Asian Market Update: Tech sector strength boosting regional equities after solid earnings from Apple; Crude extends recovery on bullish inventory data ECONOMIC DATA - (AU) Australia FEB Westpac Leading Index m/m: 0.5% v 0.4% prior - (AU) Australia APR DEWR Skilled Vacancies m/m: 1.3% v 2.4% prior - (JP) JAPAN FEB FINAL LEADING INDEX: 98.5 V 97.9 PRIOR; COINCIDENT INDEX: 100.5 V 100.7 PRIOR - Asian equity markets are up for the second consecutive day as record profit from Goldman Sachs going into US trading and an impressive result from Apple afterhours helped regional tech names pull overall indices higher. Entering the final hour of Tokyo trading, Nikkei225 and the Kospi are both up about 1.5%, while Sydney's S&P/ASX and the Taiex are up about 1%. Shanghai Composite has also shrugged some of the recent housing constraint driven malaise, rising just over 0.5%. Ahead of the US Wednesday session, front-month S&Ps point to another higher open, gaining over 0.3%. SPEAKERS/PRESS China: - Local press citing the PBoC statistics department head Zhang Tao suggesting the loan-to-deposit ratio for lenders by Mar end stood at 71.5% which is below the 75% minimum, which opens the door for further lending by nation's banks. On a related note, China banking regulator CBRC requested that big banks conduct quarterly stress tests on property loans. Also in the press, China Academy of Social Sciences cited by China Securities Journal said 2010 may see an above 5% increase in grain prices, rekindling inflation concerns. In other inflation-related news, Chinese officials said Q1 land prices may have rising about 8% in 105 cities. Recall last week, a Xinhua report speculated that land prices may have fallen about 30% m/m in March because of the govt steps to restrain speculative lending. Japan: - Bank of Japan Dep Gov Nishimura reiterated the central bank will maintain extremely accommodative policy, adding that some additional room may exist for further easing. Moreover, Nishimura underscored the significance of easy policy in supporting economic recovery, and also suggested that inflation may return in the near term. On the fiscal front, local press said the govt would consider new numerical targets for budget deficit reduction, aiming to to return to fiscal surplus by 2020. Japan's regional finance officials raised their assessment of the economy, citing recovery in production and exports. The officials said conditions are still challenging, but higher industrial output offers evidence of a rebound. Hong Kong: - Financial Secretary Tsang said Q1 economic performance is "booming", with domestic economy improving on better external conditions. Prospects of a yuan revaluation was also seen as a positive, expected to boost consumption. Tsang was also worried regarding risks of a bubble in the property market, noting low interest rates will not be sustained for long and suggesting that potential homebuyers act more cautiously ahead of govt plans to announce new measures on the sector. EQUITIES - In notable share-specific news, Elpida was higher after confirming press speculation it would return to profit in FY09/10 with Net ¥2B vs. loss ¥3Be on Rev ¥466B v ¥465Be. JFE Holdings reported FY results, posting Net ¥45.7B v ¥30Be, Op Profit ¥88.8B v ¥87Be, Rev ¥2.8T v ¥2.9Te and paying out a final dividend of ¥20 v ¥30 prior after omitting interim payout. Also in Japan, local press said Kawasaki Kisen would invest about ¥120B in floating LNG facility in NW Australia. In Korea, LG Chem