NZD and NZ yields rise on hawkish RBNZ surprise, RBA Gov clarifies recent policy statement

Asia Market Update: NZD and NZ yields rise on hawkish RBNZ surprise; RBA Gov clarifies recent policy statement; Mixed equity session amid Chinese holiday.

General trend

- Nikkei 225 lags, exporters trade generally lower; USD/JPY declined overnight; Fast Retailing [largest Nikkei component] drops after monthly sales figures.

- Weak US data overnight with fewer JOLT job openings and softer durable goods and factory orders (see North America below) helped keep Asia in check at the open.

- Quiet equity session seen in Australia.

- What will the RBNZ do next?.

- RBA to release Financial Stability Review on Thurs. [Apr 6th].

- US ADP data due later on Wed.

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens -0.2% at 7,218.

- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Pause in tightening cycle does not imply the process is complete - Reiterates further rate hikes may be needed.

- (AU) Australia Mar AIG Construction Index: -5.8 v -5.0 prior – update.

- (AU) Australia Mar Final PMI Services: 48.6 v 48.2 prelim (confirms move back into contraction).

- (AU) Australia sells A$800M v A$800M indicated in 2.75% Jun 2035 bonds; Avg Yield: 3.3432%; bid-to-cover: 2.27x.

- (NZ) New Zealand Mar Corelogic House Prices Y/Y: -10.5% v -8.9% prior.

- (NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) RAISES OFFICIAL CASH RATE (OCR) BY 50BPS TO 5.25%; MORE-THAN- EXPECTED.

- (NZ) Analysts update RBNZ rate calls after surprise decision: ASB Bank analyst now expects the RBNZ to raise rates by 25bps in May to 5.50%.

China/Hong Kong

- (HK) Hang Seng closed for holiday.

- (CN) Shanghai Composite closed for holiday.

- (HK) - Late trading yesterday: Hong Kong intervenes in FX market for first time since Feb; buys HK$ as local currency hits bottom of trading band.

- (CN) China Commerce Ministry: China will take decisive action to safeguard its interests if Japan insists on obstructing China-Japan chip industry cooperation.

- (CN) Reportedly Chinese regulators have slowed their merger reviews for several proposed acquisitions by US companies – WSJ.

- (CN) Reportedly China's regulators urge futures companies not to exaggerate iron ore prices rise - press.

- (CN) China PBOC Gov Yi Gang: Reiterates to keep CNY currency (Yuan) and financial system stable while boosting employment and economic growth.

Japan

- (JP) Nikkei 225 opens -0.6% 28,111.

- (JP) Japan Chief Cabinet Secretary Matsuno: Sets up new "OSA" system for security cooperation grants.

- (JP) Japan Mar Final PMI Services: 55.0 v 54.2 prelim (confirms 6th month of expansion, quickest rate of expansion since October 2013).

- (JP) Japan will not raise taxes for childcare policies - Japanese media.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

- (JP) Japan Chief Cabinet Secretary Matsuno: Sets up new "OSA" system for security cooperation grants.

South Korea

- (KR) Kospi opens +0.1% at 2,482.

- (KR) Bank of Korea: Core inflation will fall by slower pace than headline inflation.

- (KR) South Korea Mar Foreign Reserves: $426.1B v $425.3B prior (update).

- (KR) US Envoy for North Korea to travel to Seoul (South Korea) April 6-7; To meet with Japan, South Korea counterparts.

- (KR) South Korea Fin Min: Will diversity trade partnerships, portfolio amid uncertainties.

- (KR) Bank of Korea (BOK) sells 2-year Monetary Stabilization Bonds (MSBs): Yield: 3.280%.

- (KR) Bank of Korea (BOK) announces two Board member nominees: Seoul National University Professor Chang and Former South Korea Fin Min Official Park.

Other Asia

- (TW) Taiwan Pres Tsai met with US Senators in NY ahead of Kevin McCarthy meeting – WSJ.

- (TW) Follow Up: Taiwan President Tsai to meet US House Speaker McCarthy on Wed at 13:00 ET (17:00 GMT).

- (TH) Thailand Mar CPI M/M: -0.3% v 0.1%e; Y/Y: 2.8% v 3.3%e [annualized pace is within the central bank's target, first time since Dec 2021].

- (TH) Thailand Commerce Ministry: Cuts 2023 CPI forecast from 2.0-3.0% to 1.7-2.7%.

- (SG) Singapore Mar PMI (Whole economy): 52.6 v 49.6 prior [moves back into expansion].

- (PH) Philippines Mar CPI Y/Y: 7.6% v 8.0%e (11th month above target with annual pace being the slowest in 6 months).

- (PH) Philippines Fin Min Diokno: Mar CPI supports the view central bank (BSP) has done enough.

North America

- (US) FEB JOLTS JOB OPENINGS: 9.93M V 10.50ME (lowest since Apr 2021).

- (US) FEB FINAL DURABLE GOODS ORDERS: -1.0% V -1.0%E; DURABLES (EX-TRANSPORTATION): -0.1% V 0.0% PRELIM.

- (US) FEB FACTORY ORDERS: -0.7% V -0.5%E.

- (US) Fed's Mester (FOMC voter): Inflation remains too high; Reiterates will need to hike rates above 5% and hold them.

Europe

- (FI) Finland formally joins NATO as 31st member [**Note: implies NATO's border length with Russia now roughly doubles from pre-Ukraine war period].

- (DE) GERMANY FEB TRADE BALANCE: €16.0B V €17.0BE.

Levels as of 01:20 ET

- Nikkei 225 -1.7%; ASX 200 flat ; Hang Seng closed; Shanghai Composite closed ; Kospi +0.6%.

- Equity S&P500 Futures flat ; Nasdaq100 flat ; Dax -0.1%; FTSE100 -0.5%.

- EUR 1.0950 - 1.0970 ; JPY 131.32 - 131.85 ; AUD 0.6743 - 0.6779 ; NZD 0.6303 - 0.6375.

- Gold +0.1% at $2,040/oz; Crude Oil +0.5% at $81.12/brl; Copper -0.3% at $3.9560/lb.