DAILY EUROPEAN OPENING NEWS: Asian stocks mostly higher as sentiment gradually improved throughout the session which was attributed to US efforts over the weekend to alleviate trade concerns



US President Trump commented that he will always be friends with Chinese President Xi Jinping no matter what happens regarding the dispute on trade, while President Trump also noted that he predicts the US would prevail and reach agreements with China on trade issues. (Newswires)

White House economic advisor Kudlow said that he hopes the US will not use tariffs but added that it may have to, while he also stated that China’s first response was highly unsatisfactory. Furthermore, Kudlow commented that a tariff solution is possible in 3 months and that tariffs are not a bluff, while he further added that this is not a trade war. (Newswires)

US Treasury Secretary Mnuchin said the US is willing to continue negotiations but that President Trump is prepared to defend US interests. Mnuchin also commented that there is a potential for a trade war and that progress is being made on NAFTA as well as North Korea. (Newswires)

US President Trump didn't seek advice from White House economic adviser Kudlow on China tariffs, while Chief of Staff Kelly was said to be blindsided by speed of tariff announcements. Furthermore, reports added that US Treasury Secretary Mnuchin and US Trade Representative Lighthizer worked in lockstep on the China tariffs. (Axios)

PBoC policy adviser said that China should invest more in real assets rather than invest in US debt and that US is seeking to restrict China's rise via trade war. However, there were also comments from China think-tank CASS that the nation is unlikely to use USTs as a trade war weapon. That said, this appears to be at odds with research from SGH Macro which suggests that their understanding is that China has halted purchases of USTs. (Newswires)


Asian stocks initially began the week rangebound with a non-committal tone seen in the region following the stock rout last Friday on Wall St after President Trump upped the ante on possible trade tariffs against China and US NFP data fell short of estimates. However, sentiment then gradually improved throughout the trading day which was attributed to US efforts over the weekend to alleviate trade concerns in which President Trump predicted that the US would reach an agreement with China on trade and after White House economic adviser Kudlow explicitly stated that this is not a trade war. As such, ASX 200 (+0.4%) shrugged off the early indecision and traded positive, although weakness in mining and energy names capped upside, while Nikkei 225 (+0.7%) was lifted by JPY weakness. Elsewhere, Shanghai Comp. (+0.4%) recovered from the initial cobwebs seen on the mainland’s re-open from a 4-day closure and first opportunity to react to the additional USD 100bln tariff consideration against China, while Hang Seng (+1.9%) outperformed on declining money market rates after the PBoC resumed liquidity operations after halting for over 2 weeks. Finally, 10-yr JGBs were uneventful with marginal gains seen as they tracked recent price action in T-notes and with the BoJ also in the market to the tune of JPY 710bln in the belly to super-long end.

PBoC injected CNY 10bln via 7-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.3114 (Prev. 6.2926)


In Italian politics, the 5SM are set to unveil their economic plan which will keep the budget deficit near the level forecasts by the outgoing centre-left government. Elsewhere, the nation’s three main right-leaning parties have announced that they will present a united front ahead of a fresh round of talks this week. (Newswires)

S&P affirmed France’s sovereign rating at AA; outlook stable. DBRS raised Spain's sovereign rating to A from A (low); stable trend. (Newswires)

Hungary PM Orban is projected to win a 3rd term after the ruling party was said to receive 49.5% of votes and is set to win two-thirds majority in Parliament. (Newswires)


The major pairs were relatively rangebound overnight as currencies consolidated from the post-NFP price action in which the greenback weakened across the board due to the disappointing jobs numbers. Nonetheless, the DXY-index has nursed some losses amid a modest pullback in EUR/USD, while GBP/USD traded sideways and within proximity for another attempt to reclaim the 1.4100 handle to the upside. Elsewhere, AUD was initially restricted by a lacklustre commodity complex but then gained as the risk tone brightened, while USD/JPY and JPY-crosses also recovered some of the lost ground from last week’s miss on US jobs data and safe-haven flows into JPY, in which the pair just about reclaimed the 107.00 handle.

