ASIA-PAC MID-SESSION UPDATE: Rexit and Trade War Concerns weigh on Asia

Asia equity markets are negative across the board as region tracks the losses on Wall St, where sentiment was dampened after another high-profile departure from the administration in which President Trump fired Secretary of State Rex Tillerson, while trade war concerns were also stoked amid reports the US is looking to impose tariffs on Chinese goods. ASX 200 (-0.7%) and Nikkei 225 (-0.9%) are negative with financials pressured amid the ongoing royal commission hearings in which NAB were said to knowingly approved fake loans to reach targets, while Nikkei 225 is pressured by a firmer JPY and with some analysts also noting Abexit worries in the wake of the land-sale/cronyism scandal. Shanghai Comp. (-0.4%) and Hang Seng (-1.1%) are also downbeat with tech and telecom names weighed as the US is seeking to impose tariffs of USD 60bln on Chinese goods, which would target tech and telecom products as a punishment for intellectual property infringement. Although, losses in the mainland are somewhat stemmed by mixed data including higher than expected Industrial Production and Fixed Asset Investments.

The USD is weaker overnight after Tillerson’s ouster added to the political instability concerns and already high staff turnover at the White House. This has benefitted the greenback’s major counterparts overnight with EUR/USD back above the 1.2400 level, while GBP/USD eyes a reclaim of the 1.4000 handle. Elsewhere, antipodeans are underpinned as stronger than expected Chinese Industrial Production and Fixed Assets Investment slightly overshadowed the miss on Retail Sales, while USD/JPY and JPY-crosses are mixed with the Japanese currency mostly retaining the gains seen from the risk averse tone.

Finally, 10yr JGBs are mildly higher amid the weakness in stocks, and with the BoJ present in the market for 1-10yr JGBs in which the amounts of the Rinban operation were kept unchanged.