Strong US session extends into Asia after Trump says will not fire Fed Chair Powell

Asia market update: Strong US session extends into Asia after Trump says will Not fire Fed Chair Powell; DE/EU/UK/US Apr Flash PMIs tonight.

General trend

- Equities bounced back during the US session and then after the close gapped up strongly at the Asian open as Pres Trump walked back his weekend criticism of Fed Chair Powell that rocked the markets so negatively on Monday, saying that he had "no intention" of firing Fed Chair Powell after all.

- Asian markets took the general "risk-back-on" cue and jumped higher at the open with most indices up 1-2% other than the Shanghai (underperforming at flat), while Hang Seng outperformed +2.4%. South Korea’s Kospi, Japan’s Nikkei and Australia’s ASX indeed erased all of their losses since the April 2nd tariff shock on “Liberation Day”. Japanese banking, Auto and Electronics stocks all up sharply, along with Taiwan Semi.

- Japanese 10-year yields also +3bps back to 1.34% on reduced risk aversion.

- Markets seemed to brush off China's warning to South Korea against any rare earth goods export to the US.

- Australia prelim Manufacturing PMI for Apr continued its fourth month of expansion while Japan recorded its 10th straight contraction. PMI Services for both countries stayed in expansionary territory.

- Intel reported to cut more than 20% of staff this week; CEO looking to restore an 'engineering culture' - financial press.

- US equity FUTs 1.5% to 1.8% during Asian trading.

Looking ahead (Asian-weighted news, using Asian time zone)

- Wed 23rd ID Rate Decision, (Wed eve DE/EU/UK/US Apr Flash PMIs).

- Thu 24th KR Q1 GDP, RBA Bulletin, (Thu eve DE Apr Ifo Business Climate, Thu night US Mar Durable Goods, US Mar Home Sales).

- Fri 25th JP Apr Tokyo CPI, (Fri eve UK Retail Sales).

Holidays in Asia this week

- Mon 21st Australia, Hong Kong, New Zealand.

- Fri 25th Australia, New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.5% at 7,855.

- AUSTRALIA APR PRELIMINARY PMI MANUFACTURING: 51.7 V 52.1 PRIOR (4th month of expansion); PMI Services: 51.4 v 51.6 prior (15th month of expansion).

- Australia sells A$1.0B v A$1.0B indicated in 3.25% Apr 2029 bonds; Avg Yield 3.4302% v 3.9558% prior; bid-to-cover: 3.22x v 4.21x prior.

- New Zealand cancels release of Q1 Household living-costs index – press.

- New Zealand Treasury: Indicators suggest a slowing domestic recovery.

China/Hong Kong

- Hang Seng opens +2.4% at 22,080; Shanghai Composite opens +0.3% at 3,308.

- China's top internet firms said to have stockpiled Nvidia H20 chips - Nikkei.

- US Treasury Sec Bessent: China negotiations will be "a slog"; Describes current bilateral trade situation as an embargo. Expects to see de-escalation with China as current situation is unsustainable - press citing sources at JP Morgan event [overnight update].

- US Pres Trump: Agrees with Bessent's comment that the China tariffs amount to an embargo; Tariffs will come down, but not to zero; Newly appointed SEC Chair Atkins is perfect for certainty in regulating cryptocurrency.

- (HK) China sells CNY11B additional bonds in Hong Kong - financial press.

- Reportedly some Chinese tech firms eye US listings despite market ructions – press [overnight update].

- China Mar Client FX Net Settlement (CNY-denominated): +0.7B v -47.8B prior [overnight update].

- China PBOC sets Yuan reference rate: 7.2116 v 7.2074 prior.

- China PBOC Open Market Operation (OMO): Injects CNY108B in 7-day reverse repos; Net injects CNY3.5B v injects CNY56B prior.

Japan

- Nikkei 225 opens +1.7% at 34,787.

- JAPAN APR PRELIMINARY PMI MANUFACTURING: 48.5 V 48.4 PRIOR (10th straight contraction); PMI Services: 52.2 v 50.0 prior (5th month of expansion).

- Japan Feb Tertiary Industry Index M/M: 0.0% v 0.4%e.

- Japan Digital Min Kono: US Pres Trump 'misunderstands' US-Japan security arrangement - financial press.

- Japan ruling coalition partner Komeito's leader Saito: Comments after meeting with China's policy advisor Wang Hunin and Snr Official Liu Jianchao in Beijing - financial press.

- Japan Chief Cabinet Sec Hayashi: PM Ishiba plans to visit Vietnam and the Philippines April 27-30th.

- White House reportedly close to general trade agreements with Japan and India; May take months for final trade deals – Politico [overnight update].

