Asia market update: Kiwi plummets -1.0% on RBNZ hold, 2-yr yields -16bps; Soft AU CPI fails to impact AUD; HK Budget brings property relief; Toyota holding out on Spring wage talks?; US Q4 GDP tonight.

General trend

- New Zealand RBNZ held its OCR at 5.50%, ending some recent speculation as to a potential hike, and dowsing cold water on further hikes for the foreseeable future by saying in its statement that the NZ economy has limited capacity to absorb further upside inflation surprises.

- RBNZ also lowered its peak OCR rate from 5.69% to 5.60% while also noting that the outlook for China remains particularly weak (which still comprises nearly 30% of NZ exports).

- The Kiwi immediately plummeted -0.8%, with NZ 2-yr yields -14bps at 4.82%, later extending falls to 1.0% and -16bps.

- In the aftermath of the RBNZ hold, the Aussie dollar also ended up falling -0.2%, after initially holding firm following the earlier softer than expected CPI figures out of Australia.

- Country Garden (2007.HK) fell -10% after a winding-up petition was lodged in Hong Kong by one of its creditors.

- The Hang Seng extended its drop to -1% as the Hong Kong 2024 budget speech began, but pared losses as the speech progressed amid the scrapping of all stamp duties on property transactions and other measures.

- HK Mainland prop index went from -2.4% amid the Country Garden news to +2.2% after the Budget speech.

- Amid the spring wage negotiations between Japanese corporates and unions in Japan (that will be closely watched by the BOJ), Toyota failed to reach agreement with its union’s demands in the second meeting between the parties. Note that in the past two years Toyota has accepted the union’s demands in full on the first meeting.

- Japan BOJ Exec Dir Shimizu sounded a dovish tone when he said today that the likelihood of inflation target achievement is still not 'sufficiently high'. However, JPY showed no weakness on the comments.

- US equity FUTs flat during Asian trading.

Looking ahead (Asian time zone)

- Wed 28th (Wed night) US Q4 GDP.

- Thu 29th JP Jan Industrial Prodn + Retail Sales, AU Retail Sales, (Thu night) IN Q4 GDP, DE Feb inflation, CA Q4 GDP, US PCE + Personal Spending + Feb initial Jobless.

- Fri 1st JP Mnfg PMI, CN NBS Mnfg PMI + Caixin Mfg PMI, JP Consumer Confidence, (Fri night) EU Feb Inflation, US ISM Mnfg & Services PMI.

Holidays in Asia this week

- Feb 28th Wed Taiwan.

- Mar 1st Fri South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,652.

- Australia Jan CPI Y/Y: 3.4% V 3.6%E.

- Australia Q4 Construction Work Done: +0.7% v 0.6%e.

- Reserve Bank of New Zealand (RBNZ) leaves official cash rate (OCR) unchanged at 5.50%; as expected (Lowers OCR peak rate from 5.69% to 5.60%).

- RBNZ Gov Orr: New Zealand economy has evolved broadly as expected - post rate decision press conference.

- New Zealand to sell NZ$2.0B in new May 2035 bonds in Mar (4 auctions at NZ$500M each).

China/Hong Kong

- Hang Seng opens +0.3% at 16,833.

- Shanghai Composite opens flat at 3,016.

- Country Garden 2007.HK Winding-up petition filed by Ever Credit in Hong Kong in relation to HK$1.6B non-payment; 1st hearing on May 17th - press.

- Hong Kong 2024 Budget: Momentum for economic recovery needs to be improved amid global challenges.

- HKMA says for residential properties for self-occupation, the max LTV ratios will be adjusted to 70% for properties valued at HK$35M.

- BYD (1211.HK) Exec: BYD has no plans to sell passenger EVs in the US; Refuting rumors BYD was planning to enter the US – Electrek.

- China MIIT [industry ministry] Official: China solar industry sees production and job cuts.

- (UK) Reportedly UK considering probe of Chinese EV subsidies – press (overnight update).

- China reportedly to prevent fluctuations in the housing market - State TV (overnight update).

- Hong Kong Jan Trade Balance (HKD): +3.6B v -35.5Be (overnight update).

- China Gaming Regulator (NPPA) approves 111 domestic online games in Feb – press (overnight update).

- China PBOC: To use monetary tools in full and use them well – press (overnight update).

- China PBOC sets Yuan reference rate: 7.1075 v 7.1057 prior.

