• China’s Mainland reported total cases 74185 vs. Prev. 72436, total deaths 2004 vs. Prev. 1789
• Asian equities traded with cautious gains; Nikkei 225 outperformed, Mainland China was supported by stimulus hopes
• In FX, DXY remained near recent highs, USD/JPY reclaimed 110.00, EUR and GBP traded sideways
• Yuan saw weakness as PBoC set USD/CNY mid-point above 7.000, the weakest fix since Dec 25th, 2019
• Libya’s government has suspended peace talks following attacks on Tripoli ports by Haftar-backed forces
• EU nations are readying to toughen conditions attached to any FTA with the UK; EU leaders are to meet today
• Looking ahead, highlights include Swedish CPIF, UK Inflation, US Building Permits & Housing Starts, Canadian CPI, FOMC Minutes, CBRT Rate Decision, Fed’s Bostic, Mester, Kashkari, Kaplan and Barkin, supply form Germany
• Earnings include HP, Analog Devices, Deutsche Telekom, Telefonica Deutschland, Puma

CORONAVIRUS UPDATE

China’s Hubei province reported 1693 new cases and 132 additional deaths from the coronavirus as of February 18 vs. 1807 additional cases and 93 deaths on February 17: death toll 1921 vs. Prev. 1800. China’s Mainland reported additional 1749 coronavirus cases and 136 additional deaths as of February 18 vs. 1886 additional cases and 98 deaths on February 17: Total cases 74185 vs. Prev. 72436, total deaths 2004 vs. Prev. 1789. (Newswires)

Production of the first antiviral drug approved by Chinese authorities to treat nCoV, Favipiravir, is reportedly well in progress and is expected to hit the market later in February with the first batch estimated to reach 100,000 pills, according to Global Times citing reports. (Global Times)

South Korea reported 15 more cases of coronavirus, bringing the total to 46, according to Yonhap. South Korean Finance Minister plans to announce prelim stimulus measures by end-Feb, via Yonhap. (Yonhap)

China is reportedly mulling mergers and cash injections to bail airlines, according to sources. (Newswires)

ASIA-PAC

Asian equities traded with cautious gains following on from a mixed lead on Wall Street, where the Dow fell for a third consecutive day following Apple’s profit warning, albeit the Nasdaq ended the session relatively flat. ASX 200 (+0.4%) traded sideways throughout most of the session and failed to gain much traction from a slew of earnings, although heavyweight Westpac’s shares were under pressure amid additional costs expected to be incurred due to its regulatory investigation. Nikkei 225 (+0.9%) outperformed following the prior session’s steep losses as tech names recouped losses and with the index underpinned by a softer JPY, meanwhile, Nissan shares led the gains despite its alliance partner Renault’s downgrade to junk status at Moody’s. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp (+0.2%) pared opening losses with the former propped up by its behemoth oil names and financials (ex-HSBC), whilst the latter saw support amid further anticipated easing measures ahead of tomorrow’s LRP announcement – with the rates widely expected to be reduced following the 10bps MLF cut by the PBoC earlier in the week. Finally, Singapore’s Straits Times Index (+0.7%) was buoyed following the unveiling of a generous Singapore Budget, which allocated almost USD 5bln to tackle the impacts of the coronavirus outbreak.

PBoC set USD/CNY mid-point at 7.0012 vs. Exp. 6.9965 (Prev. 6.9826) - weakest fix since Dec 25th, 2019. (Newswires) PBOC skipped open market operations for a daily net neutral position

A US Judge has dismissed the Huawei lawsuit against the US which alleged that the US improperly limited its US business. according to the court ruling. (Newswires) Huawei said it will consider further legal options. (Global Times)

US State Department says Chinese state-run media operating in the US will need to register US-based employees and operations, citing propaganda for the new registration rules. (Newswires)

Japanese Trade Balance Total Yen (Jan) -1.313T vs. Exp. -1.6945T (Prev. -152.5B, Rev. -154.6B) (Newswires)

UK/EU

EU nations are readying to toughen conditions they will attach to any FTA with the UK. The latest version of the mandate has responded to some EU concerns that it did not go far enough in requiring UK to stick to EU regulations, even as it evolves. The revised document also makes clear that any agreement should uphold EU fishermen’s current rights in the UK [a key sticking point in talks]. (FT)

