sets yuan reference rate at 6.3205 v 6.3218 prior

- (HK) Hong Kong Finance Sec Chan: Hong Kong will subsidize cost of bond issues up to HK$2.5M

- (CN) China Feb Fixed Assets Ex Rural YTD Y/Y: 7.9% v 7.0%e

- (CN) CHINA FEB INDUSTRIAL PRODUCTION YTD Y/Y: 7.2% V 6.2%E

- (CN) CHINA FEB RETAIL SALES YTD: 9.7% V 10.0%E

- (CN) China NBS: External and domestic demand remains solid; have the conditions to reach 6.5% GDP target

-(CN) China to announce PBOC Gov Zhou replacement Monday March 19th; front runners include Politburo member Liu He or economist Xie Fuzhan - SCMP

-Cathay Pacific, 293.HK Reports FY17 (HK$) Net loss 1.3B v loss 2.3Be; Rev 97.3B v 94Be (2nd consecutive yearly loss, 1st time in history of company)

Australia/New Zealand

-ASX 200 opened -0.1%; closed -0.6%

- ASX 200 Telecom Index -2.4%, REIT -1%, Financials -0.8%

- National Australia Bank, NAB.AU Staff were approving loans they knew that were fake in order to meet sales targets and trigger incentive payments - AFR

- (NZ) New Zealand Q4 Current Account (NZ$): -2.77B v -2.5Be; Current Account GDP Ratio YTD: -2.7% v -2.6%e

- (AU) Reserve Bank of Australia (RBA) Kent: Mortgage bond issuance has stayed at post crisis high; Accommodative monetary policies and generally low levels of inflation are contributing to easy financial conditions for issuers. No reason RBA moves have to be in 25bps increments

Looking Ahead: New Zealand Q4 GDP data due for release on Thursday

Other Asia

- (ID) Indonesia Central Bank (BI): Rupiah has been stable since last week; we have consistently maintained rupiah level

-(SG) Singapore Monetary Authority (MAS) Survey: 2018 GDP growth seen at 3.2% v 3.0% estimated in Dec

North America

- US equity markets ended lower: Dow -0.7%, S&P500 -0.6%, Nasdaq -1.0%, Russell 2000 -0.6%

- S&P500 Technology -1.2%, Financials -1.1%

- (US) Pres Trump has removed US Secretary of State Rex Tillerson; nominates current CIA Director Mike Pompeo to be new Secretary of State

- (US) Trump says he and Tillerson disagreed on the Iran deal; Pompeo agrees with him that Iran nuclear deal is terrible

- (US) Reportedly Tillerson wanted to remain in the job; Trump wanted to reshuffle his foreign relations team ahead of potential talks with North Korea – press(US) Weekly API Oil Inventories: Crude: +1.2M v +5.7M prior

- QCOM Following opposition from the US government Broadcom is expected to abandon bid - US financial press

- (US) Pennsylvania Special Election Results: Conor Lamb (D) leads by 95 votes with 109,945 vote v Rick Saccone (R) with 109,850 votes; 99% of votes counted

-(US) Weekly API Oil Inventories: Crude: +1.2M v +5.7M prior

Looking Ahead: US Feb Retail Sales to be released, along with the weekly DOE Crude Oil Inventories

Europe

-(UK) UK PM May Brexit Committee said to agree to open borders until 2021 - UK Press

-(EU) EU Commission draft proposal: banks to be required to have higher prudential backstops for new loans originating after March 14th that go bad – press

-G20 Leaders March 20th draft communique: plan to reiterate summit conclusions on trade from July 2017; To say they are working to strengthen trade contribution to their economies; Will refrain from competitive devaluations and not target exchange rates for competitive purposes; to say flexible exchange rates where feasible can serve as a shock absorber - press

Looking Ahead: OPEC monthly report due to be released

Levels as of 01:00ET

- Hang Seng -1.4%; Shanghai Composite -0.4%; Kospi -0.5%

- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax 0.0%; FTSE100 -0.1%

- EUR 1.2412-1.2389; JPY 106.75-106.39; AUD 0.7878-0.7852;NZD 0.7354-0.7322

- Apr Gold +0.3% at $1,330/oz; Apr Crude Oil +0.1%at $60.77/brl; May Copper +0.9% at $3.16/lb