ASIA STOCKS: Asia Equities Mixed, Eminis Still Sub 5600
Mar-12 04:41
Asia Pac equity market trends are mixed in Wednesday trade. We have seen higher trends for some of the tech sensitive plays. The South Korean Kospi is up around 1.5%, while the Taiex is also +1% firmer. In Japan, the Topix is up around 1.00%, but the NKY is up more modestly.
- Comments from US President Trump at a business roundtable on Tuesday around economic growth and downplaying recession fears, has aided risk appetite. US equity futures are firmer, led by Nasdaq, but Eminis remain sub 5600 at this stage, so still close to recent lows.
- Australian markets are underperforming though, the ASX 200 off 1.4%. Australia failed to win a reprieve in terms of steel and aluminum tariffs placed on Australian exports to the US. Some miners are lower, but so too are some finance companies. The material sub index is off close to 1%, while the finance sub sector is down by 1.6%, so slightly underperforming the headline moves.
- The ASX 200 is not back to levels not seen since August last year. We are close to 10% off recent Feb highs. See the chart below. The index is now in oversold territory though.
- Hong Kong markets have seen some volatility since the open, but the aggregate HSI is holding modestly lower at this stage, last off nearly 0.70%. The tech index is off a little over 1%.
- Mainland China markets are struggling for positive territory, but modest losses have been seen so far, with the CSI 300 down 0.30%.
- In South East Asia, most markets are weaker. Malaysian markets are down over 1.85%. Indonesian markets up are though. Singapore is close to flat.
Fig 1: Australian Equities Nearly 10% Off Earlier Feb Highs
Source: MNI - Market News/Bloomberg
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CHINA: Bond Futures Move Lower Despite Weaker onshore Equity.
Feb-10 04:40
- China’s bond futures have followed from Friday’s selloff to move lower again in trading today.
- China’s 10YR future opened at 109.405 and has moved gradually lower throughout the trading day, to be down by -0.115 to 109.29.
- Over the weekend, China reported the January CPI surprised to the upside with food and service price inflation the main driver and likely feeding into the price action from investors in today’s trading session.
- China’s 10YR future continues to sit above the 20-day EMA of 109.1652, with a bullish bias remaining.
- China’s 2YR future opened at also followed Friday’s selloff falling by -0.09 today to be at 102.69.
- The 2YR future’s technicals are a very different story as the 50-day EMA has been breached, and the price action moves the contract towards the 100-day EMA of 102.62, dragging the 20-day and 50-day EMA’s lower with it.
- Having done very little in the shortened week last week, the 10YR CGB has moved higher in yield today by +1.5bp to 1.62% but remains in a very tight range.
- Data releases this week are dominated by the New Yuan Loans and Aggregate Financing, which will give a further snapshot of whether the various stimulus measures are having impact on consumer behaviours.
AUSSIE BONDS: Cheaper, Tariff In Focus, Cons & Bus Confidence
Feb-10 04:37
ACGBs (YM -3.0 & XM -3.0) are slightly cheaper but around Sydney session highs on a data-light day.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after Friday’s heavy post-payrolls session. Headlines have crossed from Bloomberg, with US President Trump stating that the US will announce tariffs of 25% on all steel and aluminium imports from Monday. Trump didn't announce a time when these tariffs will take effect.
- The Australian government is still trying to secure exemptions to new 25% tariffs that Donald Trump says will be imposed on all steel and aluminium imported into the United States, making the case for “free and fair trade” with America. (per Guardian)
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at -10bps.
- Swap rates are 1-2bps higher.
- The bills strip -1 to -3.
- RBA-dated OIS pricing is flat to 2bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (129%), with the probability of a February cut at 89% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see Westpac Consumer and NAB Business Confidence.
- This week, the AOFM plans to sell A$400mn of the 2.75% 21 May 2041 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday.
OIL: Latest Tariff News Drives Moderate Rise In Crude
Feb-10 04:31
More US tariff news has provided support to oil prices during trading today. The market seems to alternate between concerns about the impact of protectionism on global demand and the inflationary effect of tariffs. WTI is up 0.6% to $71.44/bbl following an intraday high of $71.58, while Brent is also 0.7% higher at $75.16/bbl after reaching $75.27. The USD index is up 0.2%.
- US President Trump said that 25% tariffs on all steel and aluminium imports would be announced on Monday. These could impact investment in the US energy sector particularly drillers who require a certain type of steel, according to Bloomberg.
- China’s retaliatory measures for the US’ universal 10% tariff on all imports from China come into effect today. They include 10-15% tariffs on imports of US oil and gas.
- Bloomberg reports that WTI net longs fell again last week and that Brent was also down after rising the previous five weeks, as significant uncertainty regarding the outlook for crude drives caution.
- Later US January NY Fed 1-year inflation expectations print and ECB President Lagarde speaks.
