Markets reverse off lows on reports of Trump’s latest (and dovish) musing on Iran war

Asia market update: Markets reverse off lows on reports of Trump’s latest (and dovish) musing on Iran war; Asia remains fixated on energy supply amid price increases.

General trend and developments

- Global risk assets turned sharply up from session lows and crude oil prices fell from elevated levels on reporting that Pres. Trump told Aides that he is willing to end war Without necessarily reopening the Strait of Hormuz.

- The March data out of Asia has been overall mixed amid the unclear Iran war impact. This, seemingly, validates the recent caution expressed by central bankers, globally.

- Tokyo CPI was generally softer than expected and the data slowed vs Feb/ However, multiple companies in Japan have already announced planned price hikes for April, as they pass on the war-related costs.

- The Philippines Central Bank expects y/y inflation to accelerate in Mar.

- Rising inflation expectations continue to weigh on Australia’s weekly consumer confidence data, at another fresh record low.

- Meanwhile, price increase announcements continue, most recently Chinese liquor giant Kweichow Moutai.

- Asia energy scramble for energy continues, with Philippines govt suspend govt work from 12:00 noon on Apr 1st.

- Sentiment was also impacted by the war in New Zealand’s Mar business confidence.

- China’s official PMIs managed to beat expectations. The Chinese manufacturing figures were supported by new orders and production. Japanese manufacturers expect Mar industrial production +3.8% m/m and +3.3% for Apr.

- RBA Minutes from the March meeting, which saw a narrow 5-4 decision to hike rates, saw the five hawkish members judging the Middle East conflict would further reduce the already constrained supply capacity of the economy and risked de-anchoring of inflation expectations, thus an immediate hike was justified. The minority four members wanted to wait for more information, even if rates would likely need to rise at some point.

- Japan appointed Trade Min Akazawa to an additional role as Minister in charge of securing supply of critical materials, as Asian nations continue to scramble for fuel and other inputs needed for their economies. Akazawa told told G7 and IEA to prepare for more measures, including further coordinated oil reserve releases.

- Japan Fin Min Katayama confirmed the G7 Finance meeting did not discuss oil market intervention specifically, although crude oil futures moves are rippling through the FX market.

- JP 2-year JGB auction completed a flush of reasonable bond auctions in Japan during the month of March, with coverage close to the 12-month average and only the slightest of tails. Japan yield curve fell steeply at the long-end.

- Bank of Korea nominee Gov Shin Hyun-song said that there is no need to worry too much about Korean Won now, comes amid the Korean Won falling 1% to fresh 17 year lows at 1,534/USD. Also comes amid South Korea proposing extra budget of $17.3B (KRW26.2T) to mitigate impact from Middle East conflict, while redeeming KRW1.0T of bonds to avoid roiling the bond market (out of KRW5.0T budgeted last week).

- China vs US competition for key resources has recently heated up in the Democratic Republic of Congo, where China recently reached a new mining agreement, looking to muscle in on a much larger deal struck by the US with the DRC last year. China’s status as the DRC’s biggest creditor is a double-edged sword, giving it leverage while its Chinese firms are already well ensconced in the country, but usurious lending conditions (typically China charges double the rate of interest of western institutions and uses the assets themselves as collateral), as well as harsh working environments have sowed a lot of distrust of China in Africa, culminating in some violent attacks against Chinese workers. DRC produces 14% of global copper and >70% of the world’s cobalt, essential for EVs and ‘clean energy’ technologies.

- US equity FUTs +0.7% to +0.8% during Asia trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

- Tue Mar 31st (Tues night US Feb JOLTs).

- Wed Apr 1st ID Mar CPI, Global Mar Mfng PMIs, US Feb Retail Sales.

- Thu Apr 2nd KR Mar CPI, AU Feb Trade Balance, US Feb Trade Balance.

- Fri Apr 3rd CN Mar RatingDog Services PMI, US Mar Nonfarm Payrolls.

Holidays in Asia this week

- Tue Mar 31st India.

- Thu Apr 2nd Philippines.

- Fri Apr 3rd Australia, Hong Kong, India, Indonesia, New Zealand, Philippines, Singapore, Taiwan, US (and much of Europe and other Christian heritage countries).

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens -0.1% at 8,455.

- (AU) Reserve Bank of Australia (RBA) Mar Minutes: Board members agreed financial conditions needed to be restrictive.

- (AU) Australia Treasurer Chalmers: Does Not expect Q2 GDP contraction.

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 58.8 (vs. 63.1 prior) [Lowest ever].

