Summary:

• Asian stocks trade mixed following moderate losses seen on Wall Street
• Japanese currency resumes rising following a huge decrease against the greenback on Wednesday
• China still mulls over curbs on US soybean imports being a ’nuclear option’ on trade

After several tumultuous sessions across global equities the Thursday’s one in Asia has been much more benign mainly due to moderate losses on Wall Street. In terms of the US indices the NASDAQ (US100 on xStation5) was afflicted the most another day in a row as tech stocks such as Tesla, Netflix or Amazon weighed on again. At the time of writing the sole Asian index being traded above its flat line is the Chinese Shanghai Composite (up 0.4%) whereas the NIKKEI (JAP225) is going nowhere, and the Hang Seng (CHNComp) and the Australian S&P/ASX 200 (AUS200) are sliding ca. 0.45%. Do notice that the Japanese stock market erased its previous gains as the yen trimmed some of its tremendous slide overnight. As far as macroeconomic readings are concerned, there was Japanese retail sales which came in at 0.4% mom and 1.6% yoy in February falling short of expectations set at 0.6% mom and 1.7% yoy respectively, however, as usual it did not prove to be any market mover.

The Japanese NIKKEI bounced back from its relevant support place albeit it’s been unable to continue its rally after the two splendid sessions. The first technical resistance is placed at 21900 points which seems to be in play until the index hovers above 20200 points. Source: xStation5

On the FX front the Japanese yen is capturing the most attention being up almost 0.4% against the greenback after a notable loss witnessed on Wednesday on widespread US dollar strength (it’s ascribed to month- and quarter-end flows). After healthy gains the US dollar is giving back some its profits in the morning being the weakest currency in the G10 basket. Having said that, there are some assumptions that increased demand on the US currency could prevail to the end of the month, and this is expected to occur especially against EUR, GBP, CAD as well as AUD according the the Barclays model. Nevertheless, when the new quarter gets underway relative strength of the US dollar might be used to re-enter medium to long-term shorts at better price.

While the USDJPY experienced a decent rebound over the past days the underlying trend remained bearish. This trend is unlikely to change unless the pair breaks substantially above 108.30 where a crucial supply area ranges. Source: xStation5

Admittedly, the trade war risks have abated to some extent of late, it turns out that they have yet to disappear altogether. Therefore, the Chinese economy is reportedly still mulling over curbs on US soybean imports called as a ’nuclear option’ on trade as China imports around 60% of total soybean traded worldwide (roughly 50% comes from Brazil and around 34% from the US), according to the US soybean council. At the same time the second largest economy still hopes that the US will abandon trade protectionist and the ongoing issue will be resolved through dialogue. Spokesman of the China’s commerce ministry said that US-China trade relations can return to normal when all trade contentious points are sorted out. All of that means that investors should stay cognizant of trade war risks which could weigh on global equities again once the thread comes back into headlines. Meanwhile, China announced it will lower the VAT rate from 1 May on some industries including manufacturing, transportation, construction, telecommunication and agriculture. The cuts are forecast to save up to 240 billion yuan this year according the report obtained by Reuters.