Canadian PM Trudeau said he is hopeful to get promising news on NAFTA in the coming time, while Canadian Foreign Minister Freeland said they have had good NAFTA conversations so far and that they are a in a new more intensive phase of discussions. Furthermore, there were also reports that a senior Mexican economy ministry official was said to be very convinced that a new NAFTA agreement on trade will be reached very soon and that the next round of NAFTA talks are planned for today in Washington DC. (Newswires)

Reports stated that no deal in principle regarding NAFTA is expected to be announced in the upcoming Summit of Americas in Lima, Peru. (Newswires)


Commodities traded mixed overnight in which WTI crude futures nursed some of the Friday’s losses where trade concerns and poor data contributed to the risk averse tone and dragged prices briefly below the USD 62/bbl. Elsewhere, gold was marginally lower amid a slight recovery in the greenback and improvement in risk tone, while copper remained lacklustre amid subdued metal prices in China where Dalian iron ore slipped to a 10-month low in early trade.

US Baker Hughes Total Rig Count (29 Mar) 1003 (Prev. 993). (Newswires)
US Baker Hughes Oil Rig Count (29 Mar) 808 (Prev. 798)
US Baker Hughes Gas Rig Count (29 Mar) 194 (Prev. 194)

Norway private sector trade union reached a wage deal which averted strike action that would have involved at least 35,000 workers in aluminium, oil and chemical industries. (Newswires)



Syrian state TV Sana confirmed reports of an air strike on a Syrian military airport in Homs and initially stated that the US was the source of the attack on Syria. However, the Pentagon denied that they had conducted a strike and Syria state media later identified Israel as the likely source of the military attack. (Newswires)

US President Trump warned Syrian President Bashar al-Assad and his 2 largest allies could pay a big price following a suspected chemical attack killed dozens over the weekend, while he also noted that Russia and Iran are responsible for backing the Syrian President. (Newswires)

North Korea is reportedly prepared to discuss denuclearization, while reports added that Pyongyang has signalled progress towards denuclearization should move in phases in tandem with diplomatic and economic concessions from the US. (Newswires)

China banned exports of items to North Korea that could potentially be used in WMDs to comply with UN resolution, while reports added that had identified 32 items which it will ban. (Newswires)

Russia is to respond to US sanctions, according to reports in local press. (TASS)



US Treasuries closed higher as trade concerns and soft jobs data sent rates lower. Donald Trump’s threat to slap further tariffs on Chinese goods lifted treasuries before the CME open with the curve initially bull-steepening. The disappointing jobs data gave further impetus for bond bulls as the 10y yield dropped back below 2.8%. Fed Chairman Powell reiterated that further gradual rate hikes would be necessary, which saw market pricing for a June hike remain around 70%. However, odds of a fourth interest rate hike are still remarkably low as Powell said it was too early to say how tariffs and trade talk will affect the outlook. T-Note futures (June 2018) settled up 14+ ticks at 121-00+.

Fed Chair Powell (Neutral) said the US economy will require further gradual interest rate hikes and noted 12-month inflation readings should move up notably this spring. Powell also commented that inflation could rise to unwelcome levels if the Fed waited for inflation and employment to hit its goals, while he added that it is too early to say how tariffs and trade talk will affect outlook. (Newswires)

Fed’s Williams (Voter, Hawk) said 3 to 4 hikes this year is the right direction and that Fed needs to keep raising rates to avoid overheating. (Newswires)

Fed’s Evans (Non-Voter, Dove) said that the US economy is very strong and that he is optimistic on inflation reaching 2% target. (Newswires)

US National Security Council spokesman Michael Anton announced to resign from role at the White House to take up a position in Hillsdale College's Kirby Center. (Politico)

09 Apr 2018 - 06:29- Research Sheet- Source: RANsquawk

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