Markets trade higher as North Korea resolution seems possible

Asia Market Update: Markets trade higher as North Korea resolution seems possible; HKMA continues to intervene; China launches anti-dumping duties on rubber imports from US, EU, Singapore

General Trend:

-Asian equity markets trade generally higher

-BHP rises over 2% after Q3 production update

-Asian aluminum producers rise after results from Alcoa and rise in prices

-South Korean chipmakers gain ahead of expected results from Taiwan Semi

-Chinese automakers rebound after losses on Wed’s session

-New Zealand Q1 CPI slows and remains within RBNZ’s target (1-3%)

-Australia March Employment change missed ests

- AUD/JPY gains with rise in equities and Chinese metals prices

- China FX Regulator SAFE said the US dollar (USD) to remain under pressure ; Yuan rises

-PBoC continues to inject liquidity in its open market operations (OMOs)

-Hong Kong 3-month HKD Hibor continues to rise, hits highest since late 2008

-Hong Kong Monetary Authority (HKMA) official said HK$50B in outflows is not too much, has not seen large short-selling orders for HKD

- Australia REIT Charter Hall Long Wale increases interest rate hedge position

-Japan Chief Cabinet Sec dismisses talk that Abe/Trump summit ended without progress

- Aluminum prices climb in the region and on LME

-Japan March CPI data due on Friday

 

Headlines/Economic Data

Japan

-Nikkei 225 opened +0.3%; closed +0.2%

-TOPIX Iron & Steel index +2.4%; Retail Trade -0.6%, Real Estate -0.4%

- Softbank, 9984.JP: Follow Up: Failed to declare ¥93.9B income from tax haven units - Nikkei

- (JP) Japan PM Abe holds joint press conference with President Trump in US: Japanese investments in the US have been gaining momentum, Has agreed with Trump to start talks on 'fair, free and reciprocal' trade'

- Subaru, 7270.JP Said to have falsified data on fuel and exhaust tests - Japanese media

- (JP) Japan Investors Net Buying of Foreign Bonds: +¥797.6B v -¥609.4B prior week; Foreign Net Buying of Japan Stocks: +¥308.3B v +¥332.9B prior week

-( JP) Japan Chief Cabinet Sec Suga: Not true US economic talks ended without progress

- (JP) Japan MoF sells ¥1.0T v ¥1.0T indicated in % (prior 0.50%) 20-yr bonds; avg yield 0.5000% v 0.5430% prior; bid to cover 3.69x v 4.47x prior

-(JP) BoJ: No particular signs of overheating in financial cycle - Financial System Report

Korea

-Kospi opened +0.1%

- (KR) South Korea Mar PPI M/M: 0.0% v 0.4% prior; Y/Y: 1.4% v 1.3% prior

- (KR) US seeking to denuclearize North Korea by 2020 – press

-Korean Air, 003490.KR Offices said to have been raided by police officials in South Korea - South Korean press

- (KR) South Korea sharp increase in the minimum wage applied to all workplaces is pushing many small companies to cut their payrolls to cope with labor costs - Korean press

China/Hong Kong

-Hang Seng opened +0.8%, Shanghai Composite +0.1%

-Hang Seng Materials index +4.3%, Energy +4% Consumer Goods +1.9%, Industrial Goods +1.8%, Info Tech +1.6%, Financials +1.4%, Property/Construction +1.2%

- (HK) Hong Kong Monetary Authority (HKMA): purchases total HK$17.63B to defend currency peg – press

- (CN) China Q1 convertible bond issuance nears 2017 level – China Securities Times

- (HK) Hong Kong Monetary Authority (HKMA) Dep Chief Executive Howard Lee: Operation in banking system has been smooth; has not noted any 'large' short-selling orders on Hong Kong Dollar (HKD)

- (HK) Hong Kong 3-month HIBOR highest level since Dec 2008

- (CN) China Dalian Iron ore gains over 4%, trades near CNY468/ton

- (CN) China PBoC Open Market Operation (OMO): Injects CNY190B v CNY150B in 7-day reverse repos prior; Net: injects CNY190B v CNY150B prior

