• European equity indices are firmer on the session, US futures are mixed; RTY underperforms
• DXY is firmer as peers trade predominantly negative; GBP/USD trades on a low 1.38 handle
• Oil continues to feel pressured and resides around session lows, precious metals follow the softer sentiment
• AstraZeneca vaccine rollout continues to be halted across Europe despite several authorities stating the risk/reward ratio remains a positive one
• Looking ahead, highlights include US retail sales, industrial production, ECB gross purchases, supply from the UK & US

CORONAVIRUS UPDATE

Italian Medicines Regulator said the decision to suspend the AstraZeneca (AZN LN) vaccine by was "political", the vaccine is safe and the benefit/risk ratio is "widely positive". Similarly, the French Health Minister Veran says the AstraZeneca COVID-19 vaccine risk/reward ratio remains a positive one. (Newswires)

Sweden's Health Agency says it is suspending use of the AstraZeneca COVID-19 vaccine. (Newswires)

Canada is to recommend AstraZeneca COVID-19 vaccine use for those aged 65 above 65 years old and Thailand's PM said the AstraZeneca vaccine rollout will go ahead which had been halted due to reports of blood clots in Europe. Conversely, Slovenia temporarily halted the use of the vaccine, while Venezuelan Vice President Rodriguez said they will not approve the AstraZeneca COVID-19 vaccine due to the effect on patients. (Newswires)

Mexico requested for the US to share its AstraZeneca vaccine doses and stated the Co.'s vaccine production in Mexico is delayed until the first week of May, according to a diplomat. (Newswires)

Japanese PM Suga said the government wants a little more time to decide on emergency lift, while there were separate reports that Japan is to decide on Thursday whether to lift the state of emergency. (Newswires)

French Health Ministry says it has discovered a new COVID variant in the Brittany region but adds initial analysis does not show it to be more serious or more transmissible than other variants. (Newswires)

WHO Global Advisory Panel on vaccine safety says they issue a statement on the AstraZeneca (AZN LN) COVID-19 vaccine after their meeting today reviewing the data. (Newswires)

ASIA

Asian equity markets traded higher following the positive performance on Wall Street where the S&P 500 and DJIA extended on record levels and the Nasdaq led the advances as tech and growth were favoured as yields eased, with stronger than expected NY Fed Empire Manufacturing data also conducive to the upbeat mood. ASX 200 (+0.8%) was firmer with tech and healthcare spearheading the broad gains across most industries aside from the commodity-related sectors including energy following a recent pullback in oil prices. Nikkei 225 (+0.5%) edged mild gains and briefly reclaimed the 30k level where it then met resistance, with upside also capped heading into the decision whether to lift the State of Emergency for the capital region and the outcome of the BoJ’s policy review. Hang Seng (+0.7%) and Shanghai Comp. (+0.8%) conformed to the rising tide across regional stocks and with firm gains in Xiaomi after FTSE Russell proposed the Co. will be eligible for re-inclusion to its indices from June 21st, while the mainland initially lagged amid concerns of tighter regulations with China to step up supervision of the internet platform economy and data ownership, as well as strengthen antitrust regulatory powers. Finally, 10yr JGBs held on to its gains overnight following the bull flattening stateside and despite the positive mood across regional stocks, while softer demand at the enhanced liquidity auction for 10yr, 20yr and 30yr JGBs did little to dent price action.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5029 vs exp. 6.5059 (prev. 6.5010)

FTSE Russell proposed that Xiaomi (1810 HK) will be eligible for re-inclusion to FTSE Russell indices from June 21st, while China Mobile (941 HK) is reportedly considering an A-share listing following removal from the US. (Newswires)

Japanese Finance Minister Aso confirmed the cabinet approved cash handouts for low-income families and are assembling an aid package for depressed people, while he added that nothing has been decided on US beef imports after press reports stated that Japan will temporarily place higher tariffs on US beef. (Newswires)

Japan's Foreign Minister Motegi has agreed with the US Secretary of State Blinken on visiting the US at an early date to hold a bilateral meeting. (Newswires)

US

It was also reported that just over a dozen Democrat Senators requested US President Biden suspend waivers to the Buy American program so US firms are prioritized in projects funded by the USD 1.9tln relief bill. (Newswires)

Reports noted that legislation introduced in the House and Senate would extend the PPP deadline from March 31st to May 31st. (Newswires)

US Secretary of State Blinken says they will push back when China utilised coercion and aggression to get its way. (Newswires)

UK/EU

The UK is planning tighter security measures across technology and sensitive sites in order to facilitate trade with China, the UK's "biggest state-based threat". (Times)

BoE Governor Bailey says inflation will remain below the 2.0% threshold, but it will initially flare in the short-term due to public support measures; will continue to buy bonds in 2021. (Newswires)

