DAILY EUROPEAN OPENING NEWS: Asian stocks were higher across the board after Trump exempted NAFTA partners from steel tariffs and looked to be open to providing relief to allies

Asian stocks were higher across the board after Trump exempted NAFTA partners from steel tariffs and looked to be open to providing relief to allies BoJ kept monetary policy unchanged as expected with NIRP held at -0.1% and 10yr JGB yield target at around 0% Looking ahead, highlights include UK production, trade, US and Canadian jobs, Baker Hughes, and speakers from the Fed and ECB ASIA

Asian stocks were higher across the board after the positive lead from US where President Trump confirmed aluminium and steel tariffs, but exempted NAFTA partners and was also said to be open to providing relief for allies. In addition, Asia-Pac risk appetite was further bolstered by geopolitical developments in which the South Korean National Security Office chief announced that North Korean Leader Kim is committed to denuclearization and will refrain from conducting further tests, with President Trump and North Korea’s Kim to meet by May. ASX 200 (+0.3%) and Nikkei 225 (+0.5%) were positive but with upside capped by a subdued commodities sector and weakness across steel names on Trump tariffs, while KOSPI (+1.0%) outperformed on the further appeasement in the Korean peninsula. Elsewhere, Hang Seng (+0.9%) was underpinned amid the broad positivity in the region, while Shanghai Comp. (+0.3%) somewhat lagged after PBoC inaction led to a net weekly drain of CNY 240bln, while participants also digested US tariffs alongside mixed Chinese lending and inflation data. Finally, 10yr JGBs were flat with markets focused on riskier assets and after an uneventful BoJ announcement.

BoJ kept monetary policy unchanged as expected with NIRP held at -0.1% and 10yr JGB yield target at around 0%. The decision was made by 8-1 vote with board member Kataoka the dissenter, who called for the BoJ to buy JGBs so 10yr yields or longer drop further and repeated that the BoJ should clarify it will ease further if domestic factors delay reaching price target. (Newswires)

PBoC Governor Zhou said China’s economy will be less reliant on quantitative stimulus and that China may reduce reliance on money supply to boost growth. (Newswires)

China Mofcom said it firmly opposes US trade measures and urged the US to withdraw tariffs on steel and aluminium, while it added it will take strong measures to safeguard its own interests. (Newswires)

PBoC skipped open market operations for a net weekly drain of CNY 240bln vs. last week’s CNY 120bln net injection. (Newswires)
PBoC set CNY mid-point at 6.3451 (Prev. 6.3239).

Chinese CPI (Feb) Y/Y 2.9% vs. Exp. 2.5% (Prev. 1.5%); highest in over 4 years. (Newswires)
Chinese PPI (Feb) Y/Y 3.7% vs. Exp. 3.8% (Prev. 4.3%)

Chinese New Yuan Loans (CNY)(Feb) 839B vs. Exp. 900B (Prev. 2900B). (Newswires)
Chinese Aggregate Financing (CNY)(Feb) 1.17tln vs. Exp. 1.07tln (Prev. 3.06tln)
Chinese Money Supply M2 (Feb) Y/Y 8.8% vs. Exp. 8.7% (Prev. 8.6%)


UK Foreign Secretary Boris Johnson suggested a no-deal Brexit should not hold be feared as the UK would thrive under WTO rules. (Telegraph)

UK government officials reportedly do not see a Brexit deal being reached until next year with January viewed as the more realistic deadline. (Newswires)

ECB staff calculations on future path of monetary policy assume asset purchases of EUR 30bln in Q4, according to Euro area officials, while source reports also stated that there is a broad agreement on GC that QE will come to a halt by the end of 2018. (Newswires) Additionally, the above assumptions are seen as technical and don’t mean a pre-commitment on extending bond buying past September


The heightened risk-appetite spurred outflows from safe-haven JPY which underpinned USD/JPY closer towards the 107.00 handle and saw similar outperformance for JPY-crosses. Elsewhere, KRW found support on the news of North Korea’s commitment to denuclearization but with gains limited as some scepticism remained, while USD, CAD and MXN were all firmer as some trade war concerns abated after President Trump exempted Canada and Mexico from tariffs, with Trump also said to be open on providing relief for allies.

Canadian Foreign Minister Freeland says a win-win-win NAFTA agreement is within reach. (Newswires)


Commodities were subdued overnight following the confirmation of Trump’s tariffs and as the USD held on to its gains. WTI crude futures were lacklustre after the prior day’s losses in which prices briefly slipped below USD 60/bbl in US hours, while natgas futures were also weaker and tripped stops on a break through the prior day’s support. Elsewhere, gold and copper remained dampened amid a stronger greenback and weakness in Chinese metal prices which saw around 5% declines in Dalian iron ore futures and Shanghai Rebar during early trade. 


South Korea National Security Office chief Chung said that North Korean Leader Kim is committed to denuclearization and is to refrain from further tests, while he added that President Trump will meet with North Korea’s Kim by May. (Newswires)

The White House commented that it looks forward to North Korean denuclearization, but added that sanctions and pressure must remain in the meantime. (Newswires)


Treasuries seemed blasé about almost everything ahead of tomorrow’s payrolls data, and it was another subdued day with limited price action. For parts of the early day, Tsys were following their German counterpart during the ECB press conference. Moves were muted, but the net impact was a compression of the spread between the two. As expected, the US Treasury said it would auction $62b in 3s/10s/30s next week. US T-note futures settled up 5ticks at 120-25+. 

US President Trump confirmed 25% tariff on steel and 10% on aluminium, while the US will hold off tariffs with Canada and Mexico until NAFTA talks. US President Trump open to modifying tariffs with individual countries and will review other military allies for tariff exclusions, while he also wants a reciprocal tax programme at some point.  (Newswires)
Note: There were earlier reports that AP Sources suggested tariffs are to take effect in 15 days with Canada and Mexico to be exempted indefinitely from the tariffs, while Trump had earlier commented that it is likely Canada and Mexico will not have tariffs if a deal is reached. (Newswires)

Fed’s George (non-voter, hawk) said it is important to keep hiking interest rates and that she expects continued moderate economic expansion and tighter labour market, while she further added that sees predominantly upside risks to her outlook. (Newswires)