ASIA STOCKS: KOSPI Leads the Way whilst Others are in Holding Pattern
Ahead of tomorrow’s decision by the BOK, the Kospi in South Korea was the regional outperformer as it achieves new highs for 2025 as large cap chipmakers join value stocks in the run up to next week’s election. Shares of holding companies continue to perform as pushes to reform the corporate structure grow louder.
Chinese bourses did very little today as volatility remains low in the region's largest economy as investors wait for the next update on tariff discussions. BYD fell in Hong Kong for a third day straight on concerns of discounting. BYD is down over -2.00% today and down over 12% for the week, weighing heavy on the Hang Seng and other EV related stocks.
- The Hang Seng is down today by -0.55% and trading very heavy for the week. The CSI 300 is up a mere +0.09%, Shanghai Comp +0.07% and Shenzhen down -0.12%.
- The KOSPI is the regional outperformer today, rising +1.66% easily wiping out yesterday's modest losses.
- The fact that the FTSE Malaysia KLCI was flat today will come as welcome relief given falling nine of the last 12 trading days.
- The Jakarta Composite did very little today also yet remains up over 6% month to date making it the best performer of the major markets.
- In Singapore the Straits Times is up +0.50% whilst the PSEi in the Philippines is up +1.40%.
- The NIFTY 50 closed lower by -0.70% yesterday and carried that over to today and is currently down -0.25%
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BONDS: NZGBS: Bull-Flattener As Local Market Plays Catch-Up
NZGBs closed showing a bull-flattener, with benchmark yields 4-9bps lower.
With the local calendar empty, today’s moves reflected US tsys’ strong close to last week. The local market was closed on Friday for the ANZAC Day holiday.
- Cash US tsys are little changed in today's Asia-Pac session. GDP, ISM Manufacturing and NFM payrolls are the main events in this week’s US calendar. Trump’s first 100 days in office speech is tomorrow.
- “RBNZ increased its foreign currency intervention capacity to a record NZ$26.7b at the end of March as it sold New Zealand dollars.” (per BBG)
- The NZ economy will expand 0.5% q/q in 1Q, according to the latest results of a Bloomberg News survey. The RBNZ’s OCR is forecast to drop from 3.50% to 3.25% by end-2025.
- Swap rates closed 4-6bps lower, with 2s10s curve flatter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 27bps of easing is priced for May, with a cumulative 82bps by November 2025.
- Tomorrow, the local calendar will see Filled Jobs data and a Pre-Budget speech from Finance Minister Willis.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
FOREX: G10 Wrap - USD Has A Quiet session
The BBDXY has had an Asian range of 1225.84 - 1227.93, Asia is currently trading around 1226. The headlines from the PBOC press conference aimed at stabilizing the economy and supporting the jobs market didn’t shift market sentiment greatly. It still appears more monetary stimulus is on the way, but the authorities will enact such moves in a timely manner. Bloomberg - “ECB: Klaas Knot told FD the June meeting will be “really complicated” due to uncertainty over US tariff policy and European fiscal plans."
- EUR/USD - Asian range 1.1340 - 1.1367, Asia is currently trading 1.1363. Intra-day support is around 1.1300, should this area not hold demand should remerge on dips back to 1.1100.
- GBP/USD - Asian range 1.3280 - 1.3312,the market seems happy to accumulate GBP on dips but the risk of a short-term retracement remains. Buyers should reemerge back towards the 1.3000/3100 area.
- USD/JPY - Asian range 143.35 - 143.88, has traded sideways for most of the Asia session. On the day the 143 handle should still see some supply, then more importantly the 145/146 area should once more offer good levels for sellers to reengage.
- USD/CNH - Asian range 7.2878 - 7.2986, the USD/CNY fix printed at 7.2043. USD/CNH continues to trade sideways and find support towards 7.2800, as it weakens in the crosses.
- Cross asset : SPX -0.52%, Gold $3293, US 10yr 4.23%, BBDXY 1226, Crude oil $63.31.
Data/Events : Spain Unemployment, Retail sales, ECB’s Guindos and Rehn Speak, US April Dallas Fed Manufacturing Activity.
Fig 1: EUR/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
GOLD: Gold Softer Again as Profit Takers Move In.
- Gold has kicked off the week with a fall in Asian trading, down -0.80% today.
- Up over 25% year to date on trade war concerns, gold is one of the best performing assets in what is proving to be a volatile start to the year.
- Reaching a new all-time high of US$3,423.98 this month, gold has surged through most predictions at the beginning of the year.
- Gold started the trading week this week in Asia at $3,325.21 and fell to $3,292.74
- Key central banks globally have reported increases to their gold reserves, boosting demand for the precious commodity whilst China’s Gold Association reported a 6% decline in gold consumption in Q1.
- Data out from the CFTC last Friday showed that Hedge Funds have reduced the number of their gold longs to the lowest level in one year indicating that the rally for now may be stalled.
- For now, all major moving averages are pointing upwards: a sign that the bullish momentum remains in place but with the CFTC positioning data, it is possible we could see a modest week for gold should trade war headlines not dominate.
