EUR initially higher on Macron and Le Pen heading into final French election round

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Asia Market Update: Shanghai continues to record high covid cases, China CPI comes in hotter than expected; EUR initially higher on Macron and Le Pen heading into final French election round.

General trend

- Equity markets across the region weaker, Shanghai and HK taking the brunt of it with continued rising cases in Shanghai. Brent crude fell below $100/bbl, as continued lockdowns will reduce energy demand. Kuwait set Asia May prices at a record high.

- USD stronger across the region, on rising treasury yields. US 10-year yields rose above 2.75% for the first time since 2019, while the China 10-year fell below the US for the first time since 2010, as expectations continue that Fed will raise rates and China PBOC will cut rates sometime this week.

- Australia 10-year above 3% for the first time since 2015.

- EUR higher on Macron and Le Pen making it to the 2nd and final round, with projections that Macron will win.

- China CPI , while higher than expected for March, still remains sluggish and shouldn't limit PBOC moves to encourage growth.

- Australia calls for elections on May 21st.

- Musk reverses position, will no longer join board of Twitter, saying he thinks its for the best.

- Lithium mining names in the region weaker on Friday comments from Tesla's Musk that the co may need to get into lithium mining itself due to lithium prices.

- Larger China banks to allow Shanghai residents to pause mortgage payments amid continued lockdown.

- BOJ Gov Kuroda sees inflation rising.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened flat.

- WSA.AU To be acquired by IGO at improved A$3.87/shr in cash (prior A$3.36/shr).

- VRT.AU CapVest raises offer to A$8.15/shr; Board unanimously recommends offer.

- (NZ) Said that the NZIER RBNZ Shadow board is divided on need for 50bps OCR hike during Apr meeting - Press.
CNR Bluescope Steel (BSL.AU) acquires US Coil Coatings business for $500M cash from Cornerstone Building Brands, to close during 2022.

- (NZ) New Zealand Mar Total Card Spending M/M: +1.6% v -7.6% prior; Retail Card Spending M/M: -1.3% v -7.8% prior (2nd consecutive decline).

- (AU) Australia 10-year bond yield trades above 3.00% for the first time since 2015.

- (AU) Reserve Bank of Australia (RBA) warns that home prices could fall ~15% over the next 2 years due to the cash rate increasing from 0.1% to 2.0% - press.

- (AU) Australia National elections to take place on May 21st, 6 week campaign period starting, PM Morrison running for another term; expected to focus on cost of living/inflation - press.


- Nikkei 225 opened -0.4%.

- (JP) Bank of Japan (BOJ) Gov Kuroda: Economy picking up as a trend, CPI moving near 0.5%; To maintain ultra loose policy to stably achieve 2.0% CPI.

- (JP) Financial press comments on the rare re-appointment of Uchida to BOJ, noting it bodes well for unwinding of YCC when that happens and expects him to help rollback of Kuroda era stimulus due to bi-partisan nature.

- (JP) Bank of Japan (BOJ) Executive Dir Uchida: Desirable for FX rates to reflect fundamentals and move in a stable manner; Closely watching impact of FX rates on prices and economy.

- (JP) Japan PM Kishida announced a restart to nuclear plants in an effort to maximize use to nuclear power for a stable energy supply - Press.

- (JP) Bank of Japan (BOJ) quarterly Regional Economic Report (Sakura): Downgrades assessment for 8 or 9 regions; Maintains 1 assessment.


- Kospi opened -0.5%.

- (KR) South Korea Fin Min nominee Choo Kyung-ho: Extra budget proposal could be presented in early May; Budget would be submitted after President Elect Yoon is inaugurated.

- (KR) South Korea covid cases for Apr 10th fall below 200K for the second day.

- (KR) South Korea Apr 1-10 Exports Y/Y: +3.0% v +14.9% prior; Imports Y/Y: +12.8% v +15.3% prior.

- (KR) South Korea fin min nominee Choo Kyung-ho: The incoming govt plans to draw up an extra budget to support pandemic hit merchants but it will be pursued in a way that does not stoke inflation or hamper financial stability - Yonhap.

- (KR) Bank of Korea (BOK) Gov Nominee Rhee: Important to introduce controls on household debt through signals on interest rates; implying BOK could raise rates again, to address the growing debt issue - Yonhap.

- (KR) South Korea 3-year treasury yield trades above 3.00% for the first time since July 2013.

China/Hong Kong

- Hang Seng opened -0.4%; Shanghai Composite opened -0.8%.

- (CN) CHINA MAR CPI M/M: 0.0% V -0.1%E; Y/Y: 1.5% V 1.3%E.

- (CN) China PBOC sets Yuan reference rate: 6.3645 v 6.3563 prior.

- (CN) Speculation continues that China PBOC may cut lending rates as soon as this week.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net CNY0B v Net CNY0B prior.

- (CN) Shanghai, China reports record 26,087 coronavirus cases (fresh record high despite extended lockdown).

- (CN) China Daily: Q1 infrastructure investment could be between +8.0-10.0% y/y.

- 883.HK To raise CNY28.1B via A Share listing, offering 2.60-2.99B shares at CNY10.80/shr.

- (CN) China Mar Vehicle Sales Y/Y: -11.0% v +18.7 prior - CAAM.

- (CN) China's Industrial & Commercial Bank of China Ltd. and Bank of Communications to give residents in Shanghai mortgage payment holiday amid covid crisis.

North America

- (US) Fed's Mester (FOMC voter, hawk): Optimistic the Fed can remove emergency levels accommodation and reduce excess demand without triggering a recession.

- (US) US news notes they are hearing from consumers that they are cutting back on discretionary spending, including entertainment and travel.

- (US) President Biden to announce new action on gun crime at 14:15ET Apr 11th.


- (FR) French presidential election: According to French official exit polls, Macron seen from 28.1% to 29.7%, Le Pen seen from 23.3% to 24.7%, Melenchon seen from 20.1% to 20.5%; All major candidates, except far-right Zemmour [6.8-7.2% vote share according to exit polls] now called for vote against Le Pen during 2nd round.

- (FR) In final 2nd round France Presidential election: Macron expected to lead Le Pen 54-46% according to Opinionway; 54-46% according to Ipsos.

- (UR) According to US military officials, Russian army will likely wage a major offensive between Izium and Dnipro - NYT.

- (UK) According to recent survey by GQ|Littler the number of planned layoffs in UK doubled from Jan to Feb - press.

- (IE) Ireland Mar Construction PMI: 53.9 v 58.4 prior.

- (UR) Chechnya Leader Kadyrov: There will be offensives in Ukraine not only near Mariupol, but in other Ukraine cities including Kyiv (Capital).

Levels as of 01:15ET

- Hang Seng -2.7%; Shanghai Composite -1.9%; Kospi -0.4%; Nikkei225 -0.7%; ASX 200 +0.1%.

- Equity Futures: S&P500 -0.7%; Nasdaq100 -0.8%, Dax -0.6%; FTSE100 -0.3%.

- EUR 1.0920-1.0875; JPY 125.00-124.07; AUD 0.7466-0.7418; NZD 0.6856-0.6813.

- Commodity Futures: Gold -0.2% at $1,942/oz; Crude Oil -2.3% at $96.02/brl; Copper -0.8% at $4.69/lb.

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