Capital Markets: "Hemorrhaging Resumes"

From Marc to Market:

Overview: There is no reprieve for investors. Equities are falling sharply. Nearly all the Asia Pacific markets slumped but Australia. Chinese markets fared better than most, but the Nikkei was off 4.5%, and India was down almost as much in late dealings.

Europe's Dow Jones Stoxx 600 is off more than 3% near midday, led by a sell-off in banks that are suspending dividends and share buybacks. It is giving back the last two days of gains. US share is sharply lower. Yesterday, the S&P 500 gave back half of Monday's gains, and today it is set to give up the other half and more.

Bond markets are quieter, but still, the US and UK 10-year benchmarks are around five basis points lower, while peripheral European bond yields are firmer, with Italy's up five basis points. Core yields are a couple basis points lower. The dollar is extending yesterday's gains, accept against the yen. Emerging market currencies are nearly all on the downside, led by 1.5%-2.0% losses of the Mexican peso and Hungarian forint.
Gold is higher but struggling to reclaim the $1600 handle after giving it up yesterday. Oil is giving back yesterday's gains with the May WTI contract hovering near $20 a barrel.

Asia Pacific
The news from Asia was mixed. China's Caixin manufacturing PMI, like the official measure, moved back above the 50 boom/bust level. Taiwan may have been the only other one in the region to report above 50 for the manufacturing PMI (50.4). Other news from the area was poor. South Korea's manufacturing PMI fell to 44.2 from 48.7, and March exports slipped by 0.2% (economists had forecast an increase).

Japan's Tankan survey showed deterioration of sentiment that was a little less than forecast. Of note, capex plans were slashed to 1.8% from 6.8%. The March manufacturing PMI was in line with the flash report at 44.8 down from 47.8 in February. Note that Japan's manufacturing PMI has not been above 50 since last April. Separately, the BOJ reduced the amount of the 3-5 year bonds it bought today, which had been anticipated as they increased the frequency of their purchases. The Abe government is putting together a fiscal package that is expected to be around 10% of GDP in the next week or so....

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