Asian Market Update – 3/16/10

ECONOMIC DATA:
- (NZ) New Zealand Feb Non-Resident Bond Holdings: 64.2% v 63.6% prior

SPEAKERS/PRESS
- Australia: In its March policy meeting minutes, the RBA said on balance, it is appropriate for rates to move “gradually” towards normal, as indicators point to continued strengthening in economic activity. The RBA also said consumer spending “held up”, after noting in the Feb minutes that household spending was mixed. In terms of Europe’s fiscal problems, the RBA said its board discussed sovereign issues related to Greece, for the second consecutive month. However, the central bank said it was unlikely that Europe’s fiscal problems would lead to market turmoil.

- China: A Chinese Commerce Ministry Official said the country’s imports and exports would be more balanced. Also, the official said export growth was recovering, although one should not be too optimistic on exports. Additionally, the Commerce Ministry official reiterated that China would keep the yuan stable this year to help exporters. In other news out of China, the People’s Bank of China’s (PBoC) Q1 survey showed that bankers are positive on China economic outlook for Q2. The survey said more than 70% of householders in China said consumer prices were too high and residents expected inflation to continue rising in Q2. Furthermore, more than half of the bankers polled in the survey said they expected no change in monetary policy, as the current policy is seen as appropriate.

- Japan: Ahead of Wed’s Bank of Japan interest rate decision, Japan’s Finance Min Kan said he was closing watching the BoJ meeting. Kan added that he wanted the BoJ to make efforts to support the economy, as he said he thinks monetary policy may impact prices.

EQUITIES:
- The Nikkei 225 is lower by over 0.10%, led by declines in consumer service and technology companies. Australia’s S&P ASX 200 has pared most of the earlier gains on losses in the utilities sector. South Korea’s Kospi index is marginally lower, driven by weakness in the oil/gas sector. Taiwan’s Taiex has gained more than 0.40%, led by advances in chipmakers. The Shanghai Composite is marginally higher as of the time of writing, while Hong Kong’s Hang Seng is slightly weaker.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, the USD is marginally weaker against the EUR and CHF, while higher against the pound. NZD/USD has gained more than 0.20% and is trading above $0.7000, supported by losses in AUD/NZD. Additionally, the Aussie is little changed and trading near $0.9150, as traders assess the RBA’s most recent policy meeting minutes. Ahead of Wednesday’s Bank of Japan interest rate decision, the Japanese yen is higher against most currencies, with the best gains coming against the pound and Australian dollar. Additionally, USD/JPY is trading just above ¥90.

- Crude oil is marginally lower and trading below $80/bbl. Oil prices have been weighed down by the earlier comments from Saudi Arabia’s Oil Minister Al-Naimi, in which he said he saw no need to change production this year and that the oil market is in balance. The Saudi Oil Minister also said inventories were coming down. In terms of event risks for the energy market, later today the US API weekly inventories data will be released. Spot Gold is slightly higher and trading above $1,110/oz, ahead of the later this week policy meeting by the US Federal Reserve. Copper prices are marginally higher. On yesterday’s session Chile, world’s largest copper producer, reported that its copper exports declined in Feb to $2.7B from $3.7B prior, following the country’s magnitude 8.6 earthquake, which occurred on Feb 27th. Additionally, earlier today a magnitude 6.7 aftershock was reported off of the coast of Chile near Concepcion.