• APAC stocks were cautious following the uninspiring lead from Wall St and regional soft data releases; S&P 500 -1.5%.
• UK reportedly urged Ukraine not to back down and is concerned US, France and Germany will push Ukraine to make significant concessions to Russia.
• DXY is on a firmer footing on a 98 handle, JPY is the laggard in an otherwise contained G10 FX space.
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future relatively unchanged after the cash market closed lower by 1.4% yesterday.
• Looking ahead, highlights include EZ, UK & US Final Manufacturing PMIs, US Labour Market Report, ISM Manufacturing PMI, China-EU Summit, Speech from Fed's Evans.

US TRADE

• US stocks traded negative with losses exacerbated into the close on a chunky sell-side imbalance into month- and quarter-end, with sentiment already hit throughout the day as Ukraine/Russia optimism waned further.
• S&P 500 -1.4% at 4,539, Nasdaq 100 -1.6% at 14,838, Dow Jones -1.6% at 34,678, Russell 2000 -1.0% at 2,067.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• UK reportedly urged Ukraine not to back down and is concerned US, France and Germany will push Ukraine to “settle” and make significant concessions to Russia, according to The Times citing a government source
• Russian Defence Ministry said it will open a humanitarian corridor from Mariupol to Zaporizhzhia on April 1st, following the request by German and French leaders to Russian President Putin, according to TASS.

DEFENCE/MILITARY

• Ukrainian President Zelensky said the situation in the south of Ukraine and the Donbas region remains extremely difficult, according to Reuters.
• Ukrainian General said Russian forces are preparing new groups to besiege the cities of Sloviansk and Kramatorsk which are both in the Donbas region, while Russian forces transferred additional missiles to Belarus to increase attacks on Ukrainian cities, according to Al Jazeera.
• Ukraine's envoy to Japan said the situation on the ground is turning better for Ukraine and they will soon be able to protect their skies with advanced military equipment set to be provided by the US and UK, according to Reuters.
• UK Ministry of Defence said Russia is redeploying forces from Georgia to reinforce its invasion of Ukraine.
• IAEA said it is in close consultations with Ukraine on sending its first assistance and support mission to Chernobyl in the next few days and is not able to confirm reports of Russian forces receiving high doses of radiation, according to Reuters.
• US senior defence official said there are currently no indications that Russia is preparing to use tactical nuclear weapons in Ukraine, according to Reuters.
• Governor of Belgorod in Russia near the border with Ukraine confirmed an oil depot fire was caused by a Ukrainian helicopter attack inside of Russia, according to ELINT News.

ENERGY/ECONOMIC SANCTIONS

• White House said the Commerce Department will take further action against Russia in the coming days, according to Reuters.
• Russia's Foreign Ministry said Russia will not ask the EU to end sanctions and has a sufficient margin of safety, according to RIA.

FUND/SOVEREIGN/OTHER NEWS

• Russian Finance Ministry said a buyback of its 2022 Eurobond was completed and it purchased it back for the nominal value of almost USD 1.45bln. Holders of the 2022 Eurobond have received payments in Roubles totalling the amount of RUB 124.4bln.
• Russia adopted a resolution whereby wheat, meslin, rye, barley, and corn are removed from the export ban to EAEU countries, according to a government statement cited by Interfax.
• US State Department called on any US citizens in Russia or Ukraine to leave immediately over concerns of being targeted specifically for arrest, according to Reuters.

