ASIA-PAC

Asian equity markets traded mixed following an indecisive lead from Wall St. with participants tentative ahead of the latest Chinese trade data and big bank earnings in US. ASX 200 (+0.8%) benefitted from early outperformance in its largest weighted financials sector as top lender CBA gained on the reports it plans to reduce 10k workers, while Nikkei 225 (+0.7%)exporters found solace from favourable currency flows. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp (U/C) lagged amid weakness in tech and gambling names, as well as cautiousness heading into the latest Chinese trade data. Finally, 10yr JGBs were lower as stocks in Japan remained afloat although downside for bonds was stemmed amid the BoJ’s presence in the market for nearly JPY 1tln of JGBs and with SoftBank pricing a record JPY 500bln offering.

PBoC skipped open market operations and are net neutral for a 2nd consecutive week. (Newswires) PBoC set CNY mid-point at 6.7220 (Prev. 6.7088)

Monetary Authority of Singapore kept policy unchanged as expected, while it lowered 2019 all-items inflation forecasts to 0.5%-1.5% from 1.0%-2.0% and sees GDP growth to be slightly below mid-point of 1.5%-3.5% projected range. (Newswires)

Chinese Trade Balance USD 32.64B vs. Exp. 7.05B (Prev. 4.08B)

- Chinese Exports YY* Mar 14.2% vs. Exp. 7.3% (Prev. -20.8%)

- Chinese Imports YY* Mar -7.6% vs. Exp. -1.3% (Prev. -5.2%)

- Chinese Yuan-Denominated Trade Balance (Mar) 220B (Prev. 34.46B)

- Chinese Yuan-Denominated Exports (Mar) +21.3% (Prev. -16.6%)

- Chinese Yuan-Denominated Imports (Mar) -1.8% (Prev. -0.3%)

China customs spokesman says impact on China trade from US-Sino tensions is generally controllable and expects China imports and exports to show mild growth in Q2, Q1 Yuan-denominated exports to US -3.7%, imports -28.3%, March exports to US +10.6%, imports -21% Y/Y. (Newswires)

Singapore GDP (Q1) Q/Q 2.0% vs. Exp. 1.2% (Prev. 1.4%). (Newswires) Singapore GDP (Q1) Y/Y 1.3% vs. Exp. 1.5% (Prev. 1.9%)

US

Fed Chair Powell (neutral) reiterated that rates are in the right place and that China's soft patch impacted US growth outlook, according to sources. (Newswires)

UK/EU

Italian Economy Minister Tria says cutting income tax is necessary and the Italian government will decide in Autumn how to go about it, adds that he believes Italy can overcome EU objection over excessive debt and rules out a ‘traditional’ budget correction, but adds that there could be adjustments. (Newswires)

German Economy Ministry notes that the state of the economy is currently mixed with weakness in the industrial sector, however, there is strength in the domestic impetus, weakness in the manufacturing sector will be significantly weaker in H1 2019 compared to H1 2018, however, softness in the sector in Q1 will be more than compensated by other parts of the economy. (Newswires)

German government will likely reduce their 2019 GDP forecast to 0.5% from 1.0% next week with 2020 growth expected at 1.5%, according to sources. (Newswires) For reference, this is similar to German press reports yesterday.

EQUITIES

European equities are marginally higher thus far [Eurostoxx 50 +0.2%] after having erased losses seen at the open. Broad-based gains are being seen across major bourses given the recent upturn of risk appetite wherein DAX breached 12k to the upside. Similarly, E-mini Jun’19 futures reclaimed the 2900 level ahead of the all time high just under 2940, last seen in October 2018. Back to Europe, sectors are mixed with outperformance in material names given the spike higher in sentiment-driven base metals. In terms of notable movers, Plus500 (-25%) fell over 40% at one point after reporting an 82% drop in revenue Y/Y, with IG Group (-3.0%) dragged lower in sympathy. Finally, markets are awaiting earnings from JP Morgan (11:55BST) and Wells Fargo (13:00BST) to kick off US earnings season.