- (AU) Australia Feb Private Sector Credit M/M: 0.6% v 0.6%e; Y/Y: 7.8% v 7.7% prior.

- (AU) RBA: To lower caps on interchange fees paid by Australian businesses.

- (AU) Australia ASIC: Remakes relief instruments for AFS licensees and overseas banks.

- (NZ) New Zealand Mar ANZ Business Confidence: 32.5 v 59.2 prior.

China/Hong Kong

- (CN) Shanghai Composite opens -0.4% at 3,908; (HK) Hang Seng opens +0.3% at 24,818.

- (CN) China Mar Manufacturing PMI (Government Official): 50.4 v 50.1e.

- (CN) China suppliers said to have ‘warned’ of higher prices for the US due to the closure of the Strait of Hormuz – CNBC [update].

- (CN China PBOC Adviser Huang Yiping: China has room to absorb shock from oil prices if Mid East conflict 'could end soon'.

- (CN) PBOC steps up reverse repos to ensure quarter-end liquidity – China Securities Journal.

- (CN) Follow-up: China said to be targeting offshore trusts in tax crackdown on ultra-rich - financial press.

- (CN) China Securities Journal: The global chip industry is entering a new price upcycle.

- (CN) China AI firms turn to ‘token exports’ amid booming demand – Chinese press.

- (CN) China said to issue plan to develop IoT (Internet of Things) to exceed CNY3.5T by 2028.

- (CN) China flight bookings +20% ahead of the Apr holiday – SCMP.

- (CN) China Mar Vehicle Inventory Alert Index: 57.5 v 56.2 prior - US financial press.

- (CN) China PBOC sets Yuan reference rate: 6.9194 v 6.9223 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY33B in 7-day Reverse Repos; Net injects CNY15B v injects CNY262B prior.

Japan

- (JP) Nikkei 225 opens -1.0% at 51,383.

- (JP) Japan Mar Tokyo CPI Y/Y: 1.4% v 1.6%e; CPI (Ex-fresh food) Y/Y: 1.7% v 1.8%e (Lowest Headline since Mar 2022, lowest Core since Apr 2024).

- (JP) Japan Feb Preliminary Industrial Production M/M: -2.1% v -2.0%e; Y/Y: 0.3% v 0.4%e.

- (JP) Japan Feb Retail Sales M/M: -2.0% v -1.0%e; Y/Y: -0.2% v 0.9%e.

- (JP) Japan PM Takaichi: Cooperation with Indonesia crucial for region's safety; Signs agreement on critical minerals.

- (JP) Japan Fin Min Katayama: Reiterates that best option now is to pass FY26 budget ASAP.

- (JP) Japan PM Takaichi: Will consider support for nations that supply Japan with vital supplies.

- (JP) Japan Industry Ministry: To set up government HQ for securing medical supplies amid Middle East impact.

- (JP) Japan Chief Cab Sec Kihara: Cases where products are not reaching customers; Necessary to progress energy response on Iran situation.

- (JP) Japan Feb Jobless Rate: 2.6% v 2.7%e.

- (JP) Narita Airport delays 2029 planned new runway - Kyodo.

Korea

- (KR) Kospi opens -2.7% at 5,137.

- (KR) South Korean won hits weakest level since March 10th, 1996 - financial press.

- (KR) South Korea reportedly conducts oil reserve swaps for local refiners - Yonhap.

- (KR) Follow up: South Korea proposes extra budget of $17.3B (KRW26.2T) to mitigate impact from Middle East conflict.

- (KR) South Korea Industry Min Kim: Supplies of natural gas are available until end of this year.

- (KR) South Korea Pres Lee: Promises more active response to energy crisis - Cabinet meeting comments.

- (KR) South Korea Feb Industrial Production M/M: 5.4% v 1.5%e; Y/Y: -2.2% v +0.7%e.

- (KR) South Korea Fin Min Koo: Additional one-month worth of urea secured.

- (KR) Japanese investors reportedly purchasing South Korea KTBs (Treasury Bonds) ahead of WGBI inclusion (Apr 2026) - financial press.

- (KR) South Korea Finance Min Koo: Japan Govt Pension Investment Fund buying KTBs.

- (KR) South Korea Daehan Shipbuilding wins order worth KRW276B for crude carriers - US financial press.

- (KR) Bank of Korea nominee Gov Shin Hyun-song: Sees Middle East crisis as risk to Korean economy; No need to worry too much about Korean won now.

Other Asia

- (PH) Philippines Central Bank (BSP): Expects Mar y/y CPI to accelerate to 3.1-3.9% (vs. 2.4% prior).

