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Asian Market Update: RBA On Hold With Slightly Rosier View Of Domestic Economy

RBA on hold with slightly rosier view of domestic economy

Asia Mid-Session Market Update: RBA on hold with slightly rosier view of domestic economy; THAAD system components start to arrive in Korea

US Session Highlights

(US) Trump trade adviser Navarro: Questions Chinese, Japanese, German and Indian trade fairness; Can reduce trade deficit through negotiations

(MX) Mexico central bank begins auction of $1B in non-deliverable forwards (start of $20B program to bolster the peso)



IEA Chief Economist Birol: beginning to see a second wave of US shale growth, the size of which will determine the oil price direction

US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.4%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Materials

Biggest gainers: RRC +4.1%, COG +3.5%, SWN +3.0%, NFLX +2.0%, MRO +1.8%

Biggest losers: ENDP -6.9%, CSRA -4.3%, FTR -3.8%, FSLR -3.7%, RIG -3.6%

At the close: VIX 11.2 (+0.3pts); Treasuries: 2-yr 1.31% (flat), 10-yr 2.49% (flat), 30-yr 3.10% (+1bps)

US movers afterhours

MEET: Reports Q4 $0.19 v $0.19e, R$29.2M v $28.7Me; +18.5% afterhours

WFT: Names Mark A. McCollum new CEO effective in late April; +14.6% afterhours

ASNA: Reports Q2 -$0.07 v -$0.10e, R$1.75B v $1.75Be; +7.8% afterhours

DISH: To be added to S&P500 Index, effective at the open on March 13th; +5.3% afterhours

PIR: Guides Q4 $0.32-0.34 v $0.30e; Rev -2.6%; SSS +0.2% – We are raising our estimates for earnings per share and adjusted earnings per share for the fourth quarter and full year as a result of a number of key factors; +5.0% afterhours

CRM: IBM and Salesforce announce global strategic partnership centered on artificial intelligence; +2.1% afterhours

THO: Reports Q2 $1.23 v $1.26e, R$1.59B v $1.51Be- Q2 Consolidated RV backlog $1.38B v $1.21B q.qq; -2.5% afterhours

CASY: Reports Q3 $0.58 v $0.88e, R$1.77B v $1.82Be; To repurchase up to $300M in common stock (6.7% of market cap); -4.6% afterhours

PCRX: Files to sell $300M aggregate principal amount of convertible senior notes due 2022; -4.9% afterhours

KTWO: Reports Q4 -$0.30 v -$0.26e, R$61.8M v $61.5Me- Guides initial FY17 R$263-270M v $270Me – Guides initial FY17 adj EBITDA $6-10M; -8.0% afterhours


(US) House releases text of Obamacare replacement bill: To include refundable tax credits tied to age and income

Asia Key economic data:



(TW) TAIWAN FEB CPI Y/Y: 0.0% V 0.7%E; WPI Y/Y: 2.2% V 3.0%E

Asia Session Notable Observations, Speakers and Press

Asia indices are mixed as investors shrugged political drama in Washington. Energy led other sectors in US session despite lower oil prices, while Financials and Materials slumped. Nikkei225 put in a modest drop as USD/JPY sank back below ¥114. AUD/USD was also volatile, with RBA delivering a modest upgrade of economic conditions, but not enough to materially shift expectations for a rate hike this year.

AUD rose going into the decision to session highs of 0.7630 on expectations of hawkish language and then fell back below 0.76 on release of another neutral statement. Most notably, RBA added that "exports have risen strongly and non-mining business investment has risen over the past year" and also acknowledged better Q4 GDP by noting that "consumption growth was stronger towards the end of the year". However, RBA also reiterated that inflation remains quite low and cheered depreciating exchange rate in assisting economy transition from its mining boom. Fixed income markets were pricing in about a 30% chance of a rate hike this year going into the statement, and after the decision those odds rose only about 3pts.

Tensions on the Korean peninsula continued to simmer as White House released a statement that President Trump spoke with leaders of Japan and South Korea. Trump said the North Korea launch is a violation of UN resolutions and poses a "serious threat". On a related note, US commander in the region said the launch justifies THAAD deployment which started today and may begin operating as soon as next month. Recall that China has been a vocal opponent of THAAD deployment in the region, cancelling joint exercises with South Korea and urging termination of the system.


