• Sentiment has generally been upbeat, but US futures are deteriorating as US players enter the market
• Chinese Manufacturing and Non-Manufacturing PMI topped estimates and the Composite PMI also printed in expansion territory
• Some downplayed the data given that it was a recovery from the prior month’s record low base and with China’s stats bureau warning the rebound does not mean the economy has returned to normal
• WHO official said coronavirus epidemic is far from over in Asia and the focus of the epidemic is now in Europe but will likely shift to other regions
• FX sees the USD firmer, to the detriment of G10 peers, but DXY still capped by the 100.00 mark
• Looking ahead, highlights include Canadian GDP, US Chicago PMI, US Consumer Confidence, APIs

CORONAVIRUS UPDATE

WHO official said coronavirus epidemic is far from over in Asia and the focus of the epidemic is now in Europe but will likely shift to other regions. The official also stated that measures to reduce transmission will not remove risks as long as the pandemic continues and that steps to reduce transmission can buy time to prepare for large-scale community transmission, while the official added that there are more than 50 candidate vaccines for coronavirus and several trials are ongoing. (Newswires)

US President Trump said we can save more than 1mln lives by following social distancing guidelines vigorously. President Trump also stated that there are challenging times ahead for the next 30 days and that 1mln Americans have now been tested, while he suggested that a national stay at home order was pretty unlikely. (Newswires)

US has recorded 575 new coronavirus deaths on Monday, the most in a single day of the outbreak. 3,004 total deaths so far, according to CNN's Sciutto citing CNN Health - NOT OFFICIAL DATA. (Twitter)

Mainland China reported 48 additional cases and 1 additional death on March 30th vs. 31 additional cases and 4 deaths on March 29th, to bring the total number of confirmed cases in mainland China to 81518 and death toll at 3305. (Newswires)

Spain's coronavirus cases stand at 94,417 (Prev. 85,195), according to the Health Ministry; deaths at 8189 (Prev. 7340). (Newswires)

World Bank sees 2020 Developing East Asia and Pacific Region growth to slow to 2.1% in baseline scenario due to coronavirus and deteriorate to -0.5% in lower case scenario, while it sees China growth to slow to 2.3% in baseline scenario and to 0.1% in lower case scenario. (Newswires)

Head of Germany's Robert Koch Institute says that they are optimistic about the flattening of the infection curve and the optimism is still justified and will be clearer after Easter. (Newswires)

ASIA

Asia equity markets were mostly higher (before trimming some gains) as the region took its cue from the gains on Wall St following recent global stimulus efforts and with sentiment also underpinned by an improvement in the latest Chinese PMI figures. ASX 200 (-2%) and Nikkei 225 (-0.9%) were lifted from the open with early outperformance in Australia led by the largest weighted financials sector and with sentiment also boosted after yesterday’s record AUD 130bln stimulus announcement, while Japanese exporters initially benefitted from a weaker currency, although both indices then gave up the gains amid Q1-end rebalancing and amid some doubts regarding the Chinese data. Hang Seng (+1.3%) and Shanghai Comp. (+0.1%) conformed to the early constructive tone following encouraging Chinese PMI data in which headline Manufacturing and Non-Manufacturing PMI topped estimates and the Composite PMI also printed in expansion territory. However, gains in the mainland were somewhat limited as some downplayed the data given that it was a recovery from the prior month’s record low base and with China’s stats bureau warning the rebound does not mean the economy has returned to normal and that this month’s data alone cannot determine an improving trend. Finally, 10yr JGBs were pressured in a continuation of the pullback from the 153.00 level, with demand subdued by the early upbeat tone in risky assets and following weaker results at the 2yr JGB auction.

