Markets hit by tech and geopolitics, weekend risk if Iran retaliates

General trend

-Tech-focused news on Taiwan Semi leading chip-relateds down in Asia was interrupted by reports of explosions in multiple Middle East countries; Iran, Iraq and Syria, including in Isfahan, south of Tehran, home to one of Iran's major nuclear facilities. Adding to the tensions were threats from Iran earlier in the day that if Israel did hit Iran’s nuclear sites that Iran ‘will surely hit back’.

- Risk aversion gradually unwound on lack of fatalities or major damage reported.

- WTI Crude quickly shot up +4% and Gold spiked as high as $2433 (+~$50), safe havens Yen +0.7% and Swiss Franc over +1.0% against USD, while Bitcoin plunged -5.5% to under 60,000 amid the tensions

- Nikkei lost over -3.0% with all equity markets down heavily.

- Before the hostilities, Taiwan Semi reported its fastest quarterly revenue growth since 2022, however the stock fell nearly -5% during US trading. When Asia opened Tokyo Electron -7% and Advantest -4.0%. Analysts concerned that among the positive TSM figures was the company forecasting lower chip demand related to some sectors such as autos and smart phones.

- Japan national CPI for March decelerated more than expected across all prints, including prior month prints.

- Japan Fin Min Suzuki backed up yesterday’s comments by currency diplomat Kanda that G7 has confirmed its commitment that excessive FX moves are undesirable.

- Potential trouble with Vietnam as the Central Bank Gov said it was prepared to intervene in FX markets even from today, that it was planning to auction gold bars on Monday and that it was selling USD to banks today at a rate of VND25,400 v the VND24260 reference rate earlier.

- US equity FUTs down as much as -1.4% on the Middle East hostilities, but pared losses to only be down ~1.0% at 05:20 GMT.

Looking ahead (Asian time zone)

- Friday Apr 19th (Fri eve UK Retail Sales).

Holidays in Asia this week

- Fri 19th N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,631.

China/Hong Kong

- Hang Seng opens-0.9% at 16,246; Shanghai Composite opens -0.5% at 3,060.

- HK Offshore Yuan (CNH) overnight HIBOR rises 69bps to 6.14% – financial press.

- China: US propionic acid imports constitute dumping.

- Apple said to remove Whatsapp and Threads from China app store; cites order from the China government related to national security concerns - WSJ.

- China PBOC Gov Pan: More open and inclusive trade will help global capital flows.

- China Agriculture Ministry Official: Expects prices of agricultural products to gradually stabilize and recover.

- China PBoC Dep Gov Zhe Hexin: Reiterates govt stance to keep the exchange rate basically stable; stance will not change; Reiterated will gradually open up the bond market [overnight update].

- SAFE [China FX Regulator] spokesperson Wang Chunying: China Commercial Banks Mar Net FX Purchase: Sell $16.7B v purchase $1.7B m/m [overnight update].

- China Commerce Ministry (MOFCOM): Object to US raising tariffs on Chinese steel and aluminum [overnight update].

- (MX) Mexico’s govt, under pressure from the US, reportedly refusing to offer Chinese automakers incentives as low-cost public land or tax cuts for investment in EV production - press [overnight update].

- ABBN.CH CEO: Seeing positive momentum in China for 1st time this year; China units activity indicates return to growth; Think we will build orders during the year - post earnings comments [overnight update].

- China PBOC sets Yuan reference rate:71046 v 7.1020 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

Japan

- Nikkei 225 opens -0.9% at 37,724.

- JAPAN MAR NATIONAL CPI Y/Y: 2.7% V 2.8%E; CPI EX-FRESH FOOD (CORE) Y/Y: 2.6% V 2.7%E.

- Japan Chief Cabinet Sec Hayashi: Govt to continue to work for wage gains that beat inflation - Japanese press.

- Japan BOJ Gov Ueda: There is a chance that the weak Yen may affect trend inflation and if so it could lead to a policy change.

- Japan Fin Min Suzuki: Meaningful that G7 confirmed commitment that excessive FX moves have a negative impact on the economy.

- Japan sells ¥5.8T vs. ¥5.8T indicated in 3-Month Bills; Avg Yield: 0.0089% v 0.0040% prior; bid- to-cover: 3.07x v 2.49x prior.

- Japan Mar Final Machine Tool Orders Y/Y: -3.8% v -3.8% prelim [overnight update].

South Korea

- Kospi opens -1.3% at 2,603.

- Bank of Korea (BOK) Gov Rhee: Gave intervention signals because recent FX moves were excessive.

- Bank of Korea (BOK) confirms Fmr Dep Gov Kim Jong Hwa and Prof Lee Soo-Hyung as new BOK board members - statement.

- SK Hynix (000660.KR) Partners with TSMC to strengthen HBM technological leadership.

- South Korea Fin Min Choi: Thoroughly monitoring foreign exchange market.

- South Korea Market Watchdog: Asks financial institutions to secure enough credit lines to prepare for deterioration of FX money market [overnight update].

