Focus on US Mar NFP, Fed chair Powell

Asia Market Update: Largest risk aversion since the early Aug 2024 panic as Asia plays catch-up to overnight losses in US equities amid plunging yields; Focus on US Mar NFP, Fed Chair Powell.

General trend

- Asia markets, with somewhat muted losses in response to US tariffs yesterday, played catch up after US indices plunged 5-6% in NY trading. Nikkei lost a further -4.0% to below 34,000 for first time since early August, Kospi -2.4% as Pres Yoon’s impeachment was upheld by the Korean Constitutional Court triggering an election within 60 days, while Australia's ASX 200 fell 2.4%, now off >10% and into corrective territory from its Feb 14th record high. Vietnam and Malaysia led a Southeast Asian sell off.

- With HK, China and Taiwan bourses closed, Asian chipmakers were hit hard, following Nvidia’s near 8% overnight loss down to $101/shr (along with heavy losses for the rest of the Mag 7 tech stocks); Hynix -6.7%, Tokyo Electron -5%, Renesas -9.9% Advantest -6.5%; Auto stocks again hit hard, Toyota -5.2%, Honda -3.6%, Mazda 7.7%, Nissan -5.6%, Hyundai -3.6%, Tata Motors -4.7%

- However, it was Japanese financials that were most heavily hit, Mizuho Shares down as much as -11% Mitsubishi UFJ -12%, Sumitomo Mitsui Financial -9.7% with the Japan banking index off as much as -10%, the biggest losses since the early August Yen-unwind last year.

- Japanese bank investors did not like JGB yields being down heavily across the curve, with Japan 10-year JGB yields falling 14bps to 1.19% [lowest since Jan 29th]. BOJ Gov Ueda warned that US tariffs will put downward pressure on the economy, while Japan PM Ishiba called US tariffs a 'National crisis”.

- Commodity currencies Kiwi and Aussie down -1.3% to 1.6% against the greenback.

- US 10-year yields fell to 6-month low of 3.9760%, Crude oil furthered its 6% drop overnight to be just above $66/bbl, while spot Gold was steady around $3,100 as Copper continued its price unwind down to 4.77/lb with Bitcoin up somewhat from overnight lows.

- US equity FUTs -1.0% during Asian trading.

Looking ahead (Asian-weighted news, on Asian time zone)

- Fri Apr 4th (Fri night US Mar NFP, Fed Chair Powell).

Holidays in Asia this week

- Mon Mar 31st India, Indonesia, Malaysia, Philippines, Singapore.

- Tue Apr 1st Indonesia, Malaysia.

- Wed Apr 2nd Indonesia.

- Thu Apr 3rd Indonesia, Taiwan.

- Fri Apr 4th China, Hong Kong, Indonesia, Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 7,834.

- Australia Feb Household Spending M/M: 0.2% v 0.3%e; Y/Y: 3.3% v 3.2%e.

- Major Australian pension funds said to be hit by cyber attack - financial press.

- Australia's ASX 200 falls -10%, into corrective territory from its Feb 14th record high.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite closed for holiday.

- China Commerce Ministry (MOFCOM) Vice Min: China willing to work with EU to maintain rules-based multilateral trading system, bring certainty to global trade.

- FITCH DOWNGRADES CHINA TO 'A'; OUTLOOK STABLE; The downgrade reflects our expectations of a continued weakening of China's public finances and a rapidly rising public debt trajectory during the country's economic transition; In our view, sustained fiscal stimulus will be deployed to support growth, amid subdued domestic demand, rising tariffs and deflationary pressures. This support, along with a structural erosion in the revenue base, will likely keep fiscal deficits high.

- China Commerce Ministry (MOFCOM): China opposes Japanese government export controls on more than a dozen semiconductor-related items [overnight update].

- China Foreign Ministry Daily Briefing: Urge US to correct its wrongdoing; Tariffs severely violates WTO rules, harms rules-based international trading regime [overnight update].

Japan

- Nikkei 225 opens -1.2% at 34,304.

- NIkkei 225 cash trading falls below 34,000 for first time since Aug 7th.

- Japan Feb Household Spending Y/Y: -0.5% v -0.8%e.

