• Asian equities traded mostly lower after another bleak session on Wall Street, ASX 200 lagged and Mainland China outperformed
• South Korea reported 169 more cases of new coronavirus thus far; total number of cases topped 1000
• Source reports noted of some discussions in the White House about whether to declare a national emergency; San Francisco Mayor has declared a state of emergency
• Hong Kong government unveiled measures worth HKD 120bln in its annual budget to bolster the economy amid the coronavirus outbreak and after months of social unrest
• Looking ahead, highlights include French Consumer Confidence, US New Home Sales, New Zealand Trade Balance, ECB’s Lagarde, Panetta, Makhlouf, Fed’s Evans, Kaplan & Kashkari, South African 2020 Budget
• Earnings include JD.com, Iberdrola, Saipem

CORONAVIRUS UPDATE

South Korea reported 169 more cases of new coronavirus thus far on February 25 vs. 144 on February 24 and vs. 51 a week ago; total cases now at 1146 and a 12th coronavirus-related death reported. (Yonhap) US soldier stationed in South Korea has tested positive for coronavirus, according to US forces in Korea (Twitter) South Korea said 16,734 people are currently being tested for coronavirus, up from 13,880 last night. Many of them are being tested as a precaution. (Yonhap) Japan is to ban foreigners who have visited Daegu and Cheongdo, South Korea, according to Kyodo. (Newswires). Elsewhere, At least 50 people with coronavirus in Japan are reported to be seriously ill, including 36 people from the Diamond Princess cruise ship, according to BNO Newsroom citing NHK. (Twitter)

China's Hubei province reported 401 new coronavirus cases and 52 additional deaths as of February 25 vs. 499 additional cases and 68 additional deaths on February 24. China reported an additional 406 coronavirus cases and 52 additional deaths as of February 25 vs. 508 additional cases and 71 deaths on February 24; Total China cases 78064 vs. Prev. 77658; Total deaths 2715 vs. Prev. 2663; 2,422 patients discharged. (Newswires/Global Times)

An eleventh death has been reported in Northern Italy from COVID-19, whilst French health official announced two new confirmed COVID-19 cases in France. (Newswires) Spain reports 2 more cases of the coronavirus, according to BNO Newsroom, including the first case in Madrid, with 7 total cases reported in the last 24 hours. (Twitter) Meanwhile, there was the first reported COVID-19 case in Southwestern German region Baden-Wuerttemberg, according to local government statement; individual recently returned from Milan, Italy. (Newswires) Britain is to launch mass coronavirus tests amid fears that the spike in numbers in Europe means that there could be far more cases in the UK than are known about. (Telegraph) Brazil's Health Ministry said a man has tested positive for coronavirus in an initial test, but they're waiting for results from a 2nd test. If confirmed. it would be South America's first case, according to BNO Newsroom. (Twitter) A second coronavirus case has been reported in Africa, tests indicate an Italian adult who arrived in the country on 17 February has tested positive, according to WHO Africa. (Twitter)

Sources noted of some discussions in White House about whether to declare national emergency under Stafford Act to deal with coronavirus, but hasn’t yet been seriously considered, per those close to the discussions, according to Bloomberg News' Jacobs. (Twitter) San Francisco Mayor has declared a state of emergency to prepare for the coronavirus, no confirmed cases of the virus in San Francisco yet, according to SF Chronicles. (San Francisco Chronicles)

US CDC official said it is no longer a question of if a coronavirus pandemic will happen, but when it will happen, however, the immediate risk to the US remains low. CDC added that COVID-19 epidemic is rapidly evolving and expanding; vaccine could be ready in a year; Americans should prepare for possible spreads in communities. NHC's Fauci noted a possible vaccine could face human trial in a month and a half. (Newswires) FDA Commissioner Hahn noted the coronavirus outbreak will likely disrupt medical supply chain in the US, including potential shortages. (Newswires) IPC state electronics manufacturers expect at least a 5-week product shipment delay from suppliers as a result of the coronavirus. (Newswires)

