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Market Update – Asian Session: RBA On Hold With A More Dovish Statement Amid Softer Employment And Wage Growth

US Session Highlights

Major equity indices retraced slightly with little news from Washington, as the Trump administration’s Supreme Court nomination is headed for a filibuster fight and investors continue to wait for the economic policy promises that began the last stock rally. There were some positive economic data releases, but not enough to put more wind into the sails. NYSE volume 3% below 3-month average.

GM Reports Mar US sales +1.6% y/y, to 256.2K units v 276.3Ke; Mar industry SAAR at 17M (v 17.2Me)

(US) MAR MARKIT FINAL MANUFACTURING PMI: 53.3 V 53.5E (lowest since August)

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

(US) MAR ISM MANUFACTURING: 57.2 V 57.2E; PRICES PAID: 70.5 V 66.0E (prices paid highest since May 2011); Employment: 58.9 v 54.2 prior (highest since June 2011)

US markets on close: Dow -0.1%, S&P500 -0.2%, Nasdaq -0.3%

Best Sector in S&P500: Telecommunication

Worst Sector in S&P500: Consumer Discretionary

Biggest gainers: INCY +3.6%; NEM +2.8%; CI +2.0%; GGP +1.8%; HUM +1.8%

Biggest losers: KMX -4.3%; FTR -4.2%; ORLY -4.1%; RHI -4.0%; BWA -3.5%

At the close: VIX 12.41 (+0.04pts); Treasuries: 2-yr 1.25% (-2bps), 10-yr 2.35% (-5bps), 30-yr 2.99% (-3bps)

US movers afterhours

PRTK: Announces positive Phase 3 study of omadacycline in community-acquired bacterial pneumonia; +29.6% afterhours

SHIP: Reports Q4 -$0.29 v -$0.31 y/y, R$10.9M v $6.8M y/y; Fleet utilization 82.6% v 73.0% y/y; +23.7% afterhours

EDAP: Reports Q4 -$0.05 v -$0.01e, R$11.4M v $10.1Me; +4.1% afterhours

KATE: Reportedly wants a few more weeks of time to negotiate following receipt of bid from Coach last week; Michael Kors said to still be interested in Kate Spade; -5.9% afterhours

Key economic data

(JP) Bank of Japan (BOJ) Q1 TANKAN 12-month Inflation Expectation Survey for Japan companies: 0.7% v 0.7% prior

(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)

(AU) AUSTRALIA FEB TRADE BALANCE (A$): 3.6B V 1.9BE (4TH CONSECUTIVE SURPLUS)

(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 111.1 v 113.8 prior

(NZ) NEW ZEALAND Q1 NZIER BUSINESS CONFIDENCE: 17 V 28 PRIOR (1-yr low); ADJ 16 V 26 PRIOR

(KR) SOUTH KOREA MAR CPI M/M: 0.0% V 0.0%E; Y/Y: 2.2% V 2.1%E; CORE CPI Y/Y: 1.4% V 1.5%

(KR) SOUTH KOREA Q1 FOREIGN DIRECT INVESTMENT (FDI) Y/Y: -9.2% V -18.2% PRIOR

Asia Session Notable Observations, Speakers and Press

Asian equity markets are tracking the declines on Wall St, where cash markets were down for the 2nd straight day. Soft auto sales in March and a slight miss on the US manufacturing PMI were attributed to the selloff, while political risk remained in focus with reports that Democrats in the Senate have the numbers to stonewall Supreme Court nominee Gorsuch with a filibuster. Materials, Financials, and Consumer Discretionary sectors led the selling, while Telecom fared well. US Treasuries were bid for the 2nd straight session, with the 10-year around 1-week lows of 2.35%. Gold prices were also higher on safehaven demand.

Nikkei225 is among the worst performers in Asia, though trading remained light as markets in mainland China and Hong Kong were closed for holiday. Headwinds in Japan tracked the rally in USD/JPY, as it fell below 110.50 for the first time in a week. AUD/USD and NZD/USD saw more pronounced selling late in the session with the release of a more dovish statement accompanying RBA decision to keep rates at 1.5%.

Employment had been fairly resilient in Australia in the 2nd half of last year, but the latest reading saw jobless rate rise to a 13-month high and net change was negative for the first time in 5 months. RBA acknowledged the softening in its statement, and also added that wage growth remains slow. Another notable change in the statement was addressed at the property market, as RBA recommended that "lenders ensure the "serviceability metrics that they use are appropriate for current conditions" while also urging reduced reliance on interest-only housing loans. RBA is clearly wary of risks of accelerating housing correction given that some of the lenders have started to tighten mortgage rates and target speculative buying. Ahead of the decision, Australia Trade Balance topped expectations, with Exports rising 1.5% and Imports sliding over 5% on the month.

China

(CN) CICC sees China Q1 GDP rising to 6.9% from 6.8% in Q4 – Shanghai Daily

Japan

Japan Ministry of Economy, Trade and Industry (METI): To increase LNG investment in emerging countries

(JP) BOJ Gov Kuroda: BOJ ETF purchase to cut risk premium; reiterates too early to discuss an ex; Too early to talk about exit strategy

Korea

(KR) South Korea acting President Hwang: There is a high chance of North Korea provocation

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.6%, Hang Seng closed, Shanghai Composite closed, ASX200 -0.3%, Kospi -0.1%

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

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

EUR 1.0660-75; JPY 110.45-95; AUD 0.7588-0.7614; NZD 0.6990-0.7020

Apr Gold +0.3% at 1,258/oz; May Crude Oil +0.1% at $50.29/brl; May Copper -0.2% at $2.60/lb

(KR) South Korea MoF sells 30-yr Treasury Bonds; avg yield 2.325

JGB (JP) Japan MoF sells ¥2.08T v ¥2.3T offered in 10-year 0.1% JGBs; Avg yield: 0.064% v 0.082% prior; bid to cover: 3.96x v 3.74x prior

Asia equities notable movers

Australia

NWS.AU News Corp. -2.5% (sued for sexual harassment)

CDV.AU Cardinal Resources +7.6% (acquisition)

BAL.AU Bellamys +5.9% (Janchor Partner adds stake)

NUF.AU Nufarm -1.7% (Credit Suisse downgrades)

VLA.AU Viralytics -9.5% (interim clinical result)

RMS.AU Ramelius Resources +6.7% (exploration update)

RSG.AU Resolute Mining +5.6% (guidance)

WHC.AU Whitehaven Coal +7.9% (coking coal prices may spike)

Japan

3333.JP Asahi Co Ltd +6.4% (results)

8227.JP Shimamura +3.6% (results)

3632.JP Gree Inc -1.7% (Jefferies cuts rating)

2809.JP Kewpie Corp. -8.0% (Q1 result)

6146.JP Disco Corp +1.1% (Q4 result)

6113.JP Amada +1.9% (JPMorgan upgrades)

3148.JP Create SD Holdings -4.9% (9-month result)

5423.JP Tokyo Steel Mfg +1.9% (Mitsubishi upgrades)

6502.JP Toshiba Corporation -8.9% (may seek 3rd extension to earnings)

South Korea

005930.KR Samsung Electronics +1.2% (Apple said to order OLED panels)

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