• Major European equities are mostly idling, but auto names briefly reversed on reports that US are considering 3 potential car tariff options
• DXY remains above 96.500, while Aussie slumped on RBA’s SOMP
• Looking ahead, highlights include Canadian Employment Data & Fed's Daly Speaking
• EARNINGS: Exelon Corp, Ventas, Phillips 66

ASIA

Asian stocks traded negative with global risk appetite subdued by growth concerns and after trade-related fears resurfaced. ASX 200 (-0.3%) was led lower by underperformance in the energy sector following the recent drop in crude prices and with financials downbeat amid a management shake-up due to fraud allegations at NAB. Nikkei 225 (-2.0%) was pressured by a firmer currency and as individual stocks also reacted to earnings, while the Hang Seng (-0.2%) suffered a bout of post-holiday blues on return from the Lunar New Year celebrations, as hopes for a quick trade deal were dampened after US President Trump ruled out meeting with his Chinese counterpart prior to the tariff deadline. In addition, reports suggested that President Trump is likely to sign an order banning Chinese telecoms equipment next week which subsequently weighed on ZTE shares. Finally, 10yr JGBs were higher as the widespread risk averse tone underpinned safe-haven demand and BoJ presence in the market for nearly JPY 1.2tln of JGBs with maturities of up to 10yrs, which also coincided with declines in long-term yields with the 20yr, 30yr and 40yr yields at their lowest in more than 2 years.

RBA Statement on Monetary Policy stated the probability of rate hike or cut is more evenly balanced than previous and that the board does not see a strong case for a near term adjustment in rates. RBA noted that higher rates would be appropriate at some point if progress is made but added that they might lower rates if there is sustained increase in unemployment and too low inflation, while it cut its GDP and inflation forecasts through to June 2020. (Newswires)

Reported that US President Trump is likely to sign an order banning Chinese telecoms equipment next week. (Newswires)

US

Fed's Bullard (Voter, Dove) said FOMC has moved in a more dovish direction and needs to tread carefully moving forward amid weak inflation and other signals the economy is facing greater risks than had expected. Bullard also stated the Fed is likely to end up with a larger than anticipated balance sheet and that he considers current level of rates as restrictive, while he sees growth this year at 2.5% and considerably weaker than the prior year, with risks for an even sharper slowdown. (Newswires)

UK/EU

UK PM May approached Labour MPs to table an amendment for the withdrawal motion and will guarantee the UK matches EU regarding workers’ rights post-Brexit following a deal with the Labour Party. (The Sun)

Italian Deputy PM Salvini reportedly wants to summon the French Interior Minister to discuss Italian terrorists in France; according to ANSA. (Newswires)

GEOPOLITICAL

US plans to withdraw all troops from Syria by the end of April. (WSJ)

US and South Korea will announce military exercise plan following the Trump-Kim summit according to sources, while there were also reports that US asked North Korea to dismantle all missiles. (Yonhap)

EQUITIES

Major European equities have been flat throughout much of the session [Euro Stoxx 50 Unch], with some mild outperformance seen in the FTSE MIB (+0.1%) where Bper Banca (+0.8%) and UniCredit (+1.9%) are in the green following earnings and the Co’s CEO stating they do not see any upcoming cross border banking mergers respectively. Sectors are mostly in the green, with IT names leading. Other notable movers include Wirecard (+2.7%) who are towards the top of the Stoxx 600 having retraced some of the prior sessions’ losses following the FT reporting an analysis of the Co’s accounting scandal; recently the Co. have stated they are taking legal action against the FT over the reporting as they believe that no misconduct has taken place. Skanska AB (-6.9%) are at the bottom of the Stoxx 600 following their earnings and the Co. stating they are planning a dividend cut. Elsewhere, L’Oreal (+0.4%) are slightly firmer following their earnings, and Travis Perkins (+1.5%) are higher after being upgraded at RBC.

US are reportedly considering 3 potential car tariff options, one of which includes a 10% levy; according to German press. (Newswires)

- The first option is a levy of 10%

- The second option is customs duties, which would be limited to technologically advanced cars such as e-cars and their components."