- Follow up: Japan LDP policy chief Onodera said to urge govt to cut gasoline prices as a means of buffering the economy against potential impacts from US tariffs and to mitigate the impact of inflation. [overnight update].

- Japan Keidanren Chief Masakazu Tokura: Want FX to stabilize as much as possible [overnight update].

- Japan Mar BOJ Core CPI Y/Y: 2.2% v 2.2% prior [overnight update].

Korea

- Kospi opens +1.4% at 2,520.

- South Korea Apr Consumer Confidence: 93.8 v 93.4 prior.

- *(CN) China said to warn South Korea against rare earth goods export to the US - Chinese press.

Other Asia

- TAIWAN MAR EXPORT ORDERS Y/Y: 12.5% V 16.2%E [overnight update].

North America

- (US) CEO Musk says not stepping down from DOGE; Reducing time allocation to DOGE - press.

- (US) HHS Secretary Kennedy: Pres Trump does not believe in mandatory vaccines - Fox News interview.

- Intel said to cut >20% of staff this week; CEO looking to restore an 'engineering culture' - financial press.

- (US) Fed's Kugler (voter): Tariffs will likely put an upward pressure on prices; Long-run inflation expectations are largely well anchored; Tighter financial conditions could weigh on growth.

- (US) VP Vance: Have common goals with India; have finalized terms of reference for trade deal.

- (US) Pres Trump said to consider cutting US drug prices to international levels; Sources expect policy to come from the agency that oversees Medicare and Medicaid health programs - press.

- (US) Apr Philadelphia Fed Non-Manufacturing Activity: -42.7 v -32.5 prior.

- (CA) Canada Mar Industrial Product Price Index M/M: 0.5% v 0.3%e; Raw Materials Price Index M/M: -1.0% v 0.1%e.

- (US) Fed's Harker (non-voter): Does not comment on economic or outlook policy.

- (US) APR RICHMOND FED MANUFACTURING INDEX: -13 V -7E; Orders fall substantially m/m; Average growth rate of prices paid increased notably.

- (US) TREASURY $69B 2-YEAR NOTE AUCTION DRAWS 3.795% V 3.984% PRIOR; BID-TO-COVER RATIO: 2.52 V 2.66 PRIOR AND 2.65 OVER THE LAST 12; When issued was 3.789%, so auction tailed by 0.6 bps.

- (US) WHITE HOUSE: There are 18 trade deal proposals on paper.

- (US) Fed's Kashkari (non-voter): Bond yields up and the dollar being down is an indication where global investors want to invest; It's too soon to estimate rate path; Things could change quickly with the resolution of trade uncertainty.

- (US) Fed’s Barkin (non-voter for 2025): Inflation expectations may have loosened; Lots of reasons to be worried about consumer spending.

- (US) Consulting firms reportedly to offer up to $20B in fed contracts - WSJ.

Europe

- Novartis, Sanofi call for higher drug prices in the EU to "encourage innovation" - FT.

- (EU) ECB's Villeroy (France): Warns of global economic damage from tariff turmoil; Trump is playing a 'lose-lose game' on trade - financial press.

- (UK) Reportedly US preparing negotiating terms for UK trade talks - WSJ, citing sources.

- (EU) ECB's Kazimir (Slovakia): See inflation at 2% target in next few months; rates within neutral range.

- (EU) EURO ZONE APR ADVANCE CONSUMER CONFIDENCE: -16.7 V -15.1E.

- (EU) ECB Chief Lagarde: US trade policy has an impact on our outlook, both positive and negative; 2025 inflation projection likely at 2.1% - CNBC.

- (UR) Pres Zelenskiy: Will not recognize Russian annexation of Crimea, which would be unconstitutional; Need full ceasefire before any Russia negotiations; Once ceasefire is in place, Ukraine ready for talks with Russia in any format.

- (UR) Russia Pres Putin: Reportedly has offered to halt the invasion of Ukraine across the current front line as a part of Russia's efforts to reach a peace deal with the US - FT.

- (EU) ECB’s De Guindos (Spain): Downside risks to growth are materializing; Euro could be alternative reserve currency in a few years.

- IMF world economic outlook (WEO): cuts 2025 GDP global growth forecast from 3.3% to 2.8%.

Levels as of 01:20 ET

- Nikkei 225 +1.8%, ASX 200 +1.5%, Hang Seng +2.4%; Shanghai Composite +0.1%; Kospi +1.6%.

- Equity S&P500 Futures +1.4%; Nasdaq100 +1.7%; DAX +2.3%; FTSE100 +0.8.

- EUR 113.08-1.1430; JPY 141.47-143.22; AUD 0.6350-0.6405; NZD 0.5937-0.5988.

- Gold -1.8% at $3,358/oz; Crude Oil +1.0% $64.28/bbl; Copper +1.2% at $4.9025/lb.