NEC Director Kudlow said the US is ahead of the curve and US laying out emergency plans for COVID-19; doesn't believe it will be an economic tragedy "at all". Kudlow said further COVID-19 travel restrictions are being considered but no decision has been made. When asked if China can make its commitments to the US, Kudlow said China’s economy is struggling, it is so far only struggling in Q1 and will see what happens after then. Kudlow also noted that he had not heard any talk of possible FOMC rate cuts, publicly or privately. Kudlow repeated that US has contained the COVID-19 spread, emergency measures taken are appropriate, but they may not be put into place, the US can avoid a recession when the world has one and long-term investors should buy the US stock market. (CNBC) US President Trump tweeted that US CDC and the Trump Administration are doing a great job of handling Coronavirus, including the very early closing of US borders to certain areas of the world. (Twitter)

ASIA-PAC

Asian equities traded mostly lower, with losses across the board for a bulk of the session after Wall Street experienced another bleak session which saw the DJIA shed almost 900 points, whilst the S&P posted is largest two-day loss since August 2015 and the Nasdaq turned negative for the year - traders were also spooked by the 10yr Treasury yield falling to a fresh record low of ~1.3070%, which came as a function of the rising virus fears. ASX 200 (-2.2%) continued to be pressured by its heavyweight financials and mining sectors, whilst Nikkei 225 (-1.0%) bore the brunt of declines across mining and auto names, but Canon shares rose around 4% at the open on the back of reports that the Co. has started developing a coronavirus testing kit. The index drifted off lows as it tracked the movements in USD/JPY. KOSPI (-1.2%) conformed to the regional declines following its breather session yesterday, as confirmed South Korean cases topped 1000 vs. 51 a week ago. Over in China, Hang Seng (-0.6%) was weighed on by losses across its oil giants, entertainment stocks and financials – which together account for almost 70% of the index, although the index pared some losses upon the unveiling of the Hong Kong budget, which announced a HKD 120bln package of measures to bolster the economy. Shanghai Comp. (-0.3%) opened lower by over 1% but thereafter trimmed losses despite the PBoC skipping OMO for a 7th consecutive day, after the latest China virus numbers showed a slowing rate of new cases and deaths.

Hong Kong government unveiled measures worth HKD 120bln in its annual budget to bolster the economy amid the coronavirus outbreak and after months of social unrest. Hong Kong Government is to hand out HKD 10k to each permanent citizen aged 18 or older. Hong Kong Finance Secretary said Hong Kong is to have a record budget deficit of HKD 139.1bln next FY. (Newswires/SCMP) Click here for the full rolling headline

PBoC set USD/CNY mid-point at 7.0126 vs. Exp. 7.0122 (Prev. 7.0232) (Newswires) PBoC skipped open market operations for a daily net neutral position

UK/EU

EU's Chief Trade Negotiator Hogan said he hopes to broker with the US a "mini-deal" before US increases tariffs on the European aircraft sector. (FT)

UK BRC Shop Price Index (Feb) Y/Y -0.6% (Prev. -0.3%) (Newswires)

FX

In FX, DXY traded within a narrow intraday band on either side of 99.000 having tracked US yields lower in the prior session on virus jitters. As such, EUR/USD and GBP/USD traded relatively flat throughout most of the session, although the former saw modest downside as Spain reported a cumulative seven coronavirus cases within 24 hours, with the pair around 1.0875 for a large part of overnight trade. Technicians will be eyeing 1.0900 to the upside followed by their pair’s 21 DMA ~1.0915, whilst to the downside, the 10 DMA ~1.0835 could offer mild support should 1.0850 fail to hold. Meanwhile, Cable flatlined around the 1.3000 psychological level before seeing modest weakness towards the latter part of the session. Levels highlighted to the upside include its 200 WMA (1.3025) 50 DMA (1.3032) and potential resistance ~1.3050, a psychological level which coincides with the pair’s Feb 18 high. Elsewhere, Antipodeans were pressured in early trade against the backdrop of rising virus cases in the region – AUD/USD moved on either side of 0.6600 with little initial reaction to dismal Aussie Construction Work Done data, whilst the Kiwi remained north of 0.6300 – although both pairs experienced modest downside as South Korean cases topped 1000. KRW experienced renewed weakness at the open, USD/KRW rose from ~1215 and stopped short of 1220 ahead of the BoK rate decision tomorrow, where market expectations are tilted towards a 25bps cut to record low rates. Finally, USD/JPY held onto its 110.00 handle and largely track US equity futures as opposed to the broader risk sentiment.

