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Asian Market Update: RBNZ Holds Rates As Expected And Maintains Neutral Policy Stance

RBNZ holds rates as expected and maintains neutral policy stance

Asia Mid-Session Market Update: RBNZ holds rates as expected and maintains neutral policy stance; US GOP lawmakers continue to negotiate healthcare bill ahead of Thursday vote

US Session Highlights

(EU) ECB’s Villeroy: Recovery in inflation did not yet warrant a change in current accommodative policy

(US) MBA MORTGAGE APPLICATIONS W/E MAR 17TH: -2.7% V 3.1% PRIOR

(US) JAN FHFA HOUSE PRICE INDEX M/M: 0.0% V 0.4%E

(US) FEB EXISTING HOME SALES: 5.48M V 5.55ME

(US) SEC votes unanimously to approve rules to shorten standard securities settlement time to two days from three days

(US) DOE CRUDE: +5.0M V +2ME; GASOLINE: -2.8M V -2ME; DISTILLATE: -1.9M V -1.5ME

(UK) Metropolitan Polices Dep Commissioner: London attack "inspired by international Islamist terrorism" results in 5 deaths and 40 injured – press

US markets on close: Dow flat, S&P500 +0.2%, Nasdaq +0.5%

Best Sector in S&P500: Technology

Worst Sector in S&P500: Telecom

Biggest gainers: MAR +3.4%, VTR +2.8%, FMC +2.7%, ILMN +2.6%, UAL +2.6%

Biggest losers: FTR -10.6%, NKE -7.1%, TDG -4.4%, MNK -3.4%, LB -2.7%

At the close: VIX 12.8 (+0.3 pts); Treasuries: 2-yr 1.26% (flat), 10-yr 2.40% (-4bps), 30-yr 3.01% (-4bps)

US movers afterhours

HTGM: Obtains CE Mark for its HTG EdgeSeq ALKPlus Assay EU; +69.6% afterhours

FIVE: Reports Q4 $0.90 v $0.89e, R$388.1M v $387Me; Guides Q1 $0.12-0.14 (GAAP) v $0.14e, R$228-232M v $229Me, SSS flat to +2%; +8.2% afterhours

PVH: Reports Q4 $1.23 v $1.21e, R$2.11B v $2.09Be; Increases share buyback by $750M extended to Jun 2020 (10.4% of market cap); Guides Q1 $1.58-1.60 v $1.57e; +7.2% afterhours

BEBE: Confirms exploring strategic alternatives; +6.5% afterhours

MLHR: Reports Q3 $0.37 v $0.33e, R$524.9M v $531Me (2 est); +5.1% afterhours

CPB: Announces $1.5B share repurchase program (9% of market cap); +1.6% afterhours

RARE: Phase 2 UX007 Glucose Transporter Type-1 Deficiency Syndrome Seizure Study: Overall seizures not significantly reduced; decrease in absence seizures observed; -6.6% afterhours

Politics

(US) FBI said to have information that associates of Pres Trump communicated with Russian operatives during elections and may have released information damaging to Clinton campaign – CNN

(US) Trump administration reportedly considering making last minute changes to House healthcare bill to appease Freedom Caucus – Axios

Asia Key economic data:

(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED

(HK) Macau Feb Visitor Arrivals -13.2% m/m, -5.6% y/y to 2.50M

Asia Session Notable Observations, Speakers and Press

Asian equities have come off overnight lows as the selling in US stocks subsided, however the focus for sentiment remains primarily on the fate of the US healthcare legislation in the House vote on Thursday evening. Despite reports of limited progress made in swaying the members of a more conservative Freedom Focus during US hours, the administration claims it will proceed with the vote. In late US hours on Wednesday, press reports suggest that the White House is considering last-minute concessions to the right wing of the party, namely reducing some of the "essential benefit" requirements of Obamacare, though it is unclear whether that would dissuade some of the more moderate lawmakers from supporting the bill.

In FX, USD majors traded rangebound as selling in the greenback subsided during US hours. USD/JPY rose nearly 80pips from US session lows to 111.50, while EUR/USD spent much of the day in 1.0780-0820 range. GBP/USD was volatile in early US hours amid reports of a terror attack in London that claimed the lives of 5 people, falling to low 1.2420s before returning toward 1.25 handle. NZD/USD hit session high just shy of 0.7070 in the wake of RBNZ policy statement that expressed more concern over housing inflation while reiterating that exchange rate should depreciate more to achieve balanced growth. RBNZ’s tempered view of progress in housing as attributed to macroprudential measures risks a rush to tighten late this year, and indeed the OIS swaps market saw Q1 2018 odds of a hike inch up 4pts to near 50%. However, RBNZ also expressed awareness of "surplus capacity in the global economy and extensive geo-political uncertainty", giving markets little reason to anticipate a shift from policy status quo.

China

(CN) China plans to hold a meeting of BRICS economy and trade ministers in July – press

(CN) China Commerce Ministry (MOFCOM): Working with Saudi Arabia to push ahead energy cooperation – press

(CN) Some China coal-fired plants urge coal price cut – Chinese press

Australia/New Zealand

(AU) Australia PM Turnbull: China and Australia are reaping the benefits of free trade agreement – press

(NZ) Rabobank: New Zealand pessimism about rural economy has fallen to a 3-year low – press

Korea

(KR) US govt reportedly readying cases that link North Korea to cybertheft at the NY Fed – press

Asian Equity Indices/Futures (00:00ET)

Nikkei flat, Hang Seng +0.4%, Shanghai Composite +0.3%, ASX200 +0.3%, Kospi +0.2%

Equity Futures: S&P500 +0.2%; Nasdaq +0.1%; Dax +0.2%; FTSE100 +0.1%

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

EUR 1.0780-1.0800; JPY 111.10-111.60; AUD 0.7650-0.7680; NZD 0.7025-0.7050

Apr Gold -0.3% at $1,246/oz; May Crude Oil +0.7% at $48.39/brl; May Copper flat at $2.64/lb

(CN) PBOC SETS YUAN MID POINT AT 6.8856 V 6.8889 PRIOR; 2nd straight firmer setting

(CN) PBOC to inject combined CNY30B v CNY90B prior in 7,14, and 28-day reverse repos

Asia equities/Notables/movers by sector

Consumer discretionary: 2331.HK Li Ning Co -3.3% (annual result); 288.HK WH Group +8.6% (annual result)

Financials: 416.HK Bank of Jinzhou -0.3% (annual result); 998.HK China CITIC Bank -0.4% (annual result); 2318.HK Ping An Insurance +2.3%, 1113.HK Cheung Kong Property Holdings +1.8%, 1.HK CK Hutchison Holdings +0.6% (annual result)

Industrials: 631.HK Sany Heavy Equipment International Holdings -1.2%, 175.HK Geely Automobile Holdings -2.0% (FY16 result); FBU.NZ Fletcher Building Limited -2.3% (new CEO); 5631.JP Japan Steel Works -2.4% (cuts guidance)

Technology: 700.HK Tencent Holdings -1.0% (Q4 result); 763.HK ZTE Corp +2.3% (settlement); 1169.HK Haier Electronics Group +12.3% (annual result); ISD.AU iSentia Group -2.0% (CFO resigns)

Materials: 743.HK Asia Cement China Holdings -0.8% (annual result)

Energy: 1898.HK China Coal Energy -2.0%; 2208.HK Xinjiang Goldwind Science & Technology +0.8% (annual result)

Healthcare: SIP.AU Sigma Pharmaceuticals +2.3% (FY17 result)

Utilities: AST.AU AusNet Services -0.9% (Citi cuts rating)

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