- Asian equities traded modestly higher albeit the Nikkei 225 pared a bulk of its gains amid a decline in US equity futures
- Australian wage data lifted AUD before gains dissipated as the data was supported by the recent rise in minimum wages
- Looking ahead, highlights include Eurozone and US PMIs, UK jobs report, US existing home sales, FOMC minutes and a slew of speakers
In what has been a relatively quiet session, Asian equities are trading with modestly gains this morning. Nikkei 225 (+0.2%) had been up as much as 1.2% with the JPY continuing to weaken across the board in which USD/JPY hovering around 1.08. Although, as the session progressed a combination of the fall in US equity futures and 1% declines in crude prices, the Nikkei had briefly dipped into negative territory. Elsewhere, the ASX 200 (+0.1%) had opened lower in response to the falls on Wall Street but has recovered into positive territory. Mining names the largest drag on the index with BHP and Fortescue both losing ground following soft earnings. Hang Seng (+1.1%) traded higher amid HSBC shares recovering from yesterday’s declines. In credit markets, the US Treasury curve is modestly flatter in the Asia-Pacific session, with the 10-Year yield last 0.4bp higher at 2.89%. JGBs trading in a tight range, with the 10yr up by 3 ticks.
PM May is facing pressure after 62 Tory hardliners demand clean Brexit, with lawmakers challenging May to take a harder approach on how far UK rules should move away from the EU after Brexit and the nature of the transition period. (Newswires/FT)
UK Foreign Secretary Johnson described Brexit as “a mess” during a private meeting with senior German officials, European Union sources have claimed. (Telegraph)
Main focus overnight had been the Australian wage price index data, after recent comments made by the RBA governor last week. Wage prices had printed just above analyst estimates which had pushed AUD higher by 20pips against the greenback. However, gains had been short-lived with the data supported by the recent rise in minimum wages, subsequently suggesting that wage prices remain subdued, while the data point is not enough to change the narrative for the RBA. JPY also on the back-foot amid the risk on tone, consequently USD/JPY continued to track higher into the mid-1.07s, although moves to the upside had been curbed by the dip in US equity futures and paring back of gains in Asian bourses.
Australian Wage Price Index YY (Q4) 2.1% vs. Exp. 2.0% (Prev. 2.0%)
Australian Wage Price Index QQ (Q4) 0.6% vs. Exp. 0.5% (Prev. 0.5%)
Riksbank’s Floden says it is clear the Riksbank will probably raise rates before the ECB. (Newswires)
Brent and WTI crude futures fell overnight amid the gains seen in the USD-index, whereby the latter had dropped to the USD 61/bbl mark. Similarly the USD strength also weighed on the precious metals complex alongside the risk on tone which kept prices around intra-day lows.
US treasuries fell on Tuesday as markets attempt to absorb the mammoth US supply this week. The Treasury sold a total of USD 151bln of bills and USD 28bln worth of 2-year notes on Tuesday, ahead of 5-year note and 2-year FRN auctions on Wednesday and a 7-year auction on Thursday. Nevertheless, the 2-year sale seemed to go OK as the yield stopped through the WI at the bidding deadline, although demand – measured by the B/C – declined from its multi-year high in January. US T-Note futures (March 2018) settle down 3 ticks at 120-15+.
US states that VP Pence had been ready to meet with North Korea at the Olympics, however North Korea had cancelled 2hrs before meeting. (AP)