General Trend:
- Energy shares trade generally lower in Asia, the May WTI Crude FUTs contract traded into negative territory on Monday; May WTI Crude moved back into positive territory on Tuesday’s Asian session
- Real Estate firms trade generally weaker in Asia after the earlier declines in the US REIT sector
- BHP declines as Q3 iron ore production missed ests
- Virgin Australia confirmed that it will enter voluntary administration, co. will continue to operate scheduled international and domestic flights
- Decliners in Japan include Electronics firms
- Sectors moving lower in China include IT, Consumer Discretionary and Property
- China Mobile declines after Q1 results dropped y/y
- NZD declines in Asia; RBNZ Gov said will consider additional stimulus in May, ‘open minded’ on direct monetization of NZ’s debt [central bank meets on May 13th]
- RBNZ proposed to remove mortgage loan-to-value (LVR) restrictions, cited the economic downturn caused by the coronavirus pandemic
- Mexican Peso (MXN) declines in Asia, Trump said he will sign an executive order to temporarily suspend immigration into the US
- RBA Gov: With conditions more settled….plan for the immediate future is to schedule any bond auctions we conduct for three days each week [Note: RBA currently offers to purchase gov’t bonds daily under its QE program]
- RBA April Minutes: GDP could fall significantly in the June quarter and remain subdued in the September quarter
- Aussie Stats Agency: March 14-April 4 jobs -6% [data is from the 3 weeks after Australia recorded its 100th confirmed coronavirus case]
- Australia PM eased restrictions on elective surgeries, said the coronavirus transmission rate must be below 1% before lockdown measures can be eased
- US companies expected to report during the NY morning include Emerson Electric, Coca-Cola, Lockheed Martin, Manpower, Paccar, Philip Morris and Travelers.
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.1%
- VAH.AU Enters voluntary administration in order to recapitalize, have continued to seek financial assistance from parties including state and Fed Govt
- VAH.AU Virgin Australia Administrator: Wants to talk about fate of Virgin’s 737 Max plane order; There is an extraordinary number of interested parties in restructuring, sending out information today
- (AU) Australia Fin Min Cormann: Considering support for airline industry, process offers best opportunity for viable airline, Virgin Australia has opportunity to recapitalize
- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Will continue to adjust bond and repo operations as needed to support liquidity of system; H1 national output and income will have the largest contraction since the 1930s; to conduct bond auctions 3 days a week – Economic and Financial Update
- (NZ) Reserve Bank of New Zealand (RBNZ) Proposes removal of loan-to-value ratio (LVR) restrictions; Move will help banks lending support customers, including mortgage deferrals
- BHP.AU Reports Q3 Iron Ore production (100% basis, Waio) 68Mt v 64Mt y/y; Attributable Iron ore production 60.0Mt v 56.1Mt y/y v 60.6Mte; Affirms iron ore guidance, reviewing copper guidance and FY21 capex
- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$83.7B v A$85.8B prior
- (AU) Australia Bureau of Statistics (ABS): New data shows that from March 14-Apr 4 Jobs -6% y/y; Total wages -6.7% y/y
- (AU) Reserve Bank of Australia (RBA) adds A$2.54B to banking system through repos v A$1.35B prior
- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: QE is more effective to deal with sharp virus shock rather than negative rates; Will consider additional stimulus in May
- (AU) Reserve Bank of Australia (RBA) offers to buy total of A$500M in bonds v A$500M prior; Offers to buy Apr 2025-Apr 2026
- (AU) RESERVE BANK OF AUSTRALIA (RBA) APR 7TH MINUTES: DAILY OPERATIONS LIKELY TO BE ON SMALLER SCALE IN NEAR TERM; WILL DO WHAT IS NEEDED TO REACH 3-YEAR YIELD TARGET
Japan
- Nikkei 225 opened -1.0%
- (JP) IOC: Japan PM Abe agreed to shoulder cost of ¥300B for postponing Olympics – press
- Follow Up: Japan Chief Cabinet Sec Suga: Refutes earlier report that Japan has agreed to pay for delay to Olympics
- 7974.JP Reportedly to boost output of Switch console by 10% this year due to jump in demand from customers stay at home – Nikkei
- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.40% (prior 0.30%) 20-year bonds; avg yield 0.3350% v 0.2480% prior; bid to cover: 3.58x v 3.69x prior
- (JP) Bank of Japan (BOJ): Japan Financial system maintaining financial stability on the whole; Risk Forex funding might be destabilized
Korea
- Kospi opened -0.6%
- (KR) South Korea Apr 1-20th Exports Y/Y: -26.9% v 10.0% prior; Imports Y/Y: -18.6% v 5.9% prior
- (KR) North Korea leader Kim Jong-un reportedly had ‘cardiovascular treatment’ and has mostly recovered – North Korean media
- (KR) North Korea leader Kim in “grave danger” after surgery – CNN; Note Leader Kim last appeared in public on April 11th
- (KR) South Korea Govt: Media report on North Korea leader Kim condition being bad is not true – Yonhap
- (KR) China Communist Party International Liaison Dept: North Korea leader Kim thought not to be critically ill
- (KR) US President Trump: Rejected South Korea’s offer on defense cost sharing because the country is wealthy and should pay “for a big percentage of what we’re doing” there – Yonhap
- (KR) Bank of Korea (BOK) provides KRW270B via weekly repo operations v KRW3.17T prior; Accepts KRW0.27T in 91-day repo operations
- (KR) Bank of Korea (BOK) auction of USD currency swap with Fed draws $2.119B in bids v $4.0B offered
China/Hong Kong
- Hang Seng opened -0.3%; Shanghai Composite opened -0.4%
- (CN) China Ministry of Finance (MOF) to front load CNY1.0T in local govt special bond issuance to end of May – Xinhua
- (CN) China National Health Commission Coronavirus Update for April 20th: 11 additional cases (4 imported) v 12 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 37 v 49 prior
- 941.HK Reports Q1 (CNY) Net 23.5B v 23.7B y/y, Rev 181.3B v 185B y/y
- (CN) China PBOC to conduct CNY5.0B in central bank bill swap (CBS) operation on today’s session v CNY5.0B prior at 2.35% v 2.35% prior
- (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 14th consecutive session; Net CNY0B v CNY0B prior
- (CN) China PBOC sets Yuan reference rate: 7.0752 v 7.0657 prior
North America
- (US) House Speaker Pelosi told Democrats she expects a deal with GOP tonight on billions to replenish a small businesses loan program and provide more hospital funds; Maj Leader Hoyer says vote as soon as Wednesday – NY Times
- (US) Pres Trump: Hopes Senate will vote on relief loans in Tuesday session; US to put up to 75M barrels into strategic reserve
- (US) US President Trump: In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States! – tweet
- (US) Fannie and Freddie may start to buy loans in forbearance to help mortgage companies – press
Europe
- (EU) Health Commissioner Kyriakides: EU is too dependent on vital drugs coming from China and India – FT
Levels as of 1:15ET
- Hang Seng -2.3%; Shanghai Composite -1.5%; Kospi -1.6%; Nikkei225 -2.0%; ASX 200 -2.0%
- Equity Futures: S&P500 -0.4%; Nasdaq100 -0.3%, Dax -0.7%; FTSE100 -1.6%
- EUR 1.0872-1.0825; JPY 107.80-107.42; AUD 0.6348-0.6284; NZD 0.6046-0.5979
- Commodity Futures: Gold -0.5% at $1,703/oz; Crude Oil +4.7% at $21.39/brl; Copper -1.6% at $2.27/lb
