Major APAC bourses started the day on a firm footing but later waned off highs; ASX 200 underperformed

·        US House set a two-hour debate on coronavirus relief bill on Friday 0900 ET/1300 GMT, according to House officials

·        UK and EU negotiating rounds have been abandoned amid coronavirus pandemic, according to The Guardian.

·        In FX, DXY weakened further and traded on either side of 99.000, USD/JPY declined below 109.00, AUD/USD gained on further fiscal hopes

·        Looking ahead, highlights include US Personal Income, University of Michigan (Final) & PCE Price Index

CORONAVIRUS UPDATE

Italy’s COVID-19 cases rose to 80,539 (prev. 74,386); death toll rises to 8,165 (prev. 7,503). Italy rejected the draft prepared for the EU Leaders' Summit on COVID-19 response, according to PM Conte's office. (Newswires)

France’s COVID-19 death toll rises to 1,696 (prev. 1,331). President Macron said he and US President Trump are preparing "a strong new initiative" with other nations; to be unveiled in the coming days (Newswires)

China mainland reported 55 new virus cases (vs 67 on Thursday); total case count 81,340 as of end-26th March; 5 new deaths in the period (vs 6 reported on Thursday); no new cases in Hubei, though 5 new deaths reported. (Newswires) South Korea total covid-19 case count 91 today, taking the total to 9,332, according to KCDC. (Newswires)

UK COVID-19 cases rose to 11,658 (prev. 9,529), death toll rises to 578 (prev. 463). NOTE: NHS changed the timings on when it reports figures. Meaning Wednesday & Thursday figures cover different time periods. March 24 (43 deaths) covers 8hr window. March 25 figure (113 deaths covers 24 hr window). (Newswires)

US confirmed cases stand at 81,378 - highest in the world, according to a Reuters calculation. (Newswires) NOTE: This data is a tally by Reuters; official data earlier showed the covid case count rise to 68,440 on Thursday (from  54,453), while the official death toll was up to 994 from 737

US House set a two-hour debate on coronavirus relief bill on Friday 0900 ET/1300 GMT, according to House officials. The Bill may not be able to pass via voice vote, and it was unclear on the timings of the next step, like a roll-call vote, the House Majority Leader's office said. (Newswires)

US President Trump said the administration preparing virus guidelines that would characterise countries as high-, medium- and low-risk, according to a letter. US President Trump said he will early next week provide information on relaxing guidelines on social distancing. US VP Pence says President Trump will be presented with options on opening the economy up this weekend. Bipartisan group of US lawmakers have urged the Trump administration to defer all tariffs during the covid pandemic, for at least a 90-day period, or until the crisis has passed. US President Trump said there is "no way" that he would cancel the Republican National Convention in August due to the virus, according to Fox (Newswires)

US NIH's Fauci said guidelines will soon be set on how many days an individual must wait after recovering from COVID-19 before returning to regular life. White House Advisor Conway said G20 leaders discussed ways to try to have minimal disruption to global supply chains. (Newswires)

Japan Economy Minister said there was no need to declare a state of emergency over covid-19. (Newswires)

ASIA

Major APAC indices initially took their cues from Wall Street, rising firmly at the open, amid optimism that policymakers will continue to roll-out stimulus measures to guard economies against covid-induced downside. However, as the European day comes into focus, the picture is mixed, as Aussie shares turned negative, and other bourses off highs. US indices finished up around 6%, with the Dow seeing its strongest three day run since 1931 and re-entering a bull-market, while the S&P had its best three-day performance since 1933. Gains were led by defensive sectors (utilities, telecoms, health care). Equities shrugged-off the highest weekly jobless claims print on record. Some desks also noted that month/quarter-end rebalancing will see 850bln of flows into equities. US equity futures opened firmer, though subsequently gave up gains, and are trading lower, albeit off worst levels. ASX 200 (-4.6%) was led lower by its heavyweight financial and mining sectors, while the Nikkei 225 (+2.0%) shrugged off a firmer JPY, with some optimism in the country emanating from Japanese Economy Minister Nishimura who stated that there was no need to declare a state of emergency over the outbreak. Elsewhere, Hang Seng (+1.0%) and Shanghai Comp. (+1.2%) remained in positive territory and were buoyed by increased efforts from Chinese officials to stem a substantial second wave of the virus in the country, with reports yesterday noting that airport tests will be ramped up for people arriving from abroad.

PBoC set USD/CNY mid-point at 7.0427 vs. Exp. 7.0531 (Prev. 7.0692) (Newswires). PBoC skipped open market operations

US is moving forward with plans to limit chips to Huawei, according to the WSJ, citing sources. The proposal would require export licenses for many of the chips that are sold to Huawei that are made by US manufacturers. (WSJ) US President Trump said it looks like the US can do another trade deal with China, though it will have to wait until after the Presidential election. (Newswires) US President Trump confirmed his conversation with China President Xi and said both nations agree to work closely together on virus. (Twitter)

South Korea Consumer Sentiment Ind* (Mar) 78.4 (Prev. 96.9, Rev. 96.9). (Newswires) China Industrial Profits (Jan-Feb) declined 38.3% Y/Y (previous -3.3%)

Australia PM Morrison said government is preparing a third tranche of economic relief. (Newswires)

RBI cuts rates by 75bps to 4.4%; voted 4-2 to cut rates; reverse repo rate lowered to 4.15%. Governor Das said the move was designed to mitigate effects of the virus, revive growth and preserve financial stability. He added that the RBI's response must involve conventional and unconventional measures. Das noted that inflation was running higher than projections in January and February, and that aggregate demand may weaken, and ease inflation further due to Covid-19. Das also said projections for growth and inflation will be dependent on how Covid progresses; he noted that uncertainties in the outlook and explained that is why the MPC has refrained from providing growth and inflation forecasts. Das also announced targeted long-term repo operations, offering up to INR 1trln.