PBoC injected CNY 20bln via 7-Day Reverse Repos at a rate of 2.20% vs. Prev. 2.20% (Newswires) PBoC set USD/CNY mid-point at 7.0851 vs. Exp. 7.0860 (Prev. 7.0447)

Chinese NBS Manufacturing PMI (Mar) 52.0 vs. Exp. 45.0 (Prev. 35.7). Chinese Non-Manufacturing PMI (Mar) 52.3 vs. Exp. 42.0 (Prev. 29.6) Chinese Composite PMI (Mar) 53.0 (Prev. 28.9)

China Stats Bureau said the rebound does not mean the economy has returned to normal and March data alone cannot tell improving trend. (Newswires)

PBoC adviser Ma Jun advised China to not set a 2020 GDP target given the large uncertainties, while Ma added setting a target may force China to resort to flood-like stimulus and noted that GDP growth of 4%-5% will be difficult to reach. (Newswires)

China tax bureau official said China is monitoring the trade situation and studying tax reduction, as well as other policies to stabilize situation, while the official added China is studying permitting more foreign firms to benefit from preferential policies such as tax cuts. (Newswires)

Japanese Industrial Production (Feb P) M/M 0.4% vs. Exp. 0.1% (Prev. 1.0%). (Newswires) Japanese Industrial Production (Feb P) Y/Y -4.7% vs. Exp. -4.9% (Prev. -2.3%) Japanese Industrial Production Forecast for March at -5.3% and April at 7.5%. Japanese Retail Sales (Feb) M/M 0.6% vs. Exp. -1.5% (Prev. 0.6%) Japanese Retail Sales (Feb) Y/Y 1.7% vs. Exp. -1.2% (Prev. -0.4%)

Japanese government official said manufacturers' output forecasts for March and April do not fully reflect developments of coronavirus outbreak, while the official added that the outlook for industrial production is to remain severe for the time being. (Newswires)

Japan's GPIF is to raise foreign bond allocation target to 25% (Prev. 15%) and raises upper limitation of investments in foreign bonds to 31%. Allocation to domestic bonds has been lowered to 25% from 35%. (Newswires)

Japan's senior ruling party official says that if necessary, the government should deploy 2nd and 3rd batches of stimulus measures. (Newswires)

UK/EU

ECB's Visco says that the Bank will not tolerate any impediments that hinder the efficacy of monetary policy transmission, adding that the Bank is prepared to increase the size of asset purchases and alter their composition and explore all potential options to provide support to the economy during the crisis. (Newswires)

GEOPOLITICS

North Korea appears to have created a new foreign ministry department with the aim of handling negotiations with the US, according to Yonhap. (Yonhap)

US has called for transitional government in Venezuela made up of opposition and some members of President Maduro’s socialist party, according to a document. (Newswires)

EQUITIES

European equities trade on a firmer footing once again (Eurostoxx 50 +0.3%) as sentiment remains upbeat alongside quarter-end rebalancing flows and post-Chinese PMI metrics, albeit stocks have drifted off highs. On the data front, price garnered some support from the last survey data out of China in which headline Manufacturing and Non-Manufacturing PMI topped estimates and the Composite PMI also printed in expansion territory. However, it is worth noting that some desks have downplayed the data given that it was a recovery from the prior month’s record low base and with China’s stats bureau warning the rebound does not mean the economy has returned to normal and that this month’s data alone cannot determine an improving trend. In terms of sector specifics, energy names sit near the top of the pile in a bounce-back from some of the declines yesterday with WTI now back above USD 21/bbl and Shell (+4.0%) shares shrugging off expectations of a USD 400-800mln Q1 impairment charge and weak refining margins. Elsewhere, travel and leisure names have also seen support during today’s session as hopes continue to be pinned on government support measures, albeit, from a UK standpoint, Times’ Swinford noted comments from Transport Secretary Shapps that the “UK government is attempting to find the right solution for airlines”, something which Swinford inferred as meaning that it “doesn’t sound like a big bailout is coming”. The main theme in the pre-market was largely centered around the suspension of buybacks and dividends (details of which can be found in the European equity opening news) with particular focus on the UK banking sector with the latest reports via Sky News suggesting that the Prudential Regulation Authority will, on Tuesday or Wednesday, state that Barclays, HSBC, Lloyds and RBS will not be paying dividends as part of FY results. Notable individual movers include Imperial Brands (+12.4%) after signing a new revolving credit facility of EUR 3.5bln and noting no material impact on group performance, Bayer (+2.0%) has reached a settlement with US plaintiffs and WPP (+6.9%) are firmer despite suspending its buyback, dividend and outlook, whilst noting that it maintains a strong balance sheet.