- Japan 10-year JGB yield falls 16.5bps to 1.195% [lowest since Jan 29th] - update.

- Japan 2-year JGB yield falls 5bps to 0.700%; 5-year JGB yield falls 8bps to 0.8850%; 20 year JGB yields -7.5bps to 2.015%.

- Bank of Japan (BOJ) Gov Ueda: US tariffs to potentially affect business confidence; US tariffs to put downward pressure on the economy (Japan and global).

- Japan PM Ishiba: Japan should call US tariffs a 'National crisis; Need Govt and opposition response to US tariffs.

- Japan ruling coalition and opposition DPP agree to lower gasoline prices from Jun 2025 through Mar 2026 - financial press.

- Japan sells ¥4.5T vs. ¥4.5T indicated in 3-Month Bills; Avg Yield: 0.3870% v 0.2934% prior; bid-to-cover: 3.03x v 2.37x prior.

- Bank of Japan (BOJ) Dep Gov Uchida: US tariffs to have negative impact on Japan's economy - Parliamentary testimony.

- Japan Finance Min Kato: Concerned US tariffs could have major impact on trade systems and economies - financial press.

- Japan Chief Cabinet Sec Hayashi: Working on coordinating a govt response to US tariffs - financial press.

- Japan Foreign Min Iwaya: Told US counterpart Rubio that imposing reciprocal tariffs is 'extremely regrettable'[overnight update].

Korea

- Kospi opens -1.5% at, 2,450
*South Korea Court: Upholds to oust Former Pres Yoon in a unanimous impeachment decision; Yoon violated the constitution and rule of law; Martial law did not meet the conditions set by the constitution and violated Parliament's rights; Yoon took actions beyond the powers provided in the constitution; Such law violation is unpardonable; An election has now been triggered.

- South Korea reacts to Former Pres Yoon's court ruling for impeachment; Yoon supporters have engaged and destroyed police vehicles.

- South Korea's Acting President Han: Will work on security and trade issues; Will maintain solid security posture after Yoons removal.

- Bank of Korea (BOK) Gov Rhee: Domestic economic conditions worsening due to tariffs [overnight update].

- South Korea Defense Ministry: Reiterates 'no military mobilization' for 2nd martial law, even if Yoon returns [overnight update].

Other Asia

- India Mar Final PMI Services: 58.5 v 57.7 prelim (confirms 44th month of expansion).

- Philippines Mar CPI M/M: -0.2% v 0.1%e; Y/Y: 1.8% v 2.0%e.

- Singapore Feb Retail Sales M/M: 3.0% v 2.8% prior; Y/Y: -3.6% v -0.2%e.

- INTC Said to tentatively join with TSMC in chipmaking JV; TSMC would hold 20% stake with Intel and other US semi companies holding remainder - The Information.

- Malaysia Govt: Not considering retaliatory tariffs despite US tariffs - financial press overnight update].

- Singapore Dep PM Gan: Won't take countermeasures against US tariffs overnight update].

- Thailand Central Bank (BOT): US tariff announcement led to FX market volatility; Ready to manage volatility in market [overnight update].

- Thailand Finance Ministry: Tariffs could impact GDP growth by 1%; plan to boost economy [overnight update].

North America

- Mexico Dep Econ Min Guitierrez: Mexico to continue 'cool-headed' approach to Trump's tariffs; To meet with USTR Rep Greer and US Commerce Dept head Lutnick next week to discuss autos and metals tariffs, plus USMCA agreement - financial press.

- (US) Trump: Open to negotiations on tariffs if other countries offer something 'phenomenal'; Today's market response to tariffs was expected; Like seeing interest rates going down.

- BYTEDANCE.IPO Applovin confirms exploring purchase of TikTok in markets outside of China - filing.

- (US) Sec State Rubio: Trump has been clear about staying in NATO; Need to also increase our defense spending - comments from NATO HQ.

- (US) Mar Challenger Job Cuts: 275.2K v 172.0K prior; Y/Y: +204.8% v +103.2% prior (highest since May 2020).

- (US) Commerce Sec Lutnick: Over the long and medium term US markets will do very well; We remain in negotiations with all major countries - CNBC.

- (US) VP Vance: Tax cuts won't be a way to offset tariffs; Not going to fix things overnight - comments on Fox News.

