RBA holds but calls out tariff concerns – Focus on EU Mar CPI

Asia market update: Wed 3pm ET “D-Day” for Trump Admin Reciprocal Tariffs, with cautious gains in Asia pre-announcement; RBA holds but calls out tariff concerns; Focus on EU Mar CPI; US Mar ISM Mnfg PMI; US Feb JOLTS.

General trend

- US Treasury Sec Bessent announced that US Pres Trump to announce US reciprocal tariffs at 3pm ET on Wed (19:00 GMT), with overwhelming financial, economic and corporate focus on the outcome.

- Asia markets tentatively followed US markets up ahead of the announcement, after yesterday’s 4% drop in the Nikkei and widespread losses following on from last week’s drop.

- US Commerce Sec Lutnick said he wants other chipmakers to join TSMC to pledge US expansion, while existing chip grants said to be "in limbo".

- Australia RBA left rates on hold, as expected, however the statement appeared to be less cautious about further easing with two mentions of tariff concerns vs No mention of the word “tariff” in prior statement. [Also removed from the prior statement… “If monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range”]. Australia Feb CPI data was also a tick softer than expected. AU 3-yr yield ranged down -3bps during session to +1bp pre-RBA. RBA Gov Bullock affirmed the Board did Not explicitly talk about a rate cut.

- Asia PMI day: Australia confirmed its 3rd month expansion but many countries saw contraction including Japan (for the 9th month), South Korea, Taiwan and Thailand. Only Vietnam joined Australia in expansionary territory.

- China March Caixin PMI Manufacturing improved to a 4-month high and saw its 6th month of expansion.

- Korean Constitutional Court brought its ruling on Pres Yoon impeachment forward by 10 days to Apr 4th, with Korean equities outperforming Asia +2.2% upon the news. Also, no short-selling at Korean bourses allowed today for 14 companies incl SK Hynix..

- Rumblings of economic concern continue out of Japan, with ruling [LDP] Party lawmaker Onodera warning that US auto tariffs will cause major economic crisis in Japan; expects the tariffs to impact 'all' regions in Japan (follows last week’s warning from PM Ishiba of a ‘very big’ impact from US auto tariffs, and need to consider cash flow measures).

- Japan Tankan saw sentiment among large Japanese manufacturers worsen for the first time in a year, citing tariff concerns. However, Small Manufacturers Sentiment hit its highest level since Mar 2019.

- Last night the Bank of Japan JGB bond buying schedule for April saw overall cuts in purchases from ¥4.50T to ¥4.105T, and the first time since Jan 2024 that the BOJ slowed buying of 10-25-year super-long bonds).

- Tesla registrations in France for March fell -36% y/y.

- Spot Gold trades to fresh record high of $3,141/oz, with FUTs at $3,171, a $30 spread.

- US equity FUTs -0.2% to -0.3% during Asian trading.

Looking ahead (Asian-weighted, on Asian time zone)

- Tue Apr 1st (Tue eve EU Mar CPI, Tue night US Mar ISM Mnfg PMI, US Feb JOLTS).

- Wed Apr 2nd KR Mar CPI, CN Mar Caixin Services PMI.

- Thu Apr 3rd AU Feb Trade Balance, (Thu night US Mar ISM Mnfg PMI).

- Fri Apr 4th JP Feb Household Spending, (Fri night US Mar NFP, Fed Chair Powell).

Holidays in Asia this week

- Mon Mar 31st India, Indonesia, Malaysia, Philippines, Singapore.

- Tue Apr 1st Indonesia, Malaysia.

- Wed Apr 2nd Indonesia.

- Thu Apr 3rd Indonesia, Taiwan.

- Fri Apr 4th China, Hong Kong, Indonesia, Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 7,860.

- Reserve Bank of Australia (RBA) leaves cash rate target unchanged at 4.10%; as expected.

- RBA Gov Bullock: RBA and economy is well positioned for any shocks that may come; Board did Not explicitly talk about a rate cut - post-rate decision press conference.

- Australia Feb Retail Sales M/M: 0.2% V 0.3%E.

- Australia Mar Final PMI Manufacturing: 52.1 v 52.6 prelim (confirms 3rd month of expansion).

- Australia Mar CoreLogic Home Value M/M: 0.4% v 0.3% prior [overnight update].

