Asian Market Update

Japan's economic data paints a gloomy picture

ECONOMIC DATA

Japan's economic data paints a gloomy picture: Japan's inflation jumped by the most of a decade, but the inflation increase comes at a time when the unemployment rate increased for the first time in five months, suggesting that Japanese households will come under renewed pressures as wages slump. Japan's Ministry of Finance lowered its assessment of the economy for the second month in March, saying the expansion is 'pausing' and consumer spending is 'almost flat'.

Japanese inflation rises to a decade high: (JP FEB NATIONAL CPI YOY: 1.0% V 0.9% expected, 0.7% prior; CORE CPI: 1.0% V 0.9% expected, 0.8% prior) It was the fifth straight monthly rise in core consumer prices. 'With economic growth pausing and workers' wages not increasing, I cannot say that recent rises in consumer prices are good,' said Economy Minister Hiroko Ota.

Japan's unemployment rate unexpectedly rise in February: : (JP Feb Jobless Rate: 3.9% v 3.8% expected, 3.8% prior; Job To Applicant Ratio: 0.97 v 0.97 expected, 0.98 prior) Job vacancies dropped to the lowest level in two years, as declining corporate profits forces Japanese companies to reduce hiring. 'We're not seeing a sharp deterioration, but there are some signs of a softening in employment growth, particularly for small firms which have been hit by rising costs,' said Lehman Brothers economist Hiroshi Shiraishi.

Japan Feb all household spending flat year/year: (JP FEB OVERALL HOUSEHOLD SPENDING YoY: 0.0% V 2.4% expected, 3.6% prior) Compared with January on a seasonally adjusted basis, household spending was down -2.9%. 'Consumption is sluggish due to poor sentiment and a gradual slowdown in employment,' noted Goldman Sachs economist Naoki Murakami.

Higher fuel prices push up Japanese retail trade in February: (JP FEB RETAIL TRADE YOY: 3.1% V 2.0% expected, 1.3% prior; MOM: -1.0% V -2.4% expected, +0.8% prior) It was the seventh straight month that retail sales increased.

New Zealand economy accelerates in Q4: (NZ Q4 GDP QOQ: 1.0% V 0.8% expected, 0.5% prior; YOY: 3.7% V 3.4% expected, 3.3% prior) The data failed to change the consensus view that New Zealand interest rates will remain high for some time, and the NZD was propelled higher. Analysts said an economic slowdown was already underway in New Zealand, but the data showed inflation pressures remain in the economy. Despite the strong NZD, exports surged 8.1% in Q4, driven by higher shipments of dairy products and petroleum products. Household consumption, accounting for more than half of the Kiwi economy, showed growth of 0.5% in Q4, up from 0.4% in Q3.

Equities: At 0:00 EDT Japan's Nikkei is +1.83% after trading down for most of the session, the S&P/ASX200 is -0.37%, South Korea's KOSPI is +1.46%, and the Shanghai Composite Index is +2.57%. The S&P futures contract gained +0.62% since the New York close, last trading at 1,337.90. In Tokyo, oil producers, metals-related companies and banks rallied, while financials traded lower in Sydney. Centro Properties, a stock with significant U.S. exposure, is higher by more than 10% after being given an extension to repay about $4.2B of debt. In other Aussie equity news, stockbroker Opes Prime has been placed into receivership. Opes recently had a securities lending book worth more than A$1B, and now owes A$1B in secured debt to ANZ Bank and Merrill. The Australian Stock Exchange noted that less than

A$5M of Opes' trades are expected to be settled on Friday, Monday and Tuesday. The clearing house Berndale Securities would meet the obligations for these trades. Chinese stocks are higher in a technical rebound, while Hong Kong's Hang Seng index traded higher on press reports that the Chinese government will allow mainland insurers to invest in Hong Kong stocks and bonds.

Commodities: Nymex crude oil lost -1.12% between 18:00 EDT and 00:09 EDT, last trading at $106.37/bbl. Spot gold is lower by -0.46%, last trading at $949.60/oz, as traders take profits ahead of the weekend.

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