- (CN) China PBoC sets yuan reference rate at 6.2832 v 6.2817 prior

- (CN) Following the earlier this week targeted China PBoC 100bps RRR cut, analysts see additional cuts in the RRR ahead – financial press

- (CN) China NDRC: Has cut commercial and industrial electricity prices by avg of 10%, part of plan to lower costs for companies

- (CN) China Commerce Ministry (MOFCOM) Domestic consumption to keep ‘rapid’ growth; US/China trade war will not only hurt US factory workers but also consumers

-(CN) China Commerce Ministry (MOFCOM) to implement temporary anti-dumping measures on halogenated butyl rubber imported from US, EU and Singapore

Australia/New Zealand

-ASX 200 opened +0.4%

-ASX 200 Resources index +2.2%, Energy +0.7%; Telecom -0.6%, REIT -0.3%, Financials -0.2%

- (NZ) RBNZ Gov Orr: Expects very benign inflation going forward; doggedly determined to aim for 2% inflation

- (NZ) NEW ZEALAND Q1 CPI Q/Q: 0.5% V 0.4%; Y/Y: 1.1% V 1.1%E

- (AU) AUSTRALIA FEB EMPLOYMENT CHANGE: +4.9K V +20.0KE; UNEMPLOYMENT RATE: 5.5% V 5.5%E; Prior Employment Change Revised Lower from +17.5K to -6.3K

-BHP, [+2.7%], BHP.AU Reports Q3 Iron Ore production 67.0Mt v 69Mte v 62Mt y/y; Cuts FY18 iron ore production outlook

- (AU) Australia Mar RBA Govt FX Transactions (A$): -985M v -438M prior

- (AU) Australia Fin Min Cormann: Govt is willing to give the royal commissioner more time (beyond the 12-months initially given) if needed to investigate banking industry – AFR

- (NZ) New Zealand sells NZ$200M in 2.75% 2037 Bonds; avg yield 3.3918%, bid to cover 2.65x

Other Asia

- (IN) India authorities are rushing to print more money and avert a cash crunch reminiscent of the crisis ignited by a sudden ban on big denomination notes in November 2016 - Nikkei

-TSMC, 2330.TW Reports Q1 (NT$) Net 89.8B v 89.8Be, Op 96.8B v 95.4B y/y, Rev 248.1B v 233.9B y/y

North America

-US equity markets ended mostly higher: Dow -0.1%, S&P500 +0.1%, Nasdaq +0.2%, Russell 2000 +1.1%

-S&P500 Energy +1.6%, Industrials +1%; Consumer Staples -0.8%, Financials -0.4%

- QCOM China MOFCOM: Reviewing Qualcomm, NXP deal, deal may have negative impact on market

- (US) Fed's Dudley (dove, FOMC voter): Fed should return to neutral policy before labor market tightens; feel confident in the growth outlook; I would not take much signal from the slowdown in consumer spending in the first two months of this year; Recent fiscal and trade policy developments are likely to increase the uncertainty around the distance to a neutral monetary policy stance and the possibility that the FOMC will have to move to a restrictive stance.

- (US) Fed's Quarles (hawk, FOMC voter): small banks ought to have different liquidity rules; Do not view current flattening of yield curve as a signal for a recession

- (US) Fed's Rosengren (moderate, non-voter) suggested US does not have buffers for next downturn - US financial press

-(US) DOE Crude: -1.1M v -0.5Me

Europe

-(UK) House of Lords votes for Brexit amendment that would keep the UK in the Customs Union with the EU (as expected); vote was 348-225, going against PM May's wishes; The amended EU Withdrawal bill now goes back to the House of Commons after the Lords vote

-Rocket Internet [RKET.DE]: PLDT sees no pressure to divest shares in Rocket Internet - Philippines press

-GKN [GKN.UK]: UK government may approve merger with Melrose by as early as next week -FT

 

Levels as of 02:00ET

- Hang Seng +1.3%; Shanghai Composite +0.9%; Kospi +0.2%; ASX 200 +0.3%

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

- EUR 1.2385-1.2364; JPY 107.51-107.18; AUD 0.7812-0.7764;NZD 0.7343-0.7309

- Jun Gold +0.1% at $1,355/oz; May Crude Oil +0.6% at $68.86/brl; May Copper +0.0% at $3.16/lb