- Follow up: RBNZ to continue (for now) with Hawkesby as acting Gov; Outlines process for temp Governor for 6-months, with plans underway to name a new Gov for 5 years.

China/Hong Kong

- Hang Seng opens +0.4% at 23,217; Shanghai Composite opens +0.2% at 3,340.

- China Mar CAIXIN PMI Manufacturing: 51.2 V 50.6E.

- (HK) Macau Mar (MOP) Casino Rev Y/Y: 19.7B, +0.8% v +0.0e.

- China Ministry of Commerce (MOFCOM): Held hearing Mar 31st on beef imports; Export Representatives of several govts including the US, Australia, NZ, Brazil, Argentina, Uruguay attended a meeting that included Chinese domestic importers - financial press.

- China NDRC held meeting with companies, including CATL, on Mar 31st - financial press.

- China Foreign Min Wang Yi: The idea Pres Trump supports Russia in order to drive wedge between Russia, China is relapse of 'obsolete confrontational thinking'- financial press.

- (HK) US Trump Administration issues Hong Kong related sanctions; Also sanctions some Mexican entities - US Treasury site.

- China Feb top 100 developers see sales -11.4% v -3.2% y/y prior - China Real Estate Information Corp (CRIC).

- China PBOC confirms did not conduct bond trading in Mar; Conducts CNY800B of outright reverse repos [overnight update].

- CAICT: Feb shipments of phones within China at 19.7M, +37.9% y/y [overnight update].

- China Securities Regulator (CSRC): To better coordinate among agencies for overseas listing [overnight update].

- Hong Kong Feb Retail Sales Value Y/Y: -13.0% v -6.9%e; Retail Sales Volume Y/Y: -15.0% v -9.6%e [overnight update].

- China PBOC sets Yuan reference rate: 7.1775 v 7.1782 prior.

- China PBOC Open Market Operation (OMO): Injects CNY65B in 7-day reverse repos; Net drains CNY313B v injects CNY32B prior.

Japan

- Nikkei 225 opens +0.7% at 35,848.

- Japan Q1 Tankan large Manufacturing index: 12 V 12E; large Manufacturing outlook: 12 V 9E.

- Japan Feb jobless rate: 2.4% V 2.5%E.

- Japan Mar Final PMI Manufacturing: 48.4 v 48.3 prelim (confirms 9th month of contraction).

- Japan Fin Min Kato: Govt is monitoring how rising costs of living are impacting households - financial press.

- Japan Ruling [LDP] Party lawmaker Onodera: Auto tariffs will cause major economic crisis in Japan; expects the tariffs to impact 'all' regions in Japan.

- Japan PM Ishiba: Vouchers distribution 'far removed' from public sentiment; deeply regrets handing out vouchers to lawmakers.

- Japan and South Korea seeking to import semiconductor raw materials from China, while China also interested in purchasing chip products from Japan and South Korea.

- China state media.

- BOJ JGB bond buying schedule for Apr; Japan Finance Ministry (MOF) cuts monthly bond buying from ¥4.50T to ¥4.105T (**Note: 1st time since Jan 2024 that the BOJ slowed buying of super-long bonds) [overnight update].

Korea

- Kospi opens +1.2% at 2,511.

- South Korea Mar Trade Balance: $5.0B v $6.0Be.

- South Korea Mar PMI Manufacturing: 49.1 v 49.9 prior (third month of contraction).

- South Korea Acting President Han vetoes the revision of the Commercial Act – Yonhap.

- South Korea Constitutional Court brings forward ruling on impeached Pres Yoon's criminal trial to Apr 4th - Yonhap.

Other Asia

- (TW) Defacto US Embassy in Taiwan: No justification for China's irresponsible threats and military pressure operations near Taiwan - financial press.

- Senior Taiwan Officials: >10 China military ships approached 'close' to Taiwan's 24 nautical mile contiguous zone on Tues morning; Taiwan dispatched its own warships to respond.

- Follow up: Vietnam reportedly cuts tariffs on LNG, cars and agricultural goods - financial press.

- Taiwan Mar PMI Manufacturing: 49.8 v 51.5 prior (moves back into contraction after 11 months expansion).

- Vietnam Mar PMI Manufacturing: 50.5 v 49.2 prior (moves back into expansion after three months contraction).

- Thailand Mar PMI Manufacturing: 49.9 v 50.6 prior (moves back into contraction after one month expansion).

