• Asian equities traded mostly lower with the Nikkei 225 hampered by a firmer JPY while Chinese bourses were dealt some reprieve from Industrial Profit data
• USD softened overnight as investors reacted to the US President’s lack of ability to pass the health care bill tspanough congress
• Looking ahead, highlights include potential comments from ECB’s Lautenschlaeger, Praet, Fed’s Evans and Kaplan

HEALTHCARE VOTE

US President Trump cancelled the vote in the House on the AHCA late on Friday as the bill did not have enough votes to pass. (Washington Post)

ASIA

Asia equity markets traded mostly lower as the region digested the cancellation of the American Health Care Act vote on Friday due to insufficient support and the implications on the Trump reflation trade. This pressured US equity futures and Asia-Pac indices alike, with ASX 200 (-0.1%) also weighed by mining names after iron ore prices extended on last week over 7% declines. Nikkei 225 (-1.4%) underperformed on a firmer currency, while Shanghai Comp. (+0.1%) and Hang Seng (-0.3%) were choppy as downside was counterbalanced by several upbeat earnings and a 31.5% increase in Chinese Industrial Profits. 10yr JGBs traded higher as the cautious risk tone spurred safe-havens flows. However, upside was limited after the BoJ Summary of Opinions provided no surprises and the central bank also refrained from a Rinban announcement.

BoJ Summary of Opinions from March 15th-16th meeting stated that Japan's economy has continued its moderate recovery trend and that inflation is expected to increase to 2%, but will take some time. The Summary of Opinions also stated that it is appropriate for BoJ to pursue powerful monetary easing and that there is no need to alter the current policy framework for the near future.

PBoC Governor Zhou stated at the Boao Forum that monetary policy may have reached an end to the quantitative easing path and that greater use of fiscal policy is needed to grapple domestic growth and structural reforms. (Newswires)

PBoC refrained open market operations for a 2nd consecutive session due to a high level of bank liquidity. (Newswires)

PBoC set CNY mid-point at 6.8701 (Prev. 6.8845)

China Industrial Profits (Jan-Feb) Y/Y 31.5% (Prev. 2.3%).( Newswires)

EUROPE

ECB’s Villeroy warned against candidate Le Pen’s suggestion to leave the Euro zone. (Newswires)

German Chancellor Merkel's CDU won 40.7% of the vote in the state elections in Saarland on Sunday. This was more than previously predicted in the polls, potentially boosting her prospects of winning a fourth term in September's national election and was also higher than Prev. 35.2% votes it received in 2012 state election. (Newswires)

UK

UK Labour leader Corbyn has been accused of trying to “sabotage” Brexit talks by setting PM May a near-impossible target if she wants Labour’s support for the final deal. (Telegraph)

UK manufacturing lobby group EEF urged PM May to drop her tspaneat to take the UK out of the EU without a new trade deal as manufacturers would bear the brunt from the bloc’s trade barriers. (Newswires)

FX

In FX markets, USD softened overnight as investors reacted to the US President’s lack of ability to pass the health care bill tspanough congress which saw USD/JPY decline by a point to below 111.00. GBP/USD and EUR/USD also benefitted to reclaim the 1.2500 and 1.0800 handles respectively, while some analysts further attributed support in the latter to a firm win by Merkel’s CDU party at the Saarland state election over the weekend. Elsewhere, CNY was underpinned after the PBoC set the reference rate to its strongest level in a month, while gains in AUD/USD were only marginal as weaker iron ore prices capped upside in the pair.

COMMODITIES

WTI crude saw relatively uneventful trade overnight with prices range bound around the USD 48/bbl level after the meeting between OPEC and non-OPEC producers failed to deliver any significant breaktspanough, with producers just agreeing to review whether to extend the output deal by 6-months. Gold (+0.4%) prices advanced amid a weaker greenback and a flight to quality, while copper dwindled amid risk averse tone and as iron ore extended on last week’s over 7% slump as markets reacted to data showing port inventories of the steel-making ingredient rose again last week.

OPEC and non-OPEC oil producers agreed to review whether the output cut deal should be extended, while sources stated that OPEC and Non-OPEC committee is said to recommend oil cut extension for an additional 6-months. (Newswires)

Russia reportedly wants more time to assess market and data before deciding on an extension of the oil output cut deal, while there were also reports that Russian Energy minister Novak stated that Russia has cut oil output by 185K bpd since October. (Newswires)

UAE expects to reduce oil production by over 200k bpd in March. (Newswires)

US Baker Hughes Rig Count (24-Mar) M/M 809 (Prev. 789). (Newswires)

US

US treasuries settled marginally higher but flow was relatively light as markets awaited the key vote on Trump’s healthcare plan. After the settlement price, Treasuries came under selling pressure following reports that the AHCA vote had been cancelled. Finally, June’17 10y t-note futures settled up 4 ticks at 124.17.

Fed's Williams (Non-voter, Hawk) stated that running policy too hot too long will spur inflation and later said that it is important that US central bank keep inflation expectations anchored at their 2% target. (Newswires)