EQUITIES: International Investors Buy The Latest Downtick In China
Chinese equities received net inflows via the Hong Kong Stock Connect channels on Wednesday, registering the largest round of daily net purchases seen since mid-April. This came even as the benchmark CSI 300 shed 0.8%, showing a bit of a willingness on the part of international investors to buy the dip, despite questions around the uneven economic recovery in China (and related debate re: further policy easing requirements) remaining prominent. An unwind of some of the upside momentum in SOEs and Tuesday’s soft import data were touted as key drivers. The tech sector (observed via the ChiNext and Hong Kong’s Hang Seng Tech Index) was a little more resilient, lodging incremental gains as those metrics edged away from YtD lows. BBG source reports suggesting that U.S. TR Tai will meet her Chinese counterpart on U.S. soil later this month, plus the speculation re: the need for further Chinese macro policy easing, may have promoted the aforementioned international inflows and relative tech sector resilience.
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US TSYS: Early Richening Holds In Asia
TYM3 deals at 115-27, +0-01+, with a narrow 0-04+ range observed on volume of ~49k.
- Cash tsys sit ~3bps richer across the major benchmarks.
- Asia-Pac participants faded Friday's post-NFP cheapening, perhaps focusing on the lower than expected average hourly earnings.
- The latest Sino-Taiwan tensions, as China simulated precision strikes on Taiwan during military drills over the weekend, also added a layer of support.
- The early richening held for the remainder of the session as tsys traded in narrow ranges with little follow through on moves.
- Fed dated OIS price ~18bp hike into the May meeting with the terminal rate at 5%. There are now ~70bps of cuts in 2023.
- There is a thin data calendar in Europe today, further out US Wholesale Inventories and Fedspeak from NY Fed President Williams provide the highlight on Monday.
NZD: Marginally Pressured In Light Holiday Trade
NZD/USD prints at $0.6240/45, ~0.1% softer today.
- The pair has fallen below its 20-Day EMA in light holiday volumes, a narrow 20 pip range has been observed thus far.
- AUD/NZD is little changed, the cross has held below the $1.07 handle after breaking below last week.
- The domestic markets remain closed for the remainder of the session. Wider swings in risk sentiment will be the main driver in NZD.
AUD: A$ Lower In Light Trade But Range Trading
The AUDUSD is down 0.2% to 0.6660 in light trading. It reached a low of 0.6656 before a high of 0.6682. The USD index is up slightly in APAC trading so far.
- In terms of the major crosses, Aussie is up 0.2% against the yen to 88.31 and +0.1% versus the kiwi to 1.068. AUDEUR is down 0.1% to 0.6111 and AUDGBP flat at 0.5365.
- Australia, NZ and HK are closed today but the Nikkei is up 0.4%, the KOSPI +1% and the CSI +0.2% higher. WTI is trading sideways and is around $80.70/bbl. Copper prices are down 0.1% and iron ore is just below $118/t.
- On Tuesday, Westpac’s April consumer confidence data and the March NAB business survey are released. They’re both likely to be watched closely given the RBA’s increased data dependence.
