From Marc to Market:
Overview: It is not clear the trigger, but risk-taking appetites rebounded smartly today after the NASDAQ completed a more than 10% pullback from its highs yesterday. Ironically, the Dow Jones Industrials set new record highs yesterday too. Most equity markets in the Asia Pacific region rallied. The notable exceptions were South Korea and China. Buying state funds in China during the ongoing National People's Congress failed to turn sentiment. The Shanghai Composite fell by 1.8%, and the Shenzhen Composite dropped 2.8%. European stocks are building on yesterday's 2.1% rise, and the German DAX is at a new record high. US shares are trading higher, and the S&P futures are up around 1% and the NASDAQ up closer to 2%. Bonds are also being bought. The US 10-year yield is off more than six basis points at 1.53%, ahead of today's $58 bln sale of three-year notes. European yields are mostly 4-6 bp lower. The ECB's data shows that officials did not appear to step up their purchases despite the rise in yields, and the balance sheet implication continued to be blunted by maturing issues. The dollar is on its back foot and paring recent gains. The Scandis and Antipodeans gain 0.5%-0.8%, while the yen is the chief laggard among the majors, up less than 0.2%. Emerging market currencies are also firmer. The JP Morgan Emerging Market Currency Index that plunged through the 200-day moving average for the first time since early November yesterday is snapping a four-day slide today. Gold is recovering from nine-month lows and resurface above $1700. Crude oil is stabilizing after yesterday's reversal. April WTI initially extended its losses, falling to around $64.35 before rebounding back toward $65.70.
Asia Pacific
Japan's Q4 20 GDP was revised down to 11.7% from 12.7% at an annualized pace and 2.8% from 3.0% quarter-over-quarter. It appears business investment was a little softer, and inventory liquidation may have been a bit greater. Consumption rose 2.2% in Q4 but is off to a poor start of 2021, hampered by the state of emergency. Household spending slumped 6.1% year-over-year, nearly three-times worse than economists expected. On a brighter note, the preliminary machine tool orders jumped 36.7% in February after a 9.7% gain in January.
Over the past few days, there has been more talk and reports about the possibility that Chinese demand for commodities has slackened. It could be sparked by the National People's Congress, which set lower targets for the budget deficit and local bond sales. It could be ideas that had circulated before the NPC, that inventory levels had been brought to desired levels. Since the NPC began, iron ore prices are off almost 5%, and steel rebar has been around 2%....
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