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Asian Market Update: Australia Retail Sales Slump

Australia Retail Sales slump

Asia Mid-Session Market Update: China, Japan, Korea manufacturing PMIs retreat; Australia Retail Sales slump

Friday US Session Highlights

(US) FEB PERSONAL INCOME: 0.4% V 0.4%E; PERSONAL SPENDING: 0.1% V 0.2%E; Real Personal Spending (PCE): -0.1% v +0.1%e

(US) FEB PCE DEFLATOR M/M: 0.1% V 0.1%E; Y/Y: 2.1% V 2.1%E

(US) FEB PCE CORE M/M: 0.2% V 0.2%E; Y/Y: 1.8% V 1.7%E

(US) Fed’s Dudley (dove, FOMC voter): Rate hikes to be data dependent; couple of more hikes in 2017 is reasonable

(US) MAR CHICAGO PURCHASING MANAGER: 57.7 V 56.9E

(US) Atlanta Fed cuts Q1 GDP to 0.9% from 1.0% on 3/24

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

Best Sector in S&P500: Real Estate

Worst Sector in S&P500: Financials

Biggest gainers: FMC +13.2%; MLM +3.2%; cBT +2.9%

Biggest losers: INCY -3.0%; URBN -2.9%; AN -2.8%

At the close: VIX 12.4 (+0.8pts); Treasuries: 2-yr 1.27% (-2bps), 10-yr 2.40% (-2bps), 30-yr 3.02% (-1bps)

Politics

(AU) Approval rating for Australia’s ruling Coalition slips to 47% v 53% for opposition Labor party in two-party terms – Australian

(US) President Trump: Will handle North Korea without China’s help if need to – FT

(US) Pres Trump tweets, calls on media to investigate "Obama SURVEILLANCE SCANDAL and stop with the Fake Trump/Russia story"

Weekend US/EU Corporate Headlines

4503.JP: Acquires privately owned drug discovery company, Ogeda SA for €800M

TSLA: Reports Q1 deliveries just over 25.0K (~13.5K Model S; ~11.6K Model X), +69% y/y; Production 25.4K (deliveries and production fresh record highs)

Key economic data:

(CN) CHINA MAR CAIXIN PMI MANUFACTURING: 51.2 V 51.7E (9th consecutive expansion)

(JP) JAPAN Q1 TANKAN LARGE MANUFACTURING INDEX: 12 V 14E; MANUFACTURERS OUTLOOK: 11 V 13E; ALL-INDUSTRY CAPEX: 0.6% V -0.3%E

(JP) JAPAN MAR FINAL PMI MANUFACTURING: 52.4 V 52.6 PRELIM

(AU) AUSTRALIA FEB RETAIL SALES M/M: -0.1% V +0.3%E

(AU) AUSTRALIA FEB BUILDING APPROVALS M/M: +8.3% (7-month high) V -1.5%E; Y/Y: -4.9% (smallest decline in 3 months) V -14.5%E

(AU) AUSTRALIA MAR MELBOURNE INSTITUTE INFLATION M/M: 0.1% V -0.3% PRIOR; Y/Y: 2.2% (14-month high) V 2.1% PRIOR

(AU) AUSTRALIA MAR CORELOGIC RPDATA HOUSE PRICES M/M: 1.4% V 1.4% PRIOR; Y/Y: 12.9% (7-year high)

(AU) AUSTRALIA MAR AIG MANUFACTURING INDEX: 57.5 V 59.3 PRIOR; 6th month of expansion

(KR) SOUTH KOREA MAR PMI MANUFACTURING: 48.4 V 49.2 PRIOR; 8th consecutive month of contraction

Asia Session Notable Observations, Speakers and Press

Asian equity markets are trading mixed, tracking underwhelming US Friday session where PCE inflation data were in line with consensus, Chicago PMI numbers saw decent growth, but personal spending data missed expectations. Oil prices have remained supported above the $50/brl level, while US Treasuries were bid somewhat higher within their recent range. FX market volatility was also somewhat dulled by the start of a holiday break in China – USD majors saw little change with the exception of AUD/USD, which slid some 40pips from the highs toward $0.76 on the release of weaker than expected Retail Sales.

