Quiet equity and FX session ahead of US CPI

Asia market update: Quiet equity and FX session ahead of US CPI; Trump's 25% tariffs on imports of steel and aluminum, take effect (as expected) with no exemptions; Shunto wage talks in focus.

General trend

- BOJ Gov Ueda: Reiterates long-term bond yields are determined by the market.

- Japan 30-year JGB yield rises to the highest since 2006 [pre 20-year auction].

- JGB yields pare rise after 20-year bond auction.

- Toyota: Says responds in full to union total wage hike demand [**Reminder: Mar 13 2024 Toyota: Co responded to union's wage hike demand in full (biggest pay hike in 25 years) - Japanese press; The fourth consecutive year that Toyota responded in full; Amount of wage increases requested varies by job type and rank, but the maximum amount is 28,440 yen per month.].

- CNH rises to the strongest level since Nov 13th 2024, but later declines.

- Aussie equity markets lag; US rules out tariff exemption for Australia [relates to steel and aluminum tariffs] (Reminder: Jul 2017: (AU) Australia to be exempt from US steel and aluminum tariffs – AFR).

- South Korea Constitutional Court in focus [Reminder Feb 25th 2025: (KR) South Korea Constitutional Court to hold final hearing of Yoon impeachment trial on Tues [Feb 25th]; the hearing is due to open at 2 pm local time; some expect the court to deliver a verdict within 2 weeks after today’s hearing – Press].

Headlines/economic data

Australia/New Zealand

-ASX 200 opens -0.2% at 7,875.

-US rules out tariff exemption for Australia [relates to steel and aluminum tariffs] - Press.

- Australia PM Albanese: Reiterates will not impose reciprocal tariffs on the US; will continue to engage with the US on tariffs.

-Australia Foreign Min Wong: Not supportive to retaliatory tariffs on US goods.

-Australia sells A$800M v A$800M indicated in 3.50% Dec 2034 bonds: Avg Yield: 4.4519%; bid-to-cover: 3.17x.

-Australia Stock Exchange [ASX.AU]: Executive: To consider allowing dual class share listings for the first time.

- New Zealand proposes changes to Foreign Investment Funds (FIF) tax rules; the purpose of the change is said to be to keep wealthy migrants in NZ - Press.

- New Zealand Feb Total Card Spending M/M: 0.0% v 0.0% prior.

China/Hong Kong

-Hang Seng opens +0.3% at 23,859.

-Shanghai Composite opens +0.2% at 3,385.

-US House Committee Chairman said put US tariffs on ‘all’ chips made in China - SCMP.

-China PBOC sets Yuan reference rate: 7.1696 v 7.1741 prior.

-China PBOC Open Market Operation (OMO): Injects CNY175.4B in 7-day reverse repos; Net drains CNY177.8B v drains CNY0.5B prior.

-Alibaba: China Manus AI announces strategic cooperation with Alibaba's Qwen team - press.

-Cathay Pacific [293.HK]: Reports FY24 (HK$) Net 9.89B v 8.13Be, Rev 104.4B v 103.8Be.

Japan

- Nikkei 225 opens -0.2% at 36,717.

- BOJ Gov Ueda: Reiterates long-term bond yields are determined by the market.

- Japan sells ¥1.0T VS. ¥1.0T indicated in 20-year JGB bonds; AVG yield: 2.2780% V 2.0280% prior; bid-to-cover: 3.46X V 3.06X prior.

- Japan Feb PPI (domestic CGPI) M/M: 0.0% v -0.1%e; Y/Y: 4.0% v 4.0%e.

- Japan Q1 BSI large all industry  Q/Q: 2.0 V 5.7 prior.

- 'Many' Japan firms are set to offer 'large' wage increases for the 3rd straight year when they conclude talks with unions on Wed; Denso had already agreed to record pay rises back in mid-Feb; the pay gains of small and medium-sized firms are seen as focal points - financial press.

- NEC [6701.JP]: Said to agree to unions wage hike demand in full for 2025 - Press.

- Nissan [7201.JP]: Said to agree to ¥16.5K avg monthly wage hike vs ¥18.0K demanded by union for 2025 - Press.

- Toyota Motor [7203.JP]: Said to consider exporting from the UK to the US to ease the impact of Trump tariffs - FT.

- Honda [7267.JP]: Agrees to ¥15.0K avg monthly wage hike, below the ¥19.5K demanded by union for 2025.