FX

DXY hovered near the prior day’s high as the index remained in close proximity to 99.50 to the upside as it looks ahead to the FOMC minutes later today, and with little by way of news flow overnight to influence price action. EUR/USD traded little changed around 1.0800 throughout the session, with some EUR 1.2bln in options expiring at 1.0785 at the NY cut. GBP/USD moved on either side of 1.3000 – with the pair’s 200 WMA residing ~1.3030 and 100 WMA just above 1.2950. USD/JPY and JPY-crosses initially traded with little conviction before the former breached resistance at 109.95 and reclaimed a 110.00+ status, with USD 1.1bln in options expiring at the round figure. Elsewhere, CNH experienced some weakness as the PBoC set its Yuan reference rate above 7.0000, marking the weakest fix since Christmas Day last year. USD/CNH briefly took out its 100 DMA ~7.0090 to a high of just shy of 7.0200. Finally, NZD/USD was supported amid comments from RBNZ Governor Orr - who stated that the NZ economy and current RBNZ monetary policy are in a good place. AUD/USD meanwhile largely side-lined in-line Wage Price data ahead of the Labour Force report tomorrow, although the Aussie lost some ground following the weaker PBoC fixing and thereafter tested 0.6700 to the upside in what seemed to be a fleeting risk-driven move at the time. The pair sees a notable option expiry of AUD 2.4bln at strike 0.6700. 

RBNZ Governor Orr said that the economy and current monetary policy are in a good place. (Newswires)

COMMODITIES

WTI and Brent front-month futures saw gains in late APAC trade as prices rose above USD 52.50/bbl and USD 58.00/bbl respectively following sideways trade throughout the bulk of the session. The contracts remain supported yesterday’s announcement of US sanctions on Rosneft Trading and after Libya’s government pulled out of peace talks, following Haftar port attacks, suggesting that export blockades in the country will remain in place. API private inventory data will be released tonight on account of Monday’s President’s Day Holiday. Elsewhere, spot gold flatlined just north of 1600/oz having reached a high of USD 1605/oz during yesterday’s session, ahead of the multi-year high of USD 1611.30/oz. Copper prices were little change intraday and remained slightly above 2.6/lb throughout the session. Finally, Dalian iron ore futures edged higher in early trade with traders citing supply concerns after Rio Tinto lowered their 2020 shipment forecasts from Australia’s Pilbara region, whilst Vale last week scaled back on their production outlook for the base metal.

Libya’s International government has suspended peace talks following attacks on Tripoli ports by Haftar-backed forces. (Al Jazeera) Libya NOC said fuel tankers are being evacuated from ports after shelling near IPG tanker. Libya Oil Output fell to 123.5k BPD vs 135.75k BPD on Monday. (Newswires)

US total shale regions oil productions in March seen +17k BPD to 9.174mln BPD, EIA said. (Newswires)

US Special Envoy to Venezuela Abrams said the US will hold further conversations with Spanish officials regarding Venezuela oil, where he would expect some of Repsol's (REP SM) operations will have to change in the region. (Newswires)

GEOPOLITICS 

North Korea has not shown any specific unusual military movements in recent weeks, according to US surveillance. (Newswires)

US 

* US T-NOTE FUTURES (H0) SETTLED 7 TICKS HIGHER AT 131-06+: The Treasury curve bull-flattened as Apple's revenue warning on Monday spooked risk. The 2s10s curve narrowed to a 14-handle, the lowest since November 2019; yields on 30s briefly fell sub-2.00%, while yields on 10s fell slightly below 1.54%. Traders also cited a weak ZEW report out of Germany in the morning (first post-Coronavirus survey).

US Democratic Primary Polls:

·       NBC News/WSJ: Sanders 27% (Unch), Biden 15% (-11), Bloomberg 14% (+5), Warren 14% (-1) Buttigieg 13% (+6) and Klobuchar 7% (+2). (Newswires)

·       Public Policy Institute of California: Sanders 32%, Biden 14%, Warren 13%, Bloomberg 12%, Buttigieg 12%, Klobuchar 5%, Steyer 3%. (Twitter)

US Attorney General Barr has considered resigning over US President Trump’s tweets regarding ongoing cases. (WSJ)

Boeing (BA) – Co. is to inspect undelivered 737 Maxes after debris was found in undelivered 737 Max planes, according to CNBC; this reportedly will not impact plane's return to service. (CNBC)