Asian Market Update – 3/1/10
Sunday, February 28th, 2010Asian Market Update: Shanghai Copper opens the week limit up, as traders assess the implications of Chile’s earthquake and China’s Feb PMI data
ECONOMIC DATA
- (NZ) New Zealand JAN Visitor Arrivals: -2.4% v 8.5% prior
- (AU) Australia FEB AiG Performance of Mfg Index: 53.8 v 51 prior (highest since Dec 2007)
- (AU) AUSTRALIA FEB TD SECURITIES INFLATION M/M: 0.1% V 0.8% PRIOR; Y/Y: 1.9% V 2.6% PRIOR (4-month low for both)
- (AU) AUSTRALIA JAN HIA NEW HOME SALES M/M: 9.5% V -4.6% PRIOR (4-month high)
- (UK) UK FEB HOMETRACK HOUSING SURVEY M/M: 0.3% V 0.1% PRIOR (highest since Jun 2007); Y/Y: 0.4% V -0.8% PRIOR (first increase since Mar 2008)
- (KS) South Korea FEB Ext Trade Balance: +$2.3B v -$461M prior; Exports y/y: 31.0% v 25.0%e; Imports y/y: 36.9%% v 38.0%e (17-month high)
- (AU) AUSTRALIA Q4 COMPANY OPERATING PROFIT Q/Q: 2.2% V 3.0%E (first increase since Q3 of 2008); INVENTORIES: 0.2% V 0.5%E
- (AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE: -A$17.5B V -A$17.2BE (lowest since Q1 of 2008); NET EXPORTS OF GDP: -1.3% V -1.1%E
- (CH) CHINA FEB PMI MANUFACTURING: 52.0 V 55.2E (1-yr low)
- (NZ) New Zealand FEB ANZ Commodity Price: 3.8% v 0.4% prior (3-month high)
- (TT) Taiwan FEB HSBC Taiwan Manufacturing PMI: 62.5 v 55.8 prior
- (MA) Malaysia Q4 Unemployment Rate: 3.5% v 3.6% prior (1-yr low)
- (CH) China FEB HSBC Manufacturing PMI: 55.8 v 57.4 prior (3-month low)
- (ID) Indonesia Feb Inflation M/M: 0.3% v 0.5%e; Y/Y: 3.8% v 4.0%e; Core inflation 3.9% v 4.1%
SPEAKERS/PRESS:
- According to a Chinese press report, the NDRC, which is the government’s top think tank said the government would apply various monetary tools to deal with liquidity and lending growth. Also, the NDRC reaffirmed that China would seek to maintain fast economic growth, while trying to contain inflation expectations. Additionally, over the weekend China’s Premier Wen said the government would fight inflation and “soaring” property prices.
- Ahead of tomorrow’s RBA monetary policy decision, in which the central bank is expected to raise rates by 25bps to 4.00%, RBA Gov Stevens did not comment directly on monetary policy. Stevens noted that fiscal challenges in Europe, the US and UK present economic risks. He added that it would not hurt for banks in Australia to have more capital.
- In Japan, BoJ Gov Shirakawa reaffirmed that keeping borrowing costs low for companies is important. Also, Shirakawa reiterated that the BoJ would keep its policy very accommodative. Japan’s Banking Minister Kamei said having the BoJ underwrite JGBs was one option for ending deflation. Japan’s Finance Min Kan was quoted as reiterating that he wants the BoJ to step up its efforts to fight deflation.
- New Zealand’s Treasury Department noted that the domestic economy lost momentum in early 2010, but forward looking indicators are positive. Also, the government said the declines in the NZ dollar have been supportive to exporters’ confidence levels.
EQUITIES:
- Most Asian equities are gaining, supported by the advances in commodity prices. The Nikkei 225 has risen by over 0.40% on gains in financials, retailers and basic materials companies. Australia’s ASX 200 is gaining by more than 0.50% on gains in shares of retailers and resource related companies. Taiwan’s Taiex is higher by over 1%, supported by gains in technology, financial and consumer goods companies. In China, the Shanghai Composite has risen by more than 0.40%, led by gains in copper producers and financials. Hong Kong’s Hang Seng is up by over 1% on gains in retailers and basic resource-related companies. Equities in South Korea are closed in observance of a national holiday.
CURRENCIES/FIXED INCOME/COMMODITIES:
- The USD is weaker against the commodity currencies, as Saturday’s earthquake in Chile has supported copper prices. In terms of the European major currencies, the USD is broadly bid, after GBP/USD hit a 9-month low earlier during the session. Also, EUR/USD is trading near 1.3600. Coupled with the gains in equities, the Japanese yen is declining against most currencies, with the exception of the British pound. As for Greece, the FT reported that the country’s government may this week announce new austerity measures and its plan to offer bonds. The WSJ commented on the speculation that Germany and France might bailout Greece with €30B in financing, by having German and French banks (including Bank Caisse de Depot and KfW Bankengruppe ) buy Greek government bonds. The WSJ added that the bailout would require approval by officials in Germany and France. Despite, the press reports related to an EU bailout of Greece, opposition remains in Germany. According to a weekend report in the German press, Germany’s CSU party (one of the country’s ruling 3 coalition parties) said it opposed any government aid for Greece.
- Shanghai Copper opened higher by the 5% daily limit after it was reported on Saturday that Chile, the world’s largest copper producer was hit by a 8.8 magnitude earthquake on Saturday. The epicenter of the earthquake was near central Chile. Chile’s largest copper producer, Codelco, noted that it would not call a force majeure in relation to its copper supplies, as the company expects its Northern mines to make up for any production disruptions. Codelco has restarted its El Teniente underground mine (381K tons per year) and the Andina mine (220K tons per year) may open in the near future. Outside of Codelco, it was reported that Anglo American’s Los Bronces and El Soldado mines (combined annual output of 280K tons) halted operations following the earthquake due to power outages. Also, BHP noted that its copper mines in Northern Chile were not impacted by the earthquake. Despite, the sharp opening gains in copper prices, the metal has moved off of the session’s high after China’s manufacturing PMI hit a 1-yr low in Feb, led by deterioration in the output, input price and imports components. Spot Gold has pared its opening gains, after the metal traded as high as 1,120.33/oz. Gold prices have been supported by the gains in the commodity currencies and XAU/GBP, which moved to a fresh record high earlier during the session. Crude oil prices are higher by over 0.30% and trading near $80/bbl, supported by the broad gains in commodity prices.
Written by Trade the News