- Nippon Steel [5401.JP]: Agrees to ¥12.0K avg monthly wage hike vs ¥15.0K union demand for 2025.

- Japan GPIF said to maintain equity allocations - Press.

- Japan Chief Cabinet Sec Hayashi: Want to communicate with the US side on rice tariff [**Reminder Sept 25th 2019: (JP) [Former] Japan Foreign Min Motegi: rice has been completely excluded from US Japan trade deal; US agreed to remove tariffs on Japanese cars; US tariffs on cars will be eliminated after further talks, but no timeframe has been set; [Former] PM Abe confirmed with Pres Trump that there will be no Section 232 tariffs on Japanese cars].

Korea

- Kospi opens +0.6% at 2,552.

- South Korea Feb Unemployment Rate : 2.7% v 3.0%e.

-South Korea Feb Total Bank Lending to Households: 1,143.7T v 1,140.5T prior.

-South Korea Feb Net Foreign Investment in Local Equities: -$1.81B v -$0.51B m/m; Net Investment in Local Bonds: +$3.54B v -$1.27B m/m.

- South Korea Finance Ministry: Seeks to change the estate tax to inheritance tax from 2028.

-South Korea: To fine mobile carriers a total of KRW114B related to alleged collusion.

-South Korea Regulator: Considering easing the K-ICS ratio for insurers by 10-20 PPTS; to make the final decision in H1.

Other Asia

-Taiwan Semi [2330.TW]: Follow Up: TSMC said to have 'pitched' Nvidia, AMD and Broadcom about taking stakes in a jv that would operate the foundries of Intel - Press.

- Indonesia: Imposes anti-dumping duties on nylon from China - Press.

- Reliance Industries [RIL.IN]: Jio Platforms unit announces partnership with SpaceX in India.

North America

- (US) Follow Up: US Customs notifies importers regarding duties on steel and [steel] derivatives; also relates to aluminum and aluminum derivative products; effective Mar 12 (as expected).

- (US) Pres Trump: Regarding cutting back Canada tariffs, I'm looking at it; Looking at backing down on 50% duties in Canada, will probably make different; 'Will let you know' on 50% Canada tariffs going into effect; I don't see a recession at all.

- US Pres Trump: Tariffs may go higher than 25% (doesn't specify which tariffs); Russia's been easier to deal with than the Ukraine.

- Canada Energy Min: Reiterates could use non-tariff measures [including restricting oil exports] if trade war with the US escalates.

- US House has enough votes to pass stopgap funding bill (CR); Bill transferred to Senate where its fate is uncertain.

- US Department of Education: Initiated 'reduction in force' to impact ~50% of the department's workforce; impacted workers will be placed on administrative leave starting on Mar 21st.

- (US) Fed staff said to have met with Treasury DOGE team in Jan; cites filing - US financial press [**Reminder Feb 20th: Musk looks at auditing the Federal Reserve - WSJ].

- (US) Jan JOLTS job openings: 7.774M V 7.600ME.

- Goldman Sachs said to cut end of 2025 S&P 500 target from 6,500 to 6,200 - US financial press.

- Walmart [WMT]: China Commerce Min said to have summoned Walmart over [prior reports of] pressure on China suppliers to cut prices - State Media.

Europe

- EU commission launches countermeasures ON US imports (as expected); the measures will come into force 'by Apr'; the countermeasures are worth up to €26.0B, matching the economic scope of the US tariffs.

- (RU) Follow Up: Russia Lawmaker: Any agreement will be on Moscow's terms [comments on Ukraine ceasefire proposal].

- (UR) US Pentagon has awarded contracts to 2 US/Ukraine drone partnerships, involves US defense startup firms partnering with Ukraine manufacturers to build drones for war - WSJ.

-Greenland elections follow up: Pro-business opposition Demokraatit Party leads parliamentary election with 30.5% support [most of the votes have now been counted].

Levels as of 01:20 ET

- Nikkei 225, +0.3%, ASX 200 -1.3% , Hang Seng -0.3%; Shanghai Composite +0.1% ; Kospi +1.5%.

- Equity S&P500 Futures: +0.2%; Nasdaq100 +0.3%, Dax +0.5%; FTSE100 -1.1%.

- EUR 1.0920-1.0895 ; JPY 148.29-147.67 ; AUD 0.6299-0.6282 ;NZD 0.5719-0.5698.

- Gold -0.1% at $2,919/oz; Crude Oil +0.7% at $66.71/brl; Copper +0.1% at $4.8003/lb.