- The third option is a 25% tariff which remains on the table

FX

AUD/GBP/EUR - It’s tight at the foot of the G10 table, with the Aussie and Pound looking particularly weak, but the single currency also on the precipice after more signs of Italy’s economic woes via a sharp decline in IP. Aud/Usd is only just off fresh lows of 0.7060 having filled bids and tested chart support around 0.7075 in wake of RBA’s SOMP that effectively confirmed the shift in policy stance to neutral from tightening signalled by Governor Lowe earlier in the week. However, hefty option interest between 0.7090-0.7105 may provide some respite with 1.1 bn expiries rolling off at the NY cut. Meanwhile, Cable has lost more recovery momentum from just shy of the 1.3000 mark after BoE super Thursday, as UK PM May returned from Brussels empty handed with the Irish border backstop issue unresolved. A 1.2926 Fib level is now being probed, ahead of 1.2900 and then the 100 DMA at 1.2893. Back to Eur/Usd, the headline pair is currently cresting yesterday’s 1.1325 low, and if breached 1.1300 looms before stronger downside chart support at 1.1289.

CHF/NZD/JPY/CAD - All relative outperformers, or at least holding up better vs a generally firm Usd as the DXY nudges back up to 96.700. The Franc is resisting 1.0030 and the Kiwi is still pivoting 0.6750, albeit partly due to favourable cross flows as Aud/Nzd retreats below 1.0500 again. Usd/Jpy is consolidating between 109.50-110.00 and the Loonie has pared some losses after declining through 1.3300 to 1.3330 at one stage, perhaps in preparation for Canadian unemployment data due later.

NOK/SEK - Although broad risk sentiment has improved somewhat ahead of the weekend, the Scandi crowns remain on the back foot, with Eur/Nok above 9.7500 after mixed Norwegian Q4 GDP data, and Eur/Sek over 10.5000 following stops and outright weak Swedish household consumption.

FIXED INCOME

Core bonds appear to have survived another bout of selling pressure and emerged relatively unscathed, with Bunds back around parity vs 10 ticks adrift at a fresh 166.26 Eurex low for the day (so far), and Gilts recovering from a dip to 124.04 (-1 tick) to nudge a new Liffe session peak of 124.16, although still short of Thursday’s 124.26 post-midday high. The 10 year EU benchmarks remain underpinned despite a bounce in equities from earlier lows, and the German debt future is also resilient in the face of firm BTPs after more poor Italian data and a bleak outlook from ISTAT based on deterioration in the nation’s leading indicator. Elsewhere, US Treasuries are essentially flat-lining in relatively subdued overnight trade and looking rather fatigued at the end of a hectic and mainly bullish week.

COMMODITIES 

Brent (+0.3%) and WTI (-0.2%) prices have seen some modest strengthening throughout the European session, after prices were largely subdued overnight. Recent news flow from Energy Intel has seen sources state that OPEC and partners are heading towards a rollover of the current deal in April; which follows yesterdays comments from Russian Energy Minister Novak stating that the charter on indefinite cooperation with OPEC could be discussed in April. Elsewhere, TransCanada have declared a force majeure on keystone oil flows; and the two Canadian pipelines which were shut due to a potential leak are yet to reopen. Looking ahead we have the Baker Hughes Rig Count, which previously saw total rigs fall by 14 to 1055.

Regarding gold (U/C) the yellow metal is unchanged, continuing from the uneventful price action seen overnight. Elsewhere, Vale has informed of a pre-emptive evacuation of around 500 people in the Gongo Soco iron mine area. Separately, copper prices have fallen for the second day on demand concerns following poor data from several global economies, including German industrial output; although, copper is in the green for the week.

Kazakhstan Kashagan field is to produce 13.5mln tonnes of oil in 2019, +2.1% Y/Y. The country's Karachagnak oil field is to produce 11.0mln tonnes of oil this year, 1.2mln tonnes less than 2018. (Newswires)

Libya’s NOC say they are unable to restart the 300k BPD Sharara oil field without security being restored. (Newswires)