Asia stocks are mostly lower as US political discord takes the limelight once again after reports that National Economic Council Director Gary Cohn is to resign amid tariff disagreements. This latest high-profile White House departure dampened the risk appetite and weighed on US equity futures in which DJIA futures saw losses of over 300 points, although Asia bourses have shown some resilience and are off worse levels. ASX 200 (-0.9%) underperforms with sentiment dampened by weaker than expected GDP figures, while Nikkei 225 (-0.2%) is choppy and briefly found reprieve after USD/JPY recovered off lows. Elsewhere, Shanghai Comp. (+0.4%) and Hang Seng (+0.1%) are positive as the mainland ignores the possibility US may consider broad curbs on Chinese imports and takeovers, as well as reports that White House adviser and ‘China hawk’ Peter Navarro is among the top 2 candidates to replace Cohn as Trump’s top economic adviser. In addition, Chinese blue-chip banking names are among the biggest gainers after regulators confirmed lowering the bad loan coverage requirements.
In FX markets, JPY strengthened on safe-haven flows following the announcement of Cohn’s resignation, which also weighed significantly on CAD and MXN as it effectively meant less opposition for the trade protectionists in Washington. Elsewhere, USD is lacklustre amid the latest political developments and AUD weakened following a miss on Q4 GDP, although losses were contained as the data also included upward revisions to prior quarter.
Finally, 10yr JGBs pared the opening safe-haven inflows to return flat, amid a similar indecisive risk tone in Japanese stocks and following an unchanged BoJ Rinban purchase announcement.