Tesla (TSLA) - Credit Suisse revises Tesla Q1 delivery forecast to around 75-80k units vs. Prev. 94k units

FX

USD - The Buck has extended gains vs major counterparts, albeit to varying degrees as a sharp rebound in Chinese PMIs, some consolidation in crude and remaining asset rebalancing flows for the final trading session of March, Q1 and the current financial year help some rival currencies to resist the Greenback’s advances. However, the DXY looks more assured around 99.500 and certainly back on the 99.000 handle within a 99.694-99.100 range, and could continue its recovery towards resistance at 99.915 (prior 2020 high before the psychological 100.000 mark was breached precisely one month later on March 20 when the index hit 102.999).

NOK - The G10 outlier and outperformer, partly due to the aforementioned bounce in oil prices, but mainly as the Norges Bank plans to jack up foreign currency sales against the Norwegian Krona to the equivalent of Nok2 bn per day in April from Nok1.6 bn this month and only a quarter of the new daily total in February. Eur/Nok is hovering just above 11.5100, but has been under 11.5000 in contrast to Eur/Sek flat-lining between 11.1040-0610 parameters.

CAD/AUD/NZD/GBP/EUR/JPY/CHF - Firmer or more stable crude is also providing the Loonie with some underlying support around 1.4200 vs its US peer, while the Aussie and Kiwi are both holding off overnight pre-Chinese PMI flash crash lows of 0.6080 and 0.5948, though down from best levels reached (0.6200+ and 0.6037 respectively) when the headline prints exceeded consensus and regained 50+ growth rather than deep contraction levels. Elsewhere, the Pound has lost its grasp of 1.2400, but faring better against the Euro circa 0.8900 as the single currency retreats through 1.1000 vs the Buck on soft Eurozone inflation and the ongoing nCoV spread in Spain. Note, hefty Eur/Usd option expiries do not seem likely to impact at this stage, but for the record there are several ranging from 1 to 1.6 bn rolling off from 1.1000 to the 1.1100 strike and beyond. Meanwhile, the Yen and Franc are towards the bottom of 108.70-107.75 and 0.9649-0.9581 bands and hindered by safe-haven outflows, with the latter not deriving any support from considerably firmer than forecast Swiss retail sales.

EM - Some respite for the Rouble after a call between US President Trump and his Russian counterpart Putin aimed at stopping the dispute with Saudi Arabia over the price of oil and market share, but little joy for the Lira even though the CBRT has rolled out more liquidity provisions for Turkish banks.

FIXED

Gilts are gradually paring more of their early DMO issuance related losses and unwinding losses relative to core counterparts at fresh Liffe intraday highs of 136.47 (-22 ticks vs -139 ticks at one stage), as the FTSE drifts back from best levels alongside EU equivalents awaiting the return of US market participants for the run in to month end. However, bonds are still on the back foot amidst the last asset portfolio and balance sheet adjustments for the final trading day of Q1 and some potential market moving macro releases in the form of Chicago PMI and Conference Board consumer confidence.

COMMODITIES

WTI and Brent front-month futures experience consolidation from the prior session’s hefty losses, in which prices tumbled to their lowest points in almost 20 years. The former outperforms on the prospect of potential US-Russia cooperation in the energy markets to stem the rotting prices. US President Trump conducted a phone call with his Russian counterpart yesterday with Kremlin noting that this was at the request of the US. The leaders agreed on the need for stability in the energy markets, albeit no further details were released. WTI front-month contracts have reclaimed USD 21/bbl to the upside having yesterday printed a base at around USD 19.30/bbl, whilst Brent touched a multi-year low at ~ USD 21.60/bbl, with prices now nearer to USD 23.50/bbl. Elsewhere, spot gold trades subdued amid a firmer USD and with portfolio rebalancing also in the fray. The yellow metal hovers just above the 1600/oz mark having hit an overnight peak at USD 1626/oz. Meanwhile, copper prices remain supported by the strong China NBS manufacturing PMIs which rose back into expansionary territory from last month’s detrimental print. Copper gains a firmer footing above USD 2/lb ahead of resistance at 2.5/lb from a technical standpoint.

OPEC March crude production survey: JCB sees OPEC crude output rising by 170k BPD to 27.92mln BPD - increases led by Saudi raising production by 370k BPD to 10.15mln BPD. (Newswires)