ASIA STOCKS: Asian Equities See Bounce, Focus Turns To US CPI Later
Asian equities on opening higher today, with the MSCI Asia Pacific Index gaining 0.4%, driven by tech and shipbuilding stocks in South Korea and materials shares in Australia. The CSI 300 Index is expected to extend its rebound, supported by stronger-than-expected Chinese M1 money growth and the continuation of a "moderately loose" monetary policy. US-listed Chinese shares gained over 2%, aided by positive tariff policy developments.
- Japanese equities are higher today after four consecutive sessions of losses, supported by a weaker yen benefiting export-focused sectors like automakers and machinery firms. The Topix is 0.6% higher while the Nikkei trades just 0.15% higher. Keyence led gains on the Topix, rising 4.4%, with banks and insurers also advancing. Semiconductor-related stocks saw renewed buying after recent sell-offs tied to concerns over rising interest rates and regulatory issues.
- Later today Bank Indonesia is expected to maintain its key interest rate at 6% amid ongoing efforts to stabilize the rupiah. Rate cuts, initially expected earlier, are now likely delayed until the second half of 2025.
- Eurozone Industrial production data is due out later today before focus turns to the US inflation report, adding another layer of focus on global growth and central bank policies.
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JGBS: Futures Steady, Longer Tenor Swap Rates Pushing Towards Recent Highs
JGBs have remained within recent ranges in the first part of Monday dealing. The March future was last 142.40, -.17.
- The early bias in US Tsy futures has been slightly higher, so this may be keeping downside momentum in check, as we remain above late Friday lows for JGB futures.
- In the cash JGB yield space, yields have all ticked higher, playing some catch up with core yield moves from Friday. Moves are modest though, not stretching beyond +1.5bps for the most part. The 10yr was last near 1.06%.
- In the swap space it fairly steady trends. Longer data tenors are seeing yield moves back towards recent highs, the 20yr above 1.60%. The 30yr is around 1.83%, up 4bps.
- The data hasn't impacted sentiment, with core machine orders much stronger than forecast, but the firmer/resilient capex theme is well known.
AUDNZD: AUD/NZD Steady, Holds Above All Key EMAs
- The AUD/NZD has been trading sideways for the past few session, rising off the monthly low of 1.0933 following the stronger-than-expected AU employment last week. The cross is trading little changed this morning at 1.1035.
- Looking at technicals, the cross is trading above all key moving averages, the RSI is at 53 having held steady over the past few sessions, while the MACD indictor is now neutral after printing negative bars for the past few weeks. 1.1100 is key resistance, with the cross only able to briefly break above that level once since July, support is seen at 1.1024 (20-day EMA), with the monthly lows of 1.0933 seen as key support.
- Focus for the cross this week will be on AU Westpac Consumer Confidence tomorrow, followed by NZ GDP on Thursday.
- The AU-NZ 2yr swap has edged back higher of the past few session to +38bps from +26bps.
- There are some large expiries today - 1.1100 ($578m) 1.1050 ($738m), 1.0800 ($468m)
Chart. AU-NZ 2yr Swap vs AUD/NZD
RBA: New Monetary & Governance Boards Announced, Will Start In March
Legislation was passed earlier this month to allow for both monetary policy and governance Boards. RBA Governor Bullock requested that there was continuity on the former for policy setting and that seems to be the case with only two new members, which have been named as Professor Fry-McKibbin, a monetary policy specialist, and former Bendigo Bank head Baker. The new structure will begin from March 2025 and so will be in place for the March 31-April 1 meeting.
- Fry-McKibbin was on the panel that completed the RBA review and recommended that the central bank have two boards to allow for more economics experience in setting policy.
- Baker was head of Bendigo and Adelaide Bank until this year and the deputy of the Australian Banking Association.
- Harper, Watkins, Ross and Hewson will remain on the monetary policy board with RBA Governor Bullock, Deputy Governor Hauser and Treasury Secretary Kennedy.
- Existing Board members Schwartz and Rubin will move across to the new governance board and the past Business Council head Westacott, law firm Gilbert+Tobin chair Gilbert, Xero chair Thodey and ex-banking exec Dave are the new appointees. Bullock will chair the board with Schwartz as deputy.
