European Morning Call

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sian stocks saw hefty losses after the US announced USD 50bln of tariffs on China with the latter planning tariffs of USD 3bln in retaliation
•    In FX, price action remained dictated by the risk sentiment in which safe-haven JPY outperformed
•    Looking ahead, highlights include the Russian rate decision, US durables, Canadian CPI and retail sales, EU council meeting and a slew of speakers

TRADE TARIFFS

US President Trump announced USD 50bln tariffs against China over IP theft under section '301' meaning that the WTO can be circumvented. According to the reports, the US could seek to limit Chinese acquisitions in the US and will also challenge licensing practices at WTO. Furthermore, the US is to publish a list of products that could be targeted for tariffs within 15 days of signing the presidential memorandum, while a 30-day consultation period was also announced, and President Trump later commented that tariffs could amount up to USD 60bln. (Newswires)

US President Trump Administration issued tariff exemptions to Argentina, Australia, Brazil, Canada, Mexico, South Korea and EU with the tariffs suspended until May 2nd. (Newswires)

China reportedly plans tariffs on USD 3bln of US imports, in which it plans 15% tariffs on US steel pipes, wine and fruits, while it also plans tariffs of 25% on US pork and pork products. Furthermore, there were also comments from Mofcom that China doesn't want a trade war but is not afraid of one, while the ministry added it hopes US will be prudent in its decisions and pulls back from the 'brink'. (Newswires)

ASIA

Asian stocks saw hefty losses on trade war fears after the US announced USD 50bln of tariffs on China and with the latter planning tariffs of USD 3bln in retaliation, while it was also reported that National Security Advisor McMasters was replaced by policy hawk John Bolton. The intensified trade tensions triggered a bloodbath across stock markets with ASX 200 (-2.0%) led lower by miners as Chinese metals prices slumped on steel demand and tariff concerns, while Nikkei 225 (-4.6%) was the worst performer and briefly fell over 1000 points as selling pressure was magnified by a firmer JPY. Elsewhere, Hang Seng (-3.1%) and Shanghai Comp. (-3.4%) conformed to the sell-off as Chinese stocks felt the pinch from the US trade offensive, while the PBoC refrained from open market operations for a net weekly drain of CNY 320bln.

PBoC skipped open market operations for a net weekly drain of CNY 320bln vs. last week's CNY 240bln net injection. (Newswires)
PBoC set CNY mid-point at 6.3272 (Prev. 6.3167)

Japanese National CPI (Feb) Y/Y 1.5% vs. Exp. 1.5% (Prev. 1.4%). (Newswires)
Japanese National CPI Ex-Fresh Food (Feb) Y/Y 1.0% vs. Exp. 1.0% (Prev. 0.9%)
Japanese National CPI Ex-Food & Energy (Feb) Y/Y 0.5% vs. Exp. 0.5% (Prev. 0.4%)

UK/EU

EU leaders agreed to recall the bloc's ambassador to Russia over Salisbury attack, according to diplomatic sources. (Newswires) In related news, EU's Tusk stated that leaders agree with UK that Russia was highly likely to be responsible for the Salisbury attack, while there were also earlier reports that EU leaders discussed expulsion of Russian diplomats as a possible response. (Newswires)

ECB’s Draghi reportedly gave an optimistic outlook to EU leaders, but noted protectionism is the largest economic risk. (Newswires)

EU formally appointed Luis de Guindos as ECB Vice President as expected. (Newswires)

Catalan separatist candidate Turull failed to win presidency in Catalan parliamentary vote. (Newswires)

FX

In FX markets, price action remained dictated by the risk sentiment in which safe-haven JPY outperformed amid the trade tension turmoil, which saw USD/JPY slip below the 105.00 handle for the first time since late 2016. Elsewhere, DXY was subdued and languished below the 90.00 level as the greenback’s major counterparts nursed losses, with EUR/USD supported at 1.2300 and GBP/USD holding onto the 1.4100 handle, while commodity-linked currencies also found mild relief amid overnight gains in oil and gold.

Riksbank's Jansson said expects SEK to appreciate gradually and that SEK is not in a downtrend. (Newswires)

COMMODITIES

Commodities were mixed with oil underpinned following comments from Saudi Energy Minister Al-Falih that OPEC/Non-OPEC will still require coordination in 2019. Gold also gained overnight on a safe-haven bid and amid a subdued greenback. Conversely, base metals underperformed as Dalian iron ore futures and   Rebar slumped over 5% in early trade triggered by concerns regarding steel demand and US tariffs.

Saudi Energy Minister Al Falih said that two thirds of the glut is gone, but added there is still time to go before OPEC+ supply cuts cut oil inventories to "normal levels". Furthermore, Al-Falih also commented that OPEC/Non-OPEC will still require coordination in 2019. (Newswires)

US

US House voted 256-167 and Senate voted 65-32 to pass the spending bill to fund government through to September 30th and avert a government shutdown, which gets sent to President Trump to sign into law. (Newswires)

US National Security Adviser McMaster is to resign and will be replaced by John Bolton. (Newswires)