- Asian bourses traded in somewhat mixed fashion as trade war concerns continue to linger.
- NZD slips after softer than expected GDP figures.
- Looking ahead, highlights include monetary policy decisions from the Norges Bank and SNB, US Jobless Claims and comments from ECB’s Lautenschlaeger.
Asia stocks were mixed as sentiment partially improved from the early rout seen after the S&P 500 and DJIA posted a 3rd consecutive day of losses due to ongoing trade war concerns and disappointing Retail Sales data. ASX 200 (-0.2%) was led lower by weakness in the financials and energy sectors, while Nikkei 225 (+0.1%) was choppy with initial underperformance seen on JPY strength and as political woes continued to cloud over Japan with former tax chief Sagawa to possibly testify as soon as next week on the cronyism/land sale scandal. However, resilience was later seen across the regional bourses and the Japanese benchmark then pared all its losses. Elsewhere, Hang Seng (-0.1%) and Shanghai Comp. (-0.5%) were also indecisive and swung between gains and losses as participants mulled over President Trump’s pick of free-trade advocate Larry Kudlow for his top economic adviser role, which is seen to be a more favourable scenario for China in comparison than other hardliner candidates, although Kudlow had already stepped up his rhetoric on China in his first interview since being chosen for the job. Finally, 10yr JGBs were flat with only minimal support seen amid the dampened global risk appetite while a mixed 20yr auction result also added to the non-committal tone.
PBoC injected CNY 20bln via 7-day reverse repos and CNY 20bln via 28-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.3141 (Prev. 6.3205)
EU is reportedly preparing unprecedented continent-wide regulations against search engines and has drafted proposals for a digital tax on tech giants’ EU turnover which will raise EUR 5bln annually. (FT/Twitter)
According to reports in the Times, EU negotiators have accepted the UK’s demands that it should be able to pursue an independent trade policy while remaining inside the customs union and single market. Elsewhere, Brexit Minister David Davis has signalled that he is prepared to accept a shorter transition period than the UK wanted. (The Times/Press Association)
In FX markets, DXY remained lacklustre and below the 90.00 level amid ongoing US-China trade tensions, which marginally benefitted its major counterparts on what was a relatively uneventful session for currencies. Elsewhere, the subdued greenback and safe-haven flows into JPY pressured USD/JPY below the 106.00 handle and saw similar weakness in JPY-crosses, while NZD/USD was choppy with initial pressure seen after New Zealand GDP data missed expectations, before the pair later recovered on the back of a softer USD.
New Zealand GDP (Q4) Q/Q 0.6% vs. Exp. 0.8% (Prev. 0.6%). (Newswires)
New Zealand GDP (Q4) Y/Y 2.9% vs. Exp. 3.1% (Prev. 2.7%)
Canadian PM Trudeau said he is confident on reaching a NAFTA agreement and that Canada is happy to speed up NAFTA discussions if required. (Newswires)
Commodities were range-bound in which WTI crude futures just about held above the USD 61/bbl level, with overnight price action muted after yesterday’s mild swings in which participants digested a larger than expected build to headline DoE crude inventories with significant drawdowns to gasoline and distillate stockpiles. Elsewhere, gold was saw marginal gains amid the backdrop of a lacklustre greenback and downbeat risk tone which also kept copper steady.
Bull-flattening along the curve was the theme again, with shorted yields slightly positive, and the long-end rallied by around 4bps. Major curves were mixed; the 2s5s was c.1bps narrower, 2s30s flat, 5s30s flat, and the 5s10s was wider by c.2bps. 10yr T-note futures (June 2018) settled 7 ticks higher at 120-17+.
US President Trump picked Larry Kudlow for the NEC Director role which Kudlow accepted. Larry Kudlow later commented that he would like to see the USD slightly stronger than it currently is, and that he would buy USD and sell gold. Furthermore, Kudlow also stated that the EU could get carve outs if it negotiates with the US and that China has not played by the rules on trade for a long time. (Newswires)
US Senate voted 67 to 21 in favour of the bill to roll back parts of Dodd-Frank Act and ease regulations for banks. (Newswires)