Asian Indices Trade Lower After The Earlier US Declines

General Trend:

• SP 500 Futures trade lower by 5% electronic session daily limit
• Electric Appliances, Real Estate and Marine Transportation are among the declining sectors in Japan
• Sectors moving lower in Australia include Energy and Financials
• Shanghai Composite declines over 2% during morning session
• RBA cut rates and announced QE that will target the 3-year yield in Australia
• RBA again added a record amount of cash to the banking system through repo operations
• RBA Gov Lowe due to speak at 5 GMT
• NZ 10-year bond yield rises over 20bps; RBNZ said cash is ample, NZ debt agency to now hold weekly Treasury bill tenders amid increased short-term financing needs
• AU and NZ announce measures to close their borders to foreigners
• JGB Futures decline despite special operations by BOJ
• Japanese government officials continue to debate stimulus and cash handouts
• South Korea announces funds to stabilize the bond and equity markets
• China Hubei reported no new cases of coronavirus on March 18th (first time since outbreak of virus started in China)
• China PBOC is due to hold its monthly settings of the loan prime rates (LPRs) on Friday; The central bank is expected to cut the 1-year and 5-year LPRs by 5bps each (according to 1 poll)

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.4%
• (AU) RESERVE BANK OF AUSTRALIA (RBA) CUTS CASH TARGET RATE BY 25BPS TO 0.25%; to target yield on 3-year Australian Government bonds of around 0.25%; announces A$90B funding facility
• (AU) Australia Government: To invest up to A$15.0B to support lending by small and medium-sized companies
• (AU) AUSTRALIA FEB EMPLOYMENT CHANGE: +26.7K V +6.3KE; UNEMPLOYMENT RATE: 5.1% V 5.3%E
• (NZ) NEW ZEALAND Q4 GDP Q/Q: 0.5% V 0.5%E; Y/Y: 1.8% V 1.7%E
• (NZ) New Zealand Debt Management Office (DMO): To hold weekly Treasury bill tenders, effective from March 24th; the new frequency to support increased short-term funding needs
• (AU) Australia PM Morrison: Govt will announce additional economic measures in coming days; To ban all non-Australians arrivals from Friday 20th
• (NZ) Reserve Bank of New Zealand (RBNZ): Aware and watching market developments, they are not unexpected or unusual
• (AU) Reserve Bank of Australia (RBA): Surplus cash at ES accounts at ~A$18.8B (record high)
• (AU) Reserve Bank of Australia (RBA) adds A$12.7B (record high) to banking system through repos v A$10.7B prior
• QAN.AU Suspends all international flights for Qantas and JetStar, starting late march; to stand down majority of 30K employees
• (AU) Australia Medical Office: Reports 565 coronavirus cases v 454 prior; Deaths 6
• (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: RBNZ and banks have plenty of cash on hand ; Cash and other payment systems are ready for coronavirus
• (AU) Australia APRA adjusts bank capital expectations, sees banks needing to use large buffers for lending, will not be concerned if banks do not meet 2016 capital benchmark

Japan

• Nikkei 225 opened +1.6%
• (JP) JAPAN FEB NATIONAL CPI Y/Y: 0.4% V 0.5%E; CPI EX-FRESH FOOD (CORE) Y/Y: 0.6% V 0.6%E; CPI Ex Fresh Food, Energy (core-core) Y/Y: 0.6% v 0.7%e
• (JP) Bank of Japan (BOJ) announces ¥1.0T in special bond buying operations (unscheduled)
• (JP) Bank of Japan (BOJ) announces 2nd special bond buying operation for the day totaling ¥300B, Daily total now ¥1.3T
• 7203.JP To close all plants in North America March 23-24th; plan to resume production March 25th
• 7201.JP To suspends North American production from March 20-April 6th due to coronavirus
• (JP) Japan Govt said to be planning more than ¥30T in stimulus – Japan press
• (JP) Bank of Japan (BOJ) Meeting Minutes from Jan: Most members: must be mindful of downside risks to economy but momentum for hitting price target sustained
• (JP) Japan Investors Net Buying of Foreign Bonds: -¥595.1B v +¥4.24T prior week; Foreign Net Buying of Japan Stocks: -¥1.2T v -¥514.8B prior week
• (JP) Japan Econ Min Nishimura: Getting many proposals from ruling opposition party lawmakers to offer cash to households, this is still in the idea stage; cannot say at this time what size stimulus package will be
• (JP) Japan Fin Min Aso: Not currently thinking about cash payments to citizens; not currently considering sales tax cut; has not yet decided on size of stimulus package