OTHER

• Japan froze the assets of 4 additional Russian organisations, 3 Russians and 6 North Koreans for involvement in North Korea's weapons projects, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were cautious following the uninspiring lead from Wall St, where the major indices closed off their worst quarterly performance in two years and as the region digested weak data releases.
• ASX 200 traded rangebound as pressure from losses in tech, industrials and financials was counterbalanced by resilience in the commodity-related sectors and upgrade to Australian PMI data.
• Nikkei 225 was subdued after mixed Tankan data in which the headline Large Manufacturing Index topped estimates, but Large Manufacturers and Non-Manufacturers' sentiment worsened for the first time in 7 quarters.
• Hang Seng and Shanghai Comp. were mixed with sentiment clouded after the PBoC drained liquidity and Chinese Caixin Manufacturing PMI slipped into contraction territory, although the mainland recovered amid the partial lifting of the lockdown in Shanghai and as Chinese press continued to advocate monetary easing.
• US equity futures nursed losses but with upside capped; ES +0.3%
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future relatively unchanged after the cash market closed lower by 1.4% yesterday.

FX

• DXY was kept afloat by recent haven flows and as yields gained overnight, while focus shifts to the NFP data.
• EUR/USD languished below 1.1100 amid the threat of Russia cutting off the gas supply to Europe.
• GBP/USD traded rangebound with a mildly negative bias against the greenback.
• USD/JPY gained on widening yield differentials and a weaker Tankan survey.
• Antipodeans were uneventful amid the cautious mood, weak Chinese PMI data and recent oil declines.

FIXED INCOME

• 10yr USTs retreated as yields were led higher by the front-end which saw a brief inversion of 2yr/10yr curve.
• Bunds continued to fade recent gains after stalling near the 159.00 level.
• 10yr JGBs were underpinned after the BoJ boosted its scheduled monthly bond purchases and following the deterioration in the BoJ’s Tankan survey, but with gains capped after a failed incursion above 150.00.

COMMODITIES

• WTI and Brent were stuck at the prior day's lows after President Biden's historic SPR announcement.
• US President Biden said an additional 30-50mln bbls of oil could be released by allies and partners, while Biden added the SPR release could cut between USD 0.10-0.35/gallon but depends on how much allies release, according to Reuters.
• White House Press Secretary Psaki said a gas tax holiday is not off the table, according to Reuters.
• US House Majority Leader Hoyer said oil companies should either produce on leases and drill wells or pay a fee for unused leases and idled wells, according to EIN News.
• Japan's Industry Minister said it is not clear whether the latest US decision to release oil will be done by the US alone or become part of an IEA-coordinated release, according to Reuters.
• Venezuela's PDVSA is looking to buy and lease tankers in anticipation of a possible easing of US sanctions on exports, according to Reuters sources and a document.
• Turkey raised natural gas prices by 44.3% for electricity production and by 50% for factories, while it also hiked prices by 35% for households.
• Spot gold traded rangebound amid a slightly firmer greenback and ahead of the US jobs report.
• Copper was subdued by the cautious mood and with Chinese Caixin Manufacturing PMI at a 2-year low.

CRYPTO

• Bitcoin traded lower overnight with prices back beneath the 45,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 90bln net drain.
• PBoC set USD/CNY mid-point at 6.3509 vs exp. 6.3473 (prev. 6.3482).
• USTR Tai said they are not necessarily looking to negotiate a new agreement on trade with China and will focus on issues not addressed in the 'phase 1' deal, while she added that US trade policy on China will focus on Beijing's targeting of critical industries for domination, according to Reuters. USTR Tai also commented that they are in conversations with Taiwan and other countries interested in joining the Indo-Pacific economic framework.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Mar) 48.1 vs Exp. 50.0 (Prev. 50.4)
• Japanese Tankan Large Manufacturing Index (Q1) 14 vs Exp. 12 (Prev. 18)
• Japanese Tankan Large Manufacturing Outlook (Q1) 9 vs Exp. 10 (Prev. 13)
• Japanese Tankan Large Non-Manufacturing Index (Q1) 9 vs Exp. 5 (Prev. 9)
• Japanese Tankan Large Non-Manufacturing Outlook (Q1) 7 vs Exp. 8 (Prev. 8)
• Japanese Tankan All Big Capex Est (Q1) 2.2% vs Exp. 4.0% (Prev. 9.3%)