ECB’s Lane says that there is still room for the ECB to cut rates deeper into negative territory, but the current issue is over efficiency around whether accommodation could be better provided by preserving favourable financing conditions; the priority remains to use bond-buying. Lane reiterated that the ECB could do more in terms of providing additional stimulus. Adds, that with enough policy support damage to the economy should be as little as possible i.e. ‘relatively contained’. Says YCC would be unnecessary as we are not in a ‘knife edge situation’ where fixing the 10yr yield makes sense. (FT)

French central bank forecasts 2021 GDP growth at 5.5% (prev. forecast 5.0%), 2022 at 4.0% (prev. forecast 5.0%) and 2023 at 2.0% (prev. forecast 2.0%). (Newswires)

Germany’s second lockdown has paused the economic recovery, but Q1 data thus far suggests there will not be a drastic drop in GDP as experienced due to the first lockdown. (Newswires)

EU ZEW Survey Expectations (Mar) 74.0 (Prev. 69.6)

German ZEW Economic Sentiment (Mar) 76.6 vs. Exp. 74.0 (Prev. 71.2)

• German ZEW Current Conditions (Mar) -61.0 vs. Exp. -62.0 (Prev. -67.2)

GEOPOLITICAL

North Korea warned US President Biden's administration that if it wants peace it needs to avoid 'causing a stink', while it was also reported that North Korean Leader Kim's sister threatened to scrap the inter-Korean military agreement and slammed the US and South Korea for joint military exercises. (KCNA/Yonhap)

US & Japan says China's behavior poses a challenge to the international community where it is inconsistent with international order. (Newswires)

Japan's Foreign Minister Motegi says themselves and the US will hold another two-plus-two meeting by year-end to evaluate strengthening of the alliance. (Newswires)

US Secretary of State Blinken says they are looking into whether additional North Korea pressure measures could be move effective. (Newswires)

EQUITIES

European equities opened the session with modest gains across the board (Euro Stoxx 50 +0.4%), in-fitting with Asia’s positive lead and the gains seen on Wall Street after the European close yesterday. Stateside, US equity futures are trading mixed but with a slight counter-cyclical bias as the RTY (-0.4%) resides as the underperformer vs the NQ (+0.4%). Regarding US stocks, a BofA survey suggests only 15% of people think that US equities are in a bubble. This is of note as with the added stimulus from the USD 1.9trln bill and consumer savings US equities may continue on an upwards trend. However, fresh fundamental catalysts remain limited ahead of a week with a plethora of Central Bank updates. Back to Europe, sectors opened mostly in the green with the underperformance in Oil & Gas and Basic resources persisting throughout the European morning. The Autos sector (+1.8%) is the morning leader followed by Real Estate (+1.4%), Financial Services (+1.2%) and Retail (+1.0%), with the latter likely on the reopening trade. In terms of individual movers, Zalando (+4.4%) have seen upside after they announced an upward revision to their FY20 revenue to 23% and an expectation to continue to grow profitably. Moreover Volkswagen (+6.0%), who could be partly responsible for the upside in automobiles and consumer discretionary, are firmer after the Co. announced they anticipate the business to significantly recover vs 2020 whilst announcing ambitious EV and battery plans, with FY21 guidance pointing to 1mln EV sales. VW stated they are to introduce a unified cell globally in 2023 whilst investing EUR 46bln into electric mobility over the next 5 years highlighting the prospects of growth. Meanwhile, AstraZeneca (+3.3%) are in the green despite a range of countries, such as Germany and France, provisionally halting the rollout of the vaccine citing health concerns. However, despite this many outlets namely, the Italian Medicines Regulator and the EMA have stated the benefit/risk ratio is positive. Lastly, Siemens Gamesa (-1.0%) is one of the laggards after CEO Nauen stated that turbine makers are being pressured by elevated input prices and developers looking for price reductions and hence putting pressure on renewable Cos.

Tesla (TSLA) intends to apply, by July at the latest, for a permit for the production of lithium-ion cells in Germany, according to Handelsblatt citing sources. NHTSA are looking into an accident in Detroit which involved a Tesla car driving under a tractor trailer. Autopilot has not yet been ruled out. (CNBC/Newswires)

Alibaba (BABA) - Chinese internet firms have removed an Alibaba internet browser from their app stores. (Newswires)

FX

USD - The Greenback remains elevated and firmer against most G10 counterparts, but capped by further consolidation in US Treasuries and other global bonds awaiting a host of March Central Bank policy meetings that kick off with the Fed tomorrow. Moreover, the Dollar is finding several psychological levels tough to breach, including 92.000 in the index ahead of top tier data, like retail sales and ip on FOMC day 1, while also keeping a close eye on supply via Usd 24 bn 20 year notes for any yield and curve repercussions. DXY is now nearer the base of a 91.974-755 range.