Chevron Corp (CVX) announce agreement to acquire Anadarko (APC) for USD 33bln at USD 65/share; will assume estimated net debt of USD 15bln. Anadarko are higher by around 20% in pre-market.

FX

EUR/JPY - Eur/Usd and Usd/Jpy are both testing big figure levels, at 1.1300 and 112.00 respectively where decent option expiries lie (1.2 bn and 1.1 bn), but the move appears to be M&A driven and via the Eur/Jpy cross that spiked through 126.00 at the Tokyo fix overnight. Specifically, a 3 bn buy order is said to have been filled between 125.70 and 126.29, with the proceeds touted to be related to MUFJ’s purchase of a DZ Bank unit. Note, Eur/Jpy has now extended gains to circa 126.60 and the single currency is seeing spill-over buying across the board to around 1.1310 vs the Dollar and 0.8656 against Sterling where stops were expected on a break of 0.8650. Technically, 1.1316 in Eur/Usd may cap the upside as it forms 55 DMA and Fib resistance, while for Usd/Jpy several chart levels reside not far above 112.00, including the 200 WMA (112.04), a Fib (112.06) and the 112.13-16 ytd peak.

AUD/CAD/NZD - All benefiting from a more risk-on tone unfolding during the EU session and rebounding from lows vs their US counterpart, with the Aussie retesting 0.7150+ and Loonie paring losses from 1.3390 through 1.3350, but the Kiwi hampered to a degree by some weak NZ data overnight as it falls short of 0.6750. Note, Aud/Usd is now back within the realms of 1 bn expiries between 0.7150-55, as the DXY slips back under 97.000 again, albeit mainly due to the aforementioned Eur’s ascent and its biggest weighting in the index.

CHF/GBP - Also firmer vs the Greenback, as the Franc pares more losses from multi-week lows and inches closer to parity and Cable retains the bulk of its Brexit extension optimism within a 1.3050-80 range, but remains toppy on approaches to 1.3100 or just above given resistance around earlier April highs.

EM - Usd/Try has advanced further amidst the political turmoil and uncertainty over recent regional elections as the official Board has deferred a decision on a recount in one area of Istanbul that the ruling AK Party is contesting. The Lira lurched down below 5.8100 at one stage and closer to lows seen last month around 5.8490.

FIXED INCOME

Bonds have sharply decelerated after a relatively calm and measured initial downturn from fresh session highs, with Bunds, Gilts and US Treasuries just off 165.01, 127.28 and 123-08+ troughs vs 165.79, 127.95 and 123-21+ at best. The catalyst seems clear given an almost as abrupt rise in equities, but the rationale or driver is far from certain unless a major asset reallocation is unearthed at some stage, or some bullish stock-specific news.

COMMODITIES

WTI and Brent recently received a bout of demand as risk-on sentiment took the wheel, wherein the former reclaimed USD 64/bbl whilst the latter gained more ground above USD 71/bbl. Oil is poised for its third consecutive week of gains, as the benchmarks price in potential supply disruptions emanating from Libyan tensions. NOC Head Sanala warned that a renewal of fighting could wipe out the nation’s crude production which stood at 1.1mln BPD in March, according to secondary sources. Elsewhere, Europe’s largest oil refinery, Shell’s 404K BPD Pernis remains restricted at 65% of its normal output amid strikes conducted by a Dutch trade union which is expected to last until at least Monday. Finally, China’s trade report noted that the country’s crude oil imports in the first quarter rose 8.2% Y/Y, although March imports fell to the lowest since 2018. In the metals complex, gold remains below the USD 1300/oz level after having lost the mark as the Greenback recouped some recent losses. Elsewhere, copper prices received a boost from the risk appetite around the market. The red metal breached its 100 DMA to the upside at 2.8974/lb before briefly trading above the 2.950/lb level.

Libya NOC chief said oil and gas exports face biggest threat since 2011 given the recent fighting, subsequently stating that a renewal of fighting could wipe out the nations crude production. (Newswires)

Norway's Petroleum directorate states that preliminary March oil production was 1.396mln BPD. March production lagged its forecasts by 1.5% due to technical issues at some oil fields. (Newswires)