• APAC stocks declined amid headwinds from the banking sell-off in the US owing to contagion fears related to Silicon Valley Bank.
• BoJ kept policy settings unchanged, as expected, with the decision on YCC made by a unanimous vote.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -1.6% after the cash market closed down 0.1% on Thursday.
• In FX, USD is steady on a 105 handle, JPY lags post-BoJ, EUR/USD and Cable sit on 1.05 and 1.19 handles respectively.
• Highlights include UK GDP, Norwegian CPI, US & Canadian Labor Market Reports, Speeches from ECB's Lagarde & Panetta.

US TRADE

EQUITIES

• US stocks wiped out their early post-jobless claims gains which were initially spurred after the data pointed to a cooling labour market in the US, although markets then proceeded to sell off on a mixture of financial contagion fears, tax hike talk and geopolitics. Financials were slammed, particularly commercial banks as SVB Financial (SIVB) dropped more than 60% on the day after it filed a USD 1.75bln stock offering to help with its cash burn and which added to fears after the recent Silvergate (SI) crypto woes in the sector, while the rout saw the 4 biggest US banks shed more USD 50bln in market cap.
• SPX -1.85% at 3,918, NDX -1.80% at 11,995, DJIA -1.65% at 32,256, RUT -2.81% at 1,826.
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NOTABLE HEADLINES

• White House released the fiscal 2024 budget proposal that projects USD 6.883tln in total spending, USD 5.036tln in revenues and projects annual deficits of over USD 1tln each year through 2033.
• Peter Thiel's Founders Fund advised companies to withdraw money from SVB (SIVB) and Y Combinator advised companies to limit SVB exposure, while Coatue Management, USV and Founder Collective also told companies to pull out funds from SVB, according to Bloomberg.
• Pershing Square's Ackman tweeted that a failure of SVB Financial (SIVB) could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash, while he added that if private capital can’t provide a solution, a highly dilutive government preferred bailout should be considered.

APAC TRADE

EQUITIES

• APAC stocks declined amid headwinds from the banking sell-off in the US owing to contagion fears related to Silicon Valley Bank in which shares of the group dropped more than 60% during Wall St trade and resulted in the four biggest US banks shedding a total of more than USD 50bln in market cap, while SVB suffered another 20% drop after-hours as funds advised companies to pull out of the lender.
• ASX 200 was pressured by losses in its largest-weighted financial industry on spillover selling from stateside peers and with the index also hit by weakness in the commodity-related sectors.
• Nikkei 225 declined with risk sentiment dampened following mixed household spending data and with banking shares further hit after the BoJ maintained its ultra-loose policy settings.
• Hang Seng and Shanghai Comp. conformed to the downbeat mood with Hong Kong underperforming amid a tech rout as JD.com shares suffer a double-digit drop despite beating on the bottom line, while property stocks are also in focus as shares in developer Kaisa initially dropped around 40% post-earnings and on return from a 12-month trading halt.
• US equity futures continued to decline (ES -0.7%) amid the banking sector contagion woes, tax hike proposals, geopolitical tensions and cautiousness with the NFP data on the horizon.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -1.6% after the cash market closed down 0.1% on Thursday.

FX

• DXY was lacklustre as yields continued to move lower across the curve amid the US banking contagion fears and after the jobless claims data showed a cooling in the labour market, while price action was also limited as the attention shifted to the looming Non-Farms Payrolls data.
• EUR/USD benefitted from the recent softening of the dollar and approached near the 1.0600 handle.
• GBP/USD took a breather after it recently bounced back above its 200DMA and reclaimed the 1.1900 status ahead of incoming UK data GDP and Industrial Production.
• USD/JPY was boosted after the BoJ kept its ultra-easy policy settings which unwound the hawkish positioning seen heading into the decision on the off chance Kuroda could provide a parting surprise.
• Antipodeans were choppy and eventually edged higher albeit with gains capped by the risk tone.

FIXED INCOME

• 10yr UST futures continued their advances as yields retreated overnight led by the short-end in which the 2-year yield declined by as much as 15bps and with markets now pricing a terminal rate of below 5.5% amid the banking contagion fears and after the recent higher-than-expected jobless claims data.
• Bund futures were lifted in tandem with the rally across bonds for a firmer footing above 133.00.
• 10yr JGB futures followed suit to the strength in global counterparts and with prices further boosted after the BoJ maintained its ultra-easy policy settings during Kuroda's final policy meeting.

COMMODITIES

• Crude futures traded lower with risk sentiment spooked by the sell-off in the banking sector.
• Saudi Aramco is to supply full contract volumes of oil to at least four north Asian refiners in April.
• Spot gold was rangebound with prices contained as participants await the incoming jobs data.
• Copper futures were pressured alongside the broad risk aversion amid the contagion fears.

CRYPTO

• Bitcoin continued to decline and dipped below the USD 20,000 level as risk assets took a hit.

NOTABLE ASIA-PAC HEADLINES

• China's parliament elected Chinese President Xi for a third term as President and as Central Military Commission Chairperson, while the NPC also elected Zhao Leji as NPC Standing Committee Chairperson and Han Zheng as China's Vice President.
• US is working to close a loophole in the export ban related to China's Inspur (000977 CH), while it was also reported that Senator Rubio introduced legislation seeking to block tax credits for batteries produced by the planned Ford (F) plant using Chinese technology.
• BoJ kept policy settings unchanged, as expected, with rates held at -0.10% and QQE with yield curve control maintained to target 10yr JGB yields at around 0%, while it kept the band around the yield target at +/-50bps with the decision on YCC made by unanimous vote. BoJ also maintained its forward guidance on interest rates and said Japan's economy is picking up with the economy expected to recover as the impact of the pandemic and supply constraints fade, while it stated that core consumer inflation is moving around 4% and inflation expectations are heightening.
• Japan's upper house approved the appointment of Kazuo Ueda as the next BoJ Governor, while it approved the appointment of Shinichi Uchida and Ryozo Himino as Deputy Governors, as expected.

DATA RECAP

• Japanese All Household Spending MM (Jan) 2.7% vs. Exp. 1.4% (Prev. -2.1%)
• Japanese All Household Spending YY (Jan) -0.3% vs. Exp. -0.1% (Prev. -1.3%)
• Japanese Corp Goods Price MM (Feb) -0.4% vs. Exp. -0.3% (Prev. 0.0%)
• Japanese Corp Goods Price YY (Feb) 8.2% vs. Exp. 8.4% (Prev. 9.5%)

GEOPOLITICS

• North Korean leader Kim oversaw the fire assault drill on Thursday and the drill proved the capability to counter an actual war, while shells were aimed at simulated targets of enemy airport. Furthermore, North Korean leader Kim said the army should be ready to fight at any time citing 'frantic war preparation moves' by the enemy, according to KCNA.
• US is to hold an informal meeting of UN Security Council members next week regarding human rights abuses in North Korea, according to Reuters.

EU/UK

• UK PM Sunak is to unveil up to GBP 5bln additional cash for defence, according to The Times
• Reuters poll showed all 60 economists surveyed unanimously forecast the ECB to hike the Deposit Rate by 50bps to 3.00% at its meeting next week, while expectations are for the Deposit Rate to peak at 3.75% in Q3 vs prev. forecast of a peak at 3.25% in Q2.