Oil spikes on surprise OPEC cuts, JGBs sharply down to early Mar levels, BOJ bond buying plan cited

Asia Market Update: Oil spikes on surprise OPEC cuts; JGBs sharply down to early Mar levels, BOJ bond buying plan cited; AUD and NZD decline ahead of rate decisions.

General trend

- Oil spiked up 7% at start of trading on the unexpected OPEC 1.15Mbd production cut announced over the weekend. Spot price later settled down to be up 5% on the day at time of writing.

- Oil currencies C$ and NOK also moved higher on the open, but later gave back earlier strength against USD.

- USD rises at the start of Q2.

- China Caixin Manufacturing PMI down sharply to 50.0.

- Equities trade mixed.

- US Equity FUTs decline at start of Q2.

- AUD and NZD are slightly down ahead of the Australia RBA rate decision tomorrow [Apr 4th], followed by New Zealand’s RBNZ rate decision on Wed [Apr 5th]

- USM ISM due tonight in the US.

- Porter Davis, said to be one of the largest homebuilders in Australia, has had liquidators appointed, and construction firm Lloyd Group has gone into voluntary administration; More construction issues to come in Australia?

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens +0.3% at 7,200.

- (AU) Spectur confirms no exposure to Porter Davis [said to be one of the largest home builders in Australia]; Lloyd Group [Australian construction firm] has gone into voluntary administration – press.

- (AU) Australia Mar CoreLogic Housing Prices M/M: +0.8 v -0.1% prior.

- (AU) Australia Mar Final Manufacturing PMI: 49.1 v 48.7 prelim (confirms the 1st contraction in 35 months).

- (AU) Australia Mar Melbourne Institute Inflation M/M: 0.3 % v 0.4% prior; Y/Y: 5.7% v 6.3% prior [lowest y/y since Oct 2022].

- (AU) Australia Feb Home Loans Value M/M: -0.9% v -1.8%e.

- (AU) Australia Feb Building Approvals M/M: 4.0% v 10.0%e.

- (AU) Australia Mar ANZ Indeed Job Ads M/M: -2.4% v -4.8% prior.

- (NZ) Reserve Bank of New Zealand (RBNZ): Releases Debt-to-Income framework for banks (the earliest date is likely to be March 2024.

China/Hong Kong

- (CN) Shanghai Composite opens +0.1% at 3,277.

- (HK) Hang Seng opens -0.1% at 20, 379.

- (HK) Various HK-listed cos. halted from trading at the start of Q2; reasons include delayed financials.

- (CN) CHINA MAR CAIXIN MANUFACTURING PMI: 50.0 V 51.4E (down sharply but still registered its 2nd month of non-contraction).

- (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B v CNY189B prior in 7-day reverse repos: Net drain CNY253B v injects CNY182B prior.

- (CN) China PBOC sets Yuan reference rate: 6.8805 v 6.8717 prior.

- (CN) China to forbid new steel production capacity and give greater support to M&A activity – press.

- Fitch: Chinese Developer's proposals are not typical debt restructurings; Does not expect restructurings to help them access unsecured funding.

- (US) US Joint Chiefs Chair Milley: My understanding and my analysis of China is that at least their military, and perhaps others, have come to some sort of conclusion that war with US is inevitable; I don't believe war is inevitable.

- (CN) Japan and China said to complete the setting up of a military hotline - financial press.

Japan

- (JP) Nikkei 225 opens +0.6% at 28,203.

- (JP) JAPAN Q1 TANKAN LARGE MANUFACTURING INDEX: 1 V 3E [lowest since Dec 2020]; LARGE MANUFACTURING OUTLOOK: 3 V 3E.

- (JP) Bank of Japan (BOJ) announces Bond purchases for Apr; expands range of purchases.

- (JP) Japan Mar Final Manufacturing PMI: 49.2 v 48.6 prelim (confirms 5th month of contraction).

- (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 Industry Ministry: Suspending subsidies for several utilities, including Chubu Electric, Kansai Electric; Cites anti-trust breaches.

- MUFJ said to delay AT1 bond issuance, cites market conditions - financial press [update].

South Korea

- (KR) Kospi opens +0.4%.

- (KR) Bank of Korea (BOK) sells 3-month Monetary Stabilization Bonds (MSBs): Yield 3.390%.

- (KR) South Korea sells 30-year bonds: Avg Yield: 3.385% v 3.590% prior.

- (KR) South Korea Mar Manufacturing PMI: 47.6 v 48.5 prior (9th month of contraction).

- (KR) US think tank: Satellite images show a growing level of activity at North Korea's main nuclear site.

Other Asia

- (ID) Indonesia Mar Manufacturing PMI: 51.9 v 51.2 prior [19th month of expansion].

- (TH) Thailand Mar Manufacturing PMI: 53.1 v 54.8 prior [15th month of expansion].

- (PH) Philippines Mar Manufacturing PMI: 52.5 v 52.7 prior [18th month of expansion].

- (VN) Vietnam Mar Manufacturing PMI: 47.7 v 51.2 prior [moved back into contraction].

- (MY) Malaysia Mar Manufacturing PMI: 48.8 v 48.4 prior [7th month of contraction].

- (SG) Singapore Q1 prelim URA Private Home Prices Q/Q: 3.2% v 0.4% prior.

- (PH) Philippines Feb Budget Balance (PHP): -106.4B v +45.7B prior.

North America

- (US) Fed's Waller (voter): Recent data is consistent with a story that inflation can be brought down quickly with relatively little job market pain.

- (US) NY Fed’s Williams (voter): GDP will soften modestly this year and rebound in 2023; Inflation is still simply too high with services the key issue.

- (US) FEB PCE DEFLATOR M/M: 0.3% V 0.3%E; Y/Y: 5.0% V 5.1%E.

- (US) US BANK DEPOSITS FELL BY $125.7B V $98.4B IN THE WEEK ENDED MARCH 15TH - FED'S ASSETS AND LIABILITIES OF US COMMERCIAL BANKS - H.8.

- (US) MAR FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 62.0 V 63.3E.

- (US) MAR CHICAGO PURCHASE MANAGER’S INDEX (PMI): 43.8 V 43.0E.

- Tesla [TSLA]: Reports Q1 deliveries 422.9K v v 430Ke v 405K q/q; Q1 production 440.8K v 440K q/q.

Europe

- (EU) ECB's de Guindos (Spain): ECB is monitoring broad risks across the financial sector; Will act to preserve stability in the euro area.

- SEVERAL OPEC+ MEMBERS TO IMPLEMENT VOLUNTARY OIL PRODUCTION CUTS OF ~1.15MBPD IN TOTAL FROM MAY 2023 TO END-2023; Saudi Arabia to voluntarily cut oil output by 500Kbpd; Russia to extend its 500Kbpd cut by end-2023.

- UBS: Swiss Federal Prosecutor said to be investigating UBS's takeover of Credit Suisse; Notes 'numerous aspects of events around Credit Suisse' that warranted investigation - FT.

Levels as of 01:20 ET

- Nikkei 225, +0.5%, ASX 200 +0.5% , Hang Seng -0.4%; Shanghai Composite +0.5% ; Kospi -0.6%.

- Equity S&P500 Futures: -0.3%; Nasdaq100 -0.6%, Dax -0.3%; FTSE100 +0.2%.

- EUR 1.0789 - 1.0846 ; JPY 132.82 - 133.58 ; AUD 0.6651 - 0.6695 ; NZD 0.6213 - 0.6259.

- Gold -0.8% at $1970/oz; Crude Oil +4.9%% at $79.36/brl; Copper -0.7% at $4.0555/lb.