(CN) China NDRC: Sees coal prices falling steadily, coal supply is sufficient

(CN) UBS Economist Hu: Sees PBOC cutting RRR 4x in 2017; benchmark rate hike unlikely this year

(CN) PBOC Dep Gov Yi Gang: Will seek to prevent systemic risk and moral hazard in markets – Chinese press


(JP) Japan Fin Min Aso: China needs to address overcapacity and debt issues

(JP) Japan Center for Economic Research (JCER): Japan Jan GDP estimated at -0.5% m/m v -0.5% prior – Nikkei


(AU) AMP’s Oliver: RBA to remain on hold until H2 of 2018 – SMH

(NZ) IMF: New Zealand household debt continues to be a risk to financial stability


(KR) Commander of US Pacific Command: North Korea’s latest missile launch confirms the need for THAAD deployment; some equipment, including 2 launch pads for Thaad US missile defense system, has arrived in South Korea; Thaad may start operating as soon as April

(KR) White House: Pres Trump spoke to Japan PM Abe and South Korea acting Pres Hwang; North Korea poses a "serious threat" and latest missile launch is a clear violation of UN resolutions – press

(KR) South Korea govt think tank (KDI): Modest economic recovery losing momentum due to faltering consumption – Korean press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.2%, Hang Seng +0.4%, Shanghai Composite -0.1%, ASX200 +0.2%, Kospi +0.7%

Equity Futures: S&P500 flat; Nasdaq flat; Dax +0.3%; FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0570-1.0595; JPY 113.85-114.10; AUD 0.7575-0.7630; NZD 0.6980-0.7020

Apr Gold flat at $1,225/oz; Apr Crude Oil flat at $53.20/brl; May Copper +0.1% at $2.66/lb

(IQ) Iraq energy min: Iraq would participate if OPEC decides to extend the cut agreement past June 30th, but too soon to say if it should be extended – Ceraweek conf comments

(AU) Australia Port Hedland Feb Iron Ore Exports 35.7Mt v 40.3Mt m/m

GLD SPDR Gold Trust ETF daily holdings fall 3.8 tonnes to 836.8 tonnes; lowest since Feb 10th; 2nd straight decline

(CN) PBOC SETS YUAN MID POINT AT 6.8957 V 6.8790 PRIOR; weakest CNY setting since Jan 17th

(CN) PBOC to inject combined CNY30B v CNY40B prior in 7-day, 14-day and 28-day reverse repos

(JP) Japan MoF sells ¥723B in 0.8% (0.6% prior) 30-yr bonds; Avg yield: 0.821% v 0.907% prior; Bid to cover: 3.14x v 3.23x prior

(KR) South Korea sells 30-yr Govt bonds at 2.369%

Asia equities/Notables/movers by sector

Consumer discretionary: 848.HK Maoye International Holdings -1.3% (profit warning); 7956.JP Pigeon Corp +1.5% (FY16/17 result)

Financials: 6030.HK CITIC Securities +1.6% (Feb result); 1918.HK Sunac China Holdings +3.4%, 688.HK China Overseas Land +1.3% (Feb result); WFD.AU Westfield Corp -1.5% (Credit Suisse cuts rating)

Industrials: 2333.HK Great Wall Motor +0.8% (Feb result); 4005.JP Sumitomo Chemical Co +2.3% (to triple OLED screen capacity); 6103.JP Okuma Corp +2.4% (Goldman Sachs raises rating); 7211.JP Mitsubishi Motors -1.5% (Nomura cuts rating)

Technology: 066570.KR LG Electronics Inc +5.0% (strong preorders of G6 smartphone); 7751.JP Canon +2.1% (efforts to form profit structure); 7974.JP Nintendo Co +1.9% (Switch device sales)

Materials: RRL.AU Regis Resources -3.5%, RSG.AU Resolute Mining -3.6%, SBM.AU St Barbara -1.5% (gold declines)

Utilities: 5803.JP Fujikura -2.5% (Nomura cuts rating)

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