ASIA STOCKS: A Broadly Positive Day Ahead of Holidays

Indonesia’s ongoing equity market malaise turned into a bloodbath today as the Jakarta composite cratered on fiscal concerns, weak FX and government intervention in the central bank. 

• Indonesia’s Jakarta Composite is down -6.8% as year to date losses approach 15%.   The move lower was enough to trigger trading halts whilst bonds and the currency suffer.
• In China however a strong day for the major indices with the Hang Seng leading the way up +1.80%, CSI 300 +0.15%, Shanghai +.10% and Shenzhen +0.30%
• In Korea, the KOSPI had a slow start to the day and never recovered, despite the positivity in China, and has traded around flat all day.
• Malaysia’s FTSE Malay KLCI however took guidance from China’s strength and has rallied throughout to be up +1.00%
• As India’s trading day gets under way, the NIFTY 50 is opening very strong, up 1% following yesterday’s gain of +0.50%. 

The USD has recovered some ground in the first part of Tuesday trade, the BBDXY index last near 1264.05, up close to 0.15% versus end NY levels from Monday's session. 

• In the cross asset space, risk aversion has crept back into US equity futures, led by the tech side (down 0.55%). Eminis are off around 0.40%. There may be concerns around Middle East tensions, after Israel attacked Hamas in Gaza, while the US administration has stated it will continue to attack the Houthis in Yemen until the group stocks attacking sea traffic.
• Oil has nudged higher, while gold is up over 0.50%, last near $3016.
• Still, traditional FX safe havens like yen, aren't rallying versus the USD. USD/JPY was last 149.55/60, off around 0.25% in yen terms and through the 20-day EMA resistance point for the pair. Session highs were at 149.73. Helping cap gains may have been the softer US yield tone, although losses aren't much beyond 1bps at this stage.  
• AUD/USD is a little lower, last near 0.6370, down close to 0.20%. NZD/USD is back to 0.5815/20, with the Kiwi continuing to outperform the AUD. The AUD/NZD cross is back to 1.0955 fresh YTD lows. Lower AU-NZ yield differentials are a factor, while relative commodity price trends have also been moving in NZD's favor.
• EUR/USD was last back near 1.0910/15.
• Later US February housing data, IP/capacity and trade prices print. Euro area January trade, March ZEW survey and Canadian February CPI are also released.

ACGBs (YM -1.0 & XM +1.5) are slightly mixed. 

• Assistant Governor (Economic) Hunter spoke at the AFR banking summit about how monetary policy can be both forward-looking and data dependent given decisions are always made under uncertainty. The bank looks at the signal from data excluding the noise and uses that in determining its outlook which is then analysed under various scenarios and judgments.
• Cash US tsys are 1-2bps richer, with a steepening bias, after yesterday’s twist-flattening. The focus is on Wednesday’s FOMC decision. The majority of analysts expects the FOMC to leave its Dot Plot funds rate medians unchanged in March compared with the December meeting.
• Cash ACGBs are flat to 2bps richer with a flattening curve. The AU-US 10-year yield differential is at 10bps.
• Swap rates are flat to 1bp lower, with the 3s10s curve flatter.
• The bills strip is flat to -2.
• RBA-dated OIS pricing is flat to 2bps firmer across meetings today.
• Tomorrow, the local calendar will see Westpac Leading Index ahead of Thursday’s jobs data for February.
• The AOFM plans to sell A$800mn of the 4.25% 21 December 2035 bond tomorrow and A$700mn of the 2.75% 21 November 2029 bond on Friday.