- China to conduct military drill in the 'area around Taiwan' starting on Apr 1st - Xinhua.

- Philippines Central Bank (BSP): Sees Mar CPI between 1.7-2.5% [overnight update].

North America

- (US) Commerce Sec Lutnick: Wants other chipmakers to join TSMC to pledge US expansion - financial press; Existing chip grants said to be "in limbo" as Lutnick pushes for increased US investments.

- (US) Treasury Sec Bessent: US Pres Trump to announce Reciprocal tariffs at 3pm ET on Wed (19:00 GMT).

- Tesla France Mar registrations 3.16K units, -36.8% y/y.

- (RU) US Pres Trump: Wants to see Russia's Putin make a deal (plus comments on several other topics) - financial press.

- (US) White House said to consider executive order fast tracking permitting for deep-sea mining in international waters.

- (US) Reportedly US automakers asked for tariff exclusions for low-value car parts - press.

- US Pres Trump signs EO establishing Office within Dept of Commerce to facilitate and accelerate foreign investments of $1B+ in the US.

- (US) MAR Chicago purchase managers index (PMI): 47.6 V 45.0E (16th straight month in contraction).

- (US) Nevada reports Feb casino gaming Rev $1.22B, -9.3% y/y, Las Vegas strip Rev $690.3M, -13.8% y/y.

- (US) Mar Dallas Fed Manufacturing activity: -16.3 V -5.0E.

- (CO) Colombia Feb National Unemployment Rate: 10.3% v 11.6% prior.

- (US) USDA releases quarterly grain stocks and prospective plantings survey: Soybean plantings 83.5M acres v 87.1M y/y; Corn plantings 95.3M acres v 90.6M y/y; All Wheat plantings 45.4M v 46.1M y/y.

- (US) US Press Sec Leavitt: US Pres Trump will get into the specifics on tariffs during Wednesday announcement; Tariffs will ensure reciprocity; The rest of the world will feel what the US public has felt.

- (US) White House spokesperson regarding potential tariff exemptions for US farmers: No exemptions at this time.

- (CO) Colombia Central Bank leaves Overnight Lending Rate unchanged at 9.50%; as expected.

- (US) Fed's Williams (voter): It's early days of figuring out impact of tariffs; There's still a lot of uncertainty around tariffs and details matter - press interview.

- (US) Fed’s Barkin (non-voter for 2025): Base case is its going to take a while before we get clarity - CNBC.

Europe

- Denmark and US said to hold first high-level talks since US Pres Trump took office - FT.

- (IE) Ireland Mar PMI Manufacturing: 51.6 v 51.9 prior.

- (UK) Mar BRC Shop Price Index Y/Y: -0.4% v -0.4%e.

- (PT) Portugal Mar Preliminary CPI M/M: +1.4% v -0.1% prior; Y/Y: 1.9% v 2.4% prior.

- (HU) Hungary Econ Min Nagy: Considering freezing banking services prices.

- (RU) Russia govt spokesperson: Putin remains open to contact with Trump; No new call between Putin-Trump planned yet, can be arranged as needed.

- (UK) PM Spokesman Pares: Expect to be impacted by Trump tariffs this week; Will act in our national interest.

- (DE) Germany Mar preliminary CPI M/M: 0.3% V 0.3%E; Y/Y: 2.2% V 2.2%E.

- (RU) G5+ Foreign Ministers: We're willing to exert more pressure on Russia, including new sanctions.

- (EU) Reportedly more ECB Officials signal readiness to accept the April rate pause - press.

- (IT) Italy said to consider raising ownership threshold that triggers mandatory takeover bids for listed companies; Govt likely to raise 25% threshold for large firms - press.

Levels as of 00:20 ET

- Nikkei 225 +0.4%, ASX 200 +1.0%, Hang Seng +0.5%; Shanghai Composite +0.4%; Kospi +2.1%.

- Equity S&P500 Futures -0.2%; Nasdaq100 -0.3%; DAX +0.1%; FTSE100 +0.1%.

- EUR 1.0814-1.0831; JPY 149.53-150.14; AUD 0.6232-0.6270; NZD 0.5663-0.5789.

- Gold +0.7% at $3,171/oz; Crude Oil +0.7% at $71.67/brl; Copper +0.7% at $5.0920/lb.