COMMODITIES 

Commodities consolidated overnight, WTI and Brent font-month futures clambered off lows with some reprieve felt after the smaller-than-forecast build in the weekly private crude inventories. WTI Apr’20 found a base at USD 49.70/bbl before reclaiming USD 50.00/bbl to the upside, while its Brent counterpart touched support at USD 54.60/bbl followed by an advance above USD 55/bbl. On the OPEC+ front and ahead of next week’s confab, ING continues to hold the view that the producers will need to  extend current curbs until at least the end of June, and alongside over-compliance by Saudi to offset impacts from the virus outbreak, adding that they do not expect Libyan supply to come back online over Q2 – which will ease some of OPEC’s burden. Elsewhere, spot gold saw vigorous selling towards the end of the US session, with market contacts noting of potential offloading in profitable gold position to offset losses in equities. Nonetheless, the yellow metal has recovered off worst levels and prices stabilised around USD 1640/oz, having found support at USD 1625/oz. Copper prices meanwhile retraces some of its recent losses and tracked Mainland China markets higher, with prices back above USD 2.55/lb. Finally, nickel prices saw support after Indonesian government ministers said that the virus outbreak in China is expected to delay USD 11bln worth of ongoing nickel and stainless-steel projects, with nickel exports expected to be delayed by several months.

US Private Inventory Crude Stocks +1.3mln (w/e 21st Feb) (exp. +2.0mln, prev. +4.2mln) (Newswires) - Cushing +0.4mln (prev. +0.4mln) - Gasoline +0.1mln (exp.-2.2mln, prev. -2.7mln) - Distillates -0.7mln (exp. -1.7mln, prev. -2.6mln)

Kuwait said all Kuwaiti ports will not be allowed to receive ships from China, Korea, Italy, Singapore, Thailand, Japan and Iraq, in order to prevent coronavirus from spreading - ships from the oil sector are excluded from the port ban. (Newswires)

US 

* US-T-NOTE FUTURES (H20) SETTLE 15 TICKS HIGHER AT 133.04. The TPLEX marched higher, particularly in the front-end, with COVID-19 continuing to see investors re-evaluate global growth, central bank policy and haven flows. The bid in the T-Note caught traction as US participants came to the scene, following on from the Europe session where the Bund dropped beneath the -0.50% level for the first time this year, meanwhile later in the session the US 10-year yield briefly printed all time record lows. Typical haven flows into Treasuries were observed as equities treaded lower, the Treasury supply this week in the front-to-belly doesn’t appear to be dissuading investors either, where markets continue to price in further chances of FOMC cuts this year. The 2-year auction on the outset could be considered weak, tailing by 1.6bps, covering below its six-auction average and dealers taking a significant cut of the takedown. Although more widely, the 2-year Note, as the rest of the curve, has been on a big rally this week, where auction participants could perceive valuations as rich in the near term ahead of more concrete data from COVID-19. By settlement, the curve had bull steepened with the 2-year yield -7bps and 30-year -5bps.

Fed's Clarida (Voter, Neutral) said the US economy and monetary policy are in a good place, he added it is still too soon to speculate on whether the coronavirus will lead to a material change in US economic outlook, noting the Fed is closely monitoring the outbreak. Clarida reiterated that as long as incoming information remains broadly consistent with Fed's outlook, the current stance of monetary policy will remain appropriate. (Newswires)

Fed's Kaplan (Voter, Dove) said events are still too fluid around the virus outbreak to say the Fed needs to lower short-term rates, as many in financial markets now think is likely. Kaplan added that it is too soon to make a judgment on how the outbreak would affect monetary policy, the Fed is a number of weeks away from being able to make the judgement. (WSJ) For reference, the next FOMC meeting will take place on March 17/18 where the Summary of Economic Projections will be released.

Fed Discount Rate Minutes: All 12 banks voted to keep the discount rate unchanged and would keep it such barring a material change to the US outlook. Continued to view current economic conditions as favourable and expected growth to continue at a moderate pace. Directors in several districts highlighted low rates had boosted residential real estate markets, evident from the growth in mortgage lending and refinancing. (Newswires)

US Democratic Primary Presidential Candidate Poll via Reuters/Ipsos: Sanders has an 11% lead among registered democrats and independent voters. (Newswires)