Korea

• Kospi opened +2.2%
• (KR) South Korea President Moon ordered KRW50T in emergency funding for small business
• (KR) South Korea Fin Min Hong: To create fund to stabilize bond market, financial institutions to also create fund for equities
• (KR) South Korea Vice Fin Min Kim: meeting held to review markets; to take steps based on contingency plan if needed; Possible plans include expanding support for corporate bond issuance
• (KR) South Korea reports 152 additional coronavirus cases in the last 24-hours v 93 prior; Total 8,565; Death toll 91 v 84 prior
• (KR) South Korea Fin Min and Bank of Korea (BOK) joint statement: Won fall is excessive; herd behaviors in FX are excessive, one-sided moves in FX are excessive given fundamentals
• (KR) South Korea KOSDAQ index decline triggers circuit breaker; Korea Exchange again activates ‘sidecar’ on Kospi after Kospi 200 FUTs decline by 5%, program trading has been halted for 5 mins

China/Hong Kong

• Hang Seng opened -0.3%; Shanghai Composite opened -0.3%
• 700.HK Reports Q4 (CNY) Net 21.6B v 22.8Be, Op 28.6B v 17.3B y/y, Rev 105.8B v 103.7Be
• (CN) China Feb Swift Global Payments CNY: 2.11% v 1.65% prior
• (CN) China National Health Commission Coronavirus Update for March 18th: 34 additional cases v 13 prior; Additional deaths: 8 v 11 prior; Hubei: 0 additional cases v 1 prior; additional deaths: 8 v 11 prior
• (CN) China PBOC sets Yuan reference rate: 7.0522 v 7.0328 prior (weakest fix since Oct 2019)
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 22nd consecutive session, Net CNY0B v CNY0B prior
• (HK) Macau reports 80% of gaming tables have resumed operations
• (CN) China FX Regulator SAFE: Will prevent risks from cross border flows

Other

• (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC RATE TARGET BY 50BPS TO 3.75%; AS EXPECTED

North America

• US) FED TO LAUNCH MONEY MARKET MUTUAL FUND LIQUIDITY FACILITY (MMLF); US Treasury to provide $10B in credit protection from Exchange Stabilization Fund for the Fed’s liquidity facility
• (US) NYSE TO MOVE TEMPORARILY TO FULLY ELECTRONIC TRADING; EQUITIES AND OPTIONS TRADING FLOORS TO TEMPORARILY CLOSE, BEGINNING MARCH 23RD
• MAR Withdraws FY20 outlook; sees very early signs of improvement in Greater China; North America and Europe have seen occupancy levels below 25% over the last few days
• (US) TTN March 18th Avg Traffic Intensity Index in Select US cities y/y: 14.0% v 14.8% prior (6th consecutive decline)
• (US) Some bank branches said to run ‘low’ on cash amid large withdrawals by customers; banking officials and Fed assure that there is ample cash on hand – US financial press
• (US) Pres Trump: announcing developments in war against ‘Chinese virus’; will invoke Defense Production Act; China has not asked for a tariff suspension – White House briefer
• (US) NIH’s Fauci: Coronavirus still in escalation phase in the US
• (US) Fed’s Kashkari (dove, FOMC voter): Coronavirus pandemic could be devastating like the great Depression or worse; the faster Congress can act the better
• ABBV New England Journal of Medicine reports a Chinese trial of 199 patients finds that Kaletra failed to improve their condition or prevent them from dying any better than standard care – financial press

Europe

• (EU) ECB ANNOUNCES €750B PANDEMIC PURCHASE PROGRAM (PPP); to cover private and public sector securities; will consider revising QE limits to extent necessary
• (EU) ECB chief Lagarde: Extraordinary times require extraordinary action; there are no limits to our commitment to the Euro, will use full potential of our tools
• (UK) PM Johnson: To increase testing for coronavirus to 25,000/day – press

Levels as of 01:10ET

• Hang Seng -5.1%; Shanghai Composite -2.6%; Kospi -8.1%; Nikkei225 -2.0%; ASX 200 -4.1%
• Equity Futures: S&P500 -4.4%; Nasdaq100 -3.7%, Dax -4.9%; FTSE100 -4.5%
• EUR 1.0981-1.0878; JPY 109.55-107.89; AUD 0.5816-0.5511; NZD 0.5750-0.5471
• Commodity Futures: Gold -0.3% at $1,474/oz; Crude Oil +8.9% at $22.67/brl; Copper -6.4% at $2.02/lb