- (PH) Philippines govt: To suspend govt work from 12:00 noon on Apr 1st.

- (MY) Malaysia Central Bank [BNM]: 2026 headline inflation seen averaging between 1.5%–2.5%, core inflation at 1.8%–2.3%.

- (TH) Thai King endorses PM Anutin's cabinet - financial press.

- (SG) Singapore Feb M2 Money Supply Y/Y: 5.1% v 5.1% prior.

- (PK) China MOFCOM: Pakistan Foreign Min to visit China from today, to hold talks with Foreign Min Wang Yi.

North America

- (US) Pres. Trump reportedly tells Aides that he is willing to end war Without reopening the Strait of Hormuz - WSJ.

- (US) Pres Trump: In serious discussion with a new regime; If no delay or opened Hormuz Strait, will blow up electric plants, oil wells and Kharg island (and possibly all desalinization plants!).

- (US) Fed Chair Powell: There are risks to both sides of the mandate, with tensions between our two objectives; Tendency is to look through supply shocks but have to keep an eye on inflation expectations, which appear to still be well anchored.

- (US) Treasury Sec Bessent: Unsanctioned Russia and Iran oil is 'on the water'; U.S. will ‘retake’ control of the straits - Fox interview.

- (US) To release defense budget details for FY27 on April 21st.

- (US) Feds Williams (moderate, voter): Core inflation forecast not yet changed by oil shock.

- (US) Mar Dallas FED Manufacturing Activity: -0.2 v +0.2 prior.

- (US) Senators said to probe FCC Chair Carr over fast-tracked Nexstar deal - US financial press.

- (US) FCC denies DirecTV petition against Cox tv license – US financial press.

- (BR) Brazil Mar FGV Inflation IGPM M/M: 0.5% v 0.5%e; Y/Y: -1.8% v -1.8%e.

- (BR) Brazil Central Bank (BCB) Gov Galipolo: Brazil Central Bank will always act cautiously.

- (MX) Mexico Feb Mexican Public Balance (MXN): -96.5B v -23.6B prior.

Europe

- (UK) Chancellor Reeves said to pocket "tax windfall" from Iran war – UK Times.

- (UK) UK Navy: Projectile hits tanker near Dubai, causes fire.

- (UK) Mar BRC Shop Price Index Y/Y: 1.2% v 1.1% prior.

- (RU) US extends license authorizing certain transactions for the negotiation of and entry to contingent contracts for the sale of Lukoil Int'l until May 1st - US Treasury website.

- (RU) Official: Russian UST-Luga port damaged in new drone attack.

- (DE) Germany Mar Preliminary CPI M/M: 1.1% v 1.0%e; Y/Y: 2.7% v 2.6%e.

- (DE) German Chancellor Merz: Iran war impact on Germany will be as serious as COVID if conflict expands.

- (IE) Ireland Mar Preliminary CPI EU Harmonized M/M: 1.8% v 0.8% prior; Y/Y: 3.6% v 2.5% prior.

- (NL) Netherlands Mar Preliminary CPI Y/Y: 2.7% v 2.9%e.

Middle East

- (IR) Iran Spokesperson Baghaei; Proposals conveyed to Iran have been mostly unrealistic, unreasonable and excessive; No direct talks have taken place.

- (IL) Israel Central Bank (BOI) leaves base rate unchanged at 4.00%; As expected.

- (IL) Israel PM Netanyahu: Iran's enriched uranium is Trump's focus right now - Newsmax interview.

- (IL) IDF: Four personnel killed, two injured during combat in Southern Lebanon.

- (IR) US said to attack large ammunition depot in Isfahan, Iran - WSJ, citing US official.

- (IR) Power outage hits East of Tehran following explosions - financial press.

- (SA) Saudi Defense Ministry: Intercepted three ballistic missiles launched towards Riyadh province.

Levels as of 01:20 ET

Nikkei 225 -0.9%; ASX 200 +0.3%; Hang Seng -0.5%; Shanghai Composite -0.2%; Kospi -3.3%.

Equity S&P500 Futures +0.5%; Nasdaq100 +0.7%; DAX +1.2%; FTSE100 +1.6%.

EUR 1.1491-1.1448; JPY 159.97-159.49; AUD 0.6875-0.6834; NZD 0.5736-0.5704.

Gold +1.1% at $4,561/oz; BTC -0.1% at $67,467, Crude Oil +0.4% at $103.26/bbl; Copper +0.1% at $5.4935/lb.