Other Asia

- (VN) Vietnam Central Bank (SBV) Gov: Prepared to intervene in FX market in case of adverse impact on economy, even from today; there must always be measures to keep the system from 'crashing' [comments on SCB].

- India Central Bank (RBI) said to be selling US dollars in onshore spot, sold in NDF in pre-open trade amid tensions in the Middle East - press, citing traders.

- IMF: Urges Asian central banks to focus on domestic inflation, and should avoid making their policy decisions overly dependent on expected Fed moves.

- Taiwan Semi (TSM) Reports Q1 (NT$) Net 225.5B v 206.9B y/y, Op 249.0B v 231.2B y/y, Rev 592.6B v 592.6B prelim (v 508.6B y/y, fastest Rev growth since 2022) [overnight update].

North America

- Paramount (PARA) Sony in talks to join Apollo bid to acquire the co. - NYT.

- (US) Fed’s Bostic (hawk, voter): Economy is slowing down, but slowing down slowly; Reiterates sees one rate cut this year - Comments at Florida event.

- (US) MBA Mortgage Applications w/e Apr 12th: +3.3% v +0.1% prior.

- (MX) Mexico Central Bank (Banxico) Dep Gov Heath: Hard to think that Mexico can go against the Fed's monetary policy cycle; Need to be patient before continuing rate cuts.

- (US) Mid-April Manheim wholesale used vehicle Index at 199.2; -1.9% m/m; -13.7% y/y.

- (VE) US said to reimpose oil ban on Venezuela if Maduro does not act quickly - press.

- (US) DOE CRUDE: +2.7M V +0.5ME; GASOLINE: -1.2M V -1ME; DISTILLATE: -2.8M V -0.5ME.

- (US) Reportedly Biden Admin expected to remove tariff exemption for bifacial solar panels, but no timeline set for the change - press.

- (US) FEDERAL RESERVE BEIGE BOOK: OVERALL ECONOMIC ACTIVITY EXPANDED SLIGHTLY, ON BALANCE, SINCE LATE FEBRUARY.

- IMF Managing Dir Georgieva: Still optimistic Fed will be able to cut rates in 2024.

Europe

- (IR) Follow Up: Situation in Ishafan [Iran] is ‘normal’, no explosion has occurred on the ground; Iran nuclear facilities said to remain unharmed – financial press.

- ISRAEL DEFENSE FORCE (IDF): SIRENS SOUNDED IN NORTHERN ISRAEL.

- (IR) UNCONFIRMED REPORTS OF EXPLOSIONS 'HEARD' IN IRAN, IRAQ, SYRIA - via Iranian and Israeli media.

- (IR) Follow Up: Blast said to be heard in Tabriz City (Iran) – IRNA.

- (IR) Follow Up: International flights said to be canceled at Imam Khomeini International Airport [Tehran, Iran] until 700 GMT.

- (IR) Follow Up: Air Defense System has been activated in the Isfahan province [Iran]; cites Iran source – financial press.

- Co's ad-privacy changes fall short, says UK regulator - WSJ.

- (IL) S&P: Cuts Israel long-term sovereign ratings to A+ from AA-; Outlook negative.

-(RU) Russia govt spokesperson Peskov: Confirm withdrawing peacekeeping troops from Karabakh [**Note: geographic region in present-day southwestern Azerbaijan and eastern Armenia].

- (PT) Portugal Mar PPI M/M: 0.0% v 0.4% prior; Y/Y: -1.4% v -2.5% prior.

- (EU) ECB's Holzmann (Austria) Biggest threat to inflation outlook is geopolitical.

- (EU) ECB's Centeno (Portugal, dove): Making significant progress on inflation; Jun meeting ill be a very important decision; Sees signs of decoupling between the Eurozone and US.

- (UK) BOE's Greene: Getting encouraging news on inflation but will be a bumpy ride back to target.

- (EU) ECB’s Cipollone (Italy): Seeing signs of recovery in EU area; Expect inflation for the rest of 2024 to be at this level more or less.

- (DE) German Fin Min Lindner: We need structural reforms to get out of the current economic slump.

- (EU) ECB's Nagel (hawk, Germany): Likelihood of June cut has increased.

- (DE) ECB’s Schnabel (Germany)Should be prudent to continue to consider the baseline forecast as just one input to policy decisions.

- (UK) BOE Gov Bailey: Our job is to hit inflation target sustainably.

- (EU) ECB Chief Lagarde: Reiterates Eurozone inflation is different from that in the US; European growth is mediocre and much slower than in the US.

Levels as of 01:20 ET

- Nikkei 225 -2.3%; ASX 200 -1.2%; Hang Seng -1.1%; Shanghai Composite -0.2%; Kospi -1.8%.

- Equity S&P500 Futures -0.9%; Nasdaq100 -1.0%; Dax -0.8%; FTSE100 -0.7%.

- EUR 1.0610-1.0646; JPY 153.59-154.59; AUD 0.6362-0.6425 NZD 0.5852-0.5906.

- Gold flat at $2,397/oz; Crude Oil +2.4% at $84.72/brl; Copper -0.2% at $4.4240/lb.