GBP/AUD/NZD - Sterling is swooning again and struggling to retain 1.3800+ status vs the Buck, but suffering heavier losses in Eur/Gbp cross terms well below 0.8600 after narrowly failing to reach 0.8550 and trip stops that were said to be waiting for a breach of the half round number yesterday. Still no obvious change or deterioration in UK fundamentals from an independent perspective or relative to the Eurozone, bar Brexit-related issues over the NI border, so Pound underperformance looks more technical. Conversely, dovish RBA minutes and even more contingency for a first rate hike via wages hitting 3% has dragged the Aussie further back towards 0.7700 against the Greenback and keeping Aud/Usd rooted around 1.0750 even though the Kiwi has been undermined by weak NZ credit card spending and Nzd/Usd is losing sight of 0.7200 in advance of Q4 current account data.

EUR/JPY/CHF/CAD - All rangebound vs their US rival, with the Euro contained between 1.1943-14 parameters and not really gleaning any momentum from moderately better than expected ZEW economic sentiment or current conditions. Meanwhile, the Yen is even more confined from 109.29-10 awaiting Japanese trade data and the BoJ, the Franc is hovering just below 0.9250 and Loonie is meandering within a 1.2501-1.2467 band in the run up to Canadian CPI on Wednesday following a loss of impetus from upbeat jobs data alongside the ongoing retracement in crude.

SCANDI/EM - Not quite all change for the Sek, but in start contrast to Monday’s actual CPI readings, Swedish money market inflation expectations rose and Riksbank’s Jansson sees more upside risk than downside going forward. In terms of growth, Governor Ingves has talked up the resilience of the economy in the face of the 2nd COVID-19 wave to keep Eur/Sek anchored either side of 10.1500, as Eur/Nok rotates circa 10.0900 in wake of the Norwegian Government downgrading its non-oil GDP forecast for the year. Elsewhere, the Try has rebounded another 10 big figures or so from yesterday’s low to test 7.5150 amidst reports from Turkey’s Finance Minister confirming plans to set up a so called price stability committee to work in conjunction with the CBRT to that aim and originally mentioned by President Erdogan.

RBA March meeting minutes stated that very significant monetary support will be needed for some time and it will maintain stimulatory conditions for as long as required, while the RBA will not hike the cash rate until inflation is sustainably within 2%-3% target band. RBA added it does not expect to reach unemployment and inflation goals until 2024 at the earliest and the board agreed it would not consider removing or changing 10bps target yield, as well as reiterated that negative rates remain extraordinarily unlikely. Furthermore, it stated that rising yields reflected increasing optimism about the economic outlook and increase in compensation for future inflation, while the board said it will look through the transitory fluctuations in inflation. (Newswires)

• Australian Home Price Index (Q4) Q/Q 3.0% vs. Exp. 2.0% (Prev. 0.8%)
• Australian Home Price Index (Q4) Y/Y 3.6% vs. Exp. 4.7% (Prev. 4.5%)
• New Zealand Credit Card Spending (Dec) M/M -0.1% (Prev. 0.1%)
• New Zealand Credit Card Spending (Dec) Y/Y -10.6% (Prev. -5.6%)

FIXED

Bonds have overcome several wobbles and bouts of selling pressure to stay afloat, while also absorbing cash offerings quite comfortably, albeit short end via German Schatz and a 2024 UK tap where relative ECB and BoE policy guidance is supportive. The impending 2054 DMO offering and 20 year T-note sale may yet require more of a concession, but for now Bunds are midway between 171.95-64 extremes, Gilts are not far from a new 128.19 Liffe intraday high that is only 1 tick shy of last Friday’s session best, and US Treasuries are mostly firmer with the curve flatter albeit off overnight peaks ahead of retail sales and ip that are scheduled on FOMC day 1.

COMMODITIES

WTI and Brent front month futures have continued the retreat seen during the APAC session despite a relatively tentative market tone and light news-flow for the complex. That being said, prices are seemingly impacted from the potential demand hinderance arising from the suspension of the AstraZeneca COVID vaccine across a number of OECD countries, potentially translating to more prolonged restriction measures than expected, with cases continuing to rise across the Eurozone – a risk that has previously been voiced by energy agencies alongside OPEC. WTI May resides around USD 64.50/bbl (vs high USD 65.43/bbl) while its Brent counterpart trades just below USD 68/bbl (vs high USD 68.94/bbl). Looking ahead, the complex will continue eyeing vaccine developments alongside the overarching sentiment across markets. Looking ahead, traders will be eyeing the weekly Private Inventories, albeit participants should be cognizant of the lingering distortions from the Texas Deep Freeze. Analysts at ING also suggest that the “WTI forward curve is showing signs of weakness, with the prompt spread having spent the last three days trading in contango”. Elsewhere, spot gold and silver vary, with the latter moving as a function of the earlier firmer Buck and the former awaiting the FOMC showdown tomorrow alongside any fresh macro news flow in the meantime. Spot gold remains around 1,733/oz (vs high 1,737/oz), as has been the case throughout the larger part of the European morning. Over to base metals, LME copper trades softer on account of a directionless risk tone, but off worst levels as the Dollar retreats. Dalian iron ore futures overnight gained over 5% as China’s top steel-making city lifted its smog alert. Meanwhile, Shanghai aluminium futures hit a 9-and-a-half year highs over some supply concerns.