- China PBOC Open Market Operation (OMO): Sells CNY324B in 7-day reverse repos; Net injects CNY275B v injects CNY343B prior.


- Nikkei 225 opens -0.1% at 39,189.

- BOJ Exec Dir Shimizu says likelihood of inflation target achievement is still not 'sufficiently high' - Japan press.

- Toyota (7203.JP) Yet to reach wage agreement with union in 2nd meeting - Japanese press.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 5~10 Years; 10~25 Years and > 25 Year maturities.

- MUFG Securities Co. analysts believe BoJ is setting the stage for an exit from negative rates which could come as early as at the next meeting in March (overnight update).

South Korea

- Kospi opens +0.2% at 2,629.

- South Korea fertility rate fell to 0.72 in 2023, from 0.78 in 2022 - Statistics Korea.

- South Korea Watchdog Chief: May give ‘clearer’ picture on follow-up policies regarding short-selling ban sometime in March.

Other Asia

- Taiwan Jan Export Orders Y/Y: +1.9% v -3.6%e (2nd positive Y/Y pace in 16 months); Sees February orders down between -15.7% and -11% y/y (overnight update).

North America

- (US) House Speaker Johnson offered Mar 8th and Mar 22nd as the new funding deadlines, expressed a willingness to delay funding deadlines – Punchbowl.

- Former US Pres Trump wins Michigan Republican Primary (as expected) - US press.

- US) Fed’s Bowman (voter, hawk): Reiterates remains cautious on monetary policy; Willing to raise policy rate if inflation progress stalls or reverses.

- (US) Treasury $42B 7-year note auction results: Draws 4.327% V 4.109% prior, bid-to-cover ratio: 2.58 V 2.57 prior and 2.53 over last 12 auctions.

- House Speaker Mike Johnson: Will work to prevent a government shutdown (deadline is Friday).

- OPEC+ reportedly to consider voluntary oil output cuts into Q2 and may extend them until year end – sources.

- US) Feb Richmond Fed manufacturing index: -5 V -9E; New Orders -5.

- US) Dec FHFA house price index M/M: 0.1% V 0.3%E; Q/Q: 1.5% V 2.1% PRIOR.

- AAPL Reportedly winding down EV car plans; Shifting some workers to generative AI or cutting their position - press.

- Feb Dallas Fed Services Activity: -3.9 v -9.3 prior.

- Feb Consumer Confidence: 106.7 v 115.0e; Expectations index: 79.8 v 81.5 prior (revised from 83.8); Present situation index: 147.2 v 154.9 prior (revised from 161.3).

- Feb Richmond Fed Manufacturing Index: -5 v -9e; New Orders -5.

- Atlanta Fed GDPNow: Raises Q1 GDP forecast from 2.9% to 3.2%.

- Jan Preliminary Durable Goods Orders: -6.1% v -5.0%e; Durables (ex-transportation): -0.3% v +0.2%e; Capital Goods Orders (non-defense/ex-aircraft): 0.1% v 0.1%e; Capital Goods Shipments (non-defense/ex-aircraft): 0.8% v 0.2%e.


- BOE Dep Gov Ramsden: Looking more evidence about inflation persistence and how long Bank Rate should maintain at current level.

- UK Chief of Defence staff: We are not on the cusp of war with Russia. We are not about to be invaded; The biggest reason that Putin doesn’t want a conflict with NATO is because Russia will lose and lose quickly.

- G20 Finance Ministers draft communique said to be discussing language on global tax agreement by Jun; affirm its exchange rate commitment - financial press.

- Hamas official: US Pres Biden's comments on halt to Gaza war are premature; Leaked truce proposal does not meet our demands.

- Chancellor of the Exchequer (Fin Min) Hunt reportedly expected to cut employee national insurance by at least 1% and freeze fuel duty in Spring Budget next week; Hunt said to announce a tax on vapes in his Budget deter children from picking up habit & raise money - UK press.

Levels as of 00:20 ET

- Nikkei 225 -0.1% ; ASX 200 -0.1% ; Hang Seng flat ; Shanghai Composite -0.5%; Kospi +1.1%.

- Equity S&P500 Futures flat; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 flat.

- EUR 1.0831-1.0848; JPY 150.40-150.64; AUD 0.6515-0.6550; NZD 0.6103-0.6178.

- Gold -0.2% at $2,039/oz; Crude Oil -0.4% at $78.55/brl; Copper -0.4% at $3.8382/lb.

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