- (US) FEB TRADE BALANCE: -$122.7B V -$123.5BE.

- (US) INITIAL JOBLESS CLAIMS: 219K V 225KE; CONTINUING CLAIMS: 1.903M V 1.87ME.

- (BR) Brazil Mar Services PMI: 52.5 v 50.6 prior (2nd month of expansion).

- (US) MAR ISM SERVICES INDEX: 50.8 V 52.9E; Employment: 46.2 v 53.9 prior (lowest since 2023); Prices remain sticky with significant increase in the number of respondents reporting cost increases due to tariff activity.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +29 BCF VS. +24 BCF TO +26 BCF.

-(CA) Canada PM Carney: At this time, does not plan to coordinate Canada's response with other countries; Canada will impose 25% tariffs on all vehicles imported from the US that do not comply with the USMCA trade deal; Tariffs will not affect auto parts or vehicle content produced in Mexico.

- (US) Fed's Jefferson (voter): Crucial to assess the full effect of Trump's changes; Latest data shows inflation is moving sideways; There's no need to hurry to adjust rates.

- (US) Reportedly White House considering the idea of launching a tariff investigation into critical minerals imports - press.

- (US) Pres Trump regarding market reaction to tariffs: It's going very well; Market is going to boom; World is looking for ways to make a deal - comments to press.

-(US) Fed's Cook (voter): Worried that inflation risks skewed to upside due to tariffs; Now is time to be 'patient but attentive'; Reduced uncertainty and easing inflation would facilitate rate cuts - speech text.

Europe

- (EU) Finland says Europe must shift defence burden away from the US - FT.

- (RU) Reportedly Trump's inner circle has advised against a call with Russia's Pres Putin until Putin commits to a full ceasefire - US press.

- (ES) Spain PM Sanchez: Europe needs to deploy package of counter-tariffs, other measures; Today, we are responding to US tariffs with €14.1B plan to protect our economy.

- (DE) Germany March New Car Registrations 253.5K, -3.9% y/y - KBA.

- (EU) Official: Sees €290B of exports affected by new US tariffs; Expects to pay €58B in extra duties.

- (EU) Trade Commissioner Sefcovic reportedly to meet US counterparts tomorrow Fri, Apr 4th.

- (EU) GERMANY AND FRANCE REPORTEDLY PUSH FOR "MORE AGGRESSIVE TARIFF RESPONSE" - PRESS.

- OPEC+ agrees to incremental increase of 411K bpd (up from 135K bpd prior) planned for May in addition to two monthly increments - statement following ministerial meeting.

- (EU) ECB ACCOUNT OF MARCH 5-6 POLICY MEETING (AKA MINUTES): Both rate cut or pause on the table at the upcoming Apr meeting.

- (CN) FITCH DOWNGRADES CHINA TO 'A'; OUTLOOK STABLE.

- (CH) Switzerland govt: Finds US calculations on tariffs incomprehensible; Doesn't currently envisage any countermeasures.

- (PL) Poland Central Bank (NBP) Gov Glapinski: Our stance has changed even though we kept rates steady; Polish rate cut possible 'in the nearest period' - post rate decision press conference.

- (US) MAR ISM SERVICES INDEX: 50.8 V 52.9E; Employment: 46.2 v 53.9 prior (lowest since 2023); Prices remain sticky with significant increase in the number of respondents reporting cost increases due to tariff activity.

- (FR) France Pres Macron: We'll react in an organized and unified manner; Trump's trade tariffs are a shock for international trade; Tariffs on some overseas territories are exorbitant.

Levels as of 00:20 ET

- Nikkei 225 -4.0%, ASX 200 -2.4%, Hang Seng closed; Shanghai Composite closed; Kospi -2.4%.

- Equity S&P500 Futures -0.9%; Nasdaq100 -1.0%; DAX -0.1%; FTSE100 -0.4%.

- EUR 1.1037-1.1104; JPY 145.30-146.41; AUD 0.6230-0.6334; NZD 0.5715-0.5798.

- Gold +0.1%% at $3,124/oz; Crude Oil -1.2% at $66.2/bbl; Copper -0.8% at $4.7730/lb.