UK/EU

UK Chancellor Sunak announced support for the self-employed; will pay self-employed taxable grant of 80% of average monthly profits of the last three years. The government will be open to those with trading profits of up to GBP 50,000 annually (or GBP 2,500 per month). Chancellor Sunak wants to get the self-employed scheme up by mid-June. (Newswires)

UK and EU negotiating rounds have been abandoned amid coronavirus pandemic, with EU accusing Britain of failing to table a comprehensive legal text for them to work with, according to The Guardian. (Twitter)

EU leaders gave finance ministers two weeks to sort out technical details of bailout fund credit lines for the Eurozone to fight the crisis. German Chancellor Merkel said that, for Germany, the ESM is the main instrument to help other European countries during the virus crisis. (Newswires)

FX

The DXY started the Asia day going sideways, having relinquished the 100.00 level in US trade, amid record high jobless claims. Policymaker support has added Dollars into the system, and accordingly cross currency basis has eased, which has seen the JPY continue to advance despite a constructive risk environment, where stocks were mostly higher. USD/JPY gave up the 109.00 level and remained around session lows as European players enter the market. Risk sensitive FX are firmer, accordingly (AUD, NZD, CAD, GBP); particularly the Aussie, which vaulted 0.61, as officials plan a third tranche of economic aid. AUD/USD meandered near session highs and around the 0.6100 handle following the announcement. EUR/USD and GBP/USD benefitted from the DXY’s pullback towards 99.000, with the pairs having stabilised around 1.1050 and 1.2250 respectively heading into the European open.

COMMODITIES

After settling lower on Thursday, crude futures were up in Asia trade, although it has generally respected the week's range. Concerns on the demand-side of the crude equation kept oil defensive on Thursday, while concerns of rising supply are also playing a role, amid the Russia/Saudi price war. WTI underperformed its Brent counterpart, with analysts suggesting it was a result of US refiners cutting back refinery runs amid falling consumption of products. Additionally, the US coronavirus relief bill had not set aside funds for the Energy Department to "fill up the SPR", as per President Trump's wishes; the DOE itself said it had funds for potential oil purchases for the SPR, and was working with Congress on the details. Meanwhile, a letter emerged revealing US lawmakers had urged Secretary of State Pompeo to call on ally Saudi Arabia to change its course on oil prices, which is threatening the US economy. Pompeo should encourage both Riyadh and Moscow to stop wreaking havoc in global markets—particularly as the US seeks to address a growing pandemic and avert an economic crisis. The lawmakers called on Saudi Arabia to partner with the United States on strategic energy infrastructure projects across the Indo-Pacific region and in the Americas. If the Saudis turned down US offers, the lawmakers called for various types of aid and assistance to be pulled. Elsewhere, Saudi-led coalition said it intercepted and destroyed missiles fired by Yemeni Houthis, according to Saudi state new. Meanwhile, spot gold was uneventful just above 1600/oz and failed to gain impetus from the weakening Buck.

US Senators wrote a letter persuading Saudi to leave OPEC, threatening sanctions, as posted by EnergyIntel. (Twitter) US Department of Energy said it has funds for potential oil purchases for the SPR and is working with Congress on details. (Newswires)

IEA's Chief Birol said the global oil storage capacity may be full very soon; oil demand recovery will not be easy or quick. (Newswires)

Libya's NOC says oil production stands at 96k BPD as of March 25th (vs. 114.31k BPD on March 8th). (Newswires)

GEOPOLITICS

Saudi-led coalition said it intercepted and destroyed missiles fired by Yemeni Houthis, according to Saudi state news. (Newswires)

US

The Tplex bull steepened as front-end Bills continued to decline into negative territory. The Fed’s monetary bazooka continues to alleviate funding pressures as O/N collateral rates remained low and minimal take-up in the repo operations, while demand in the reverse repo op continues to balloon - the negative yields in Bills are supporting Dealers’ move to park cash at the Fed. The negative front-end is also likely pushing participants further out the curve in search of yield. Elsewhere, the Treasury’s 7-year note auction was well-received, stopping through the 0.707% WI by 2.7bps, covered 2.76x (more than the six-auction average of 2.45x), and consistent with other recent auctions, dealers continue to take more than usual. By settlement, 2s10s +0.5bps at 54bps; 2-year -5bps at 0.281% and 10-year -3bps at 0.827%. T-NOTE (M0) FUTURES SETTLED 12+ TICKS HIGHER AT 137-23+.

Fed Chair Powell reiterated at FSOC the Fed is committed to using all tools to safeguard the economy; have taken an aggressive series of actions. (Newswires)

US banks had USD 50.8bln of outstanding loans via the discount window, as of Wednesday (vs USD 28.2bln last week), according to Fed data. (Newswires)

Fitch affirmed United States at 'AAA'; Outlook Stable. (Newswires)