Aussie retail figures came in unexpectedly negative, with a -0.1% slide against expected 0.3% rise, sending AUD down to its lows. This may allow RBA some flexibility as it prepares to crafts its monetary policy statement on tap for tomorrow. Slowing Australia spending as well as recent slump in exports is mitigated by continued price pressures in the property sector – just today, CoreLogic for March saw prices nationwide rise by 12.9% on the year – a 7-year high. Building Approvals data were also higher, with m/m increase registering its 7-month high rate of growth.

Over the weekend, China March Caixin manufacturing PMI missed expectations at 51.2 V 51.7E. Caixin economists noted continued downward trend in employment, weakest new export sales this year, and further slowdown in the rate of input price inflation, even though the overall figure was in expansion territory for the 9th straight month. Also of note in China, BoC released its FY16 results that saw a miss on the bottom line, a 200bp drop in ROE and 30bp slide in NIMs. The bank warned domestic and international picture will remain "complicated this year" amid China’s economic transition as its shares fell over 2% in Hong Kong.

Other PMI figures from the far east were mixed. South Korea’s was most troubling, remaining in contraction for 8th straight month amid "sharpest decline in employee numbers" since the end of 2008. New export orders also slumped due to weaker demand from China amid THAAD system deployment dispute. Japan final PMI also retreated somewhat from the prelim figure, even though Q1 Tankan showed more signs of economic recovery.

China

(CN) China announces property curbs in city of Tianjin – China Daily (update)

(CN) PBOC raises interest rates on Standing Lending Facility (SLF) Loans by 0.2pts to 3.3% effective Mar 16th – press

(HK) Macau Mar Gaming Rev MOP21.23B v MOP22.99B prior; y/y: 18.1% v +11%e

Japan

(JP) Japan megabanks said to be planning to raise mortgage rates – Nikkkei

Australia/New Zealand

(NZ) New Zealand Treasury March Monthly Economics Indicators report: Inflation was near 2% in Q1; sees inflation below 2% later in 2017

Korea

(KR) South Korea, Japan, and US naval forces to hold 3-day anti-submarine training – press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.1%, Hang Seng +0.3%, Shanghai Composite closed, ASX200 -0.3%, Kospi +0.2%

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

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

EUR 1.0650-1.0680 (3-month high); JPY 111.10-111.50; AUD 0.7610-0.7640; NZD 0.7000-0.7015; GBP 1.2530-1.2555

Apr Gold flat at 1,250/oz; May Crude Oil -0.1% at $50.53/brl; May Copper -0.3% at $2.65/lb

(US) Weekly Baker Hughes US Rig Count: 824 v 809 w/w (+1.9%) (11th straight weekly rise)

iShares Silver Trust ETF daily holdings fall to 10,274 tonnes from 10,292 tonnes prior; 3rd straight decline

(KR) South Korea MoF sells 3-yr bonds; avg yield 1.67%

Asia equities/Notables/movers

Australia

DOW.AU Downer -1.9% (Cut at Morgan Stanley)

MLD.AU Maca +3.9% (contract)

Japan

4613.JP Kansai Pain +2.2% (raised at Nomura)

8750.JP Daichi Life -3.7% (medium term growth target speculation)

6502.JP Toshiba -6.6% y/y (may miss Q3 earnings results again)

Hong Kong

1919.HK Cosco Shipping +0.6% (FY16 results)

1186.HK China Railway Constructino (CRCC) +2.7% (FY16 results)

1893.HK China National Materials Company +4.7% (FY16 results)

0661.HK China Daye Non Ferrous Metals Mining +3.3% (FY16 results)

3988.HK Bank of China -2.1% (FY16 results)

3688.HK Top Spring International Holdings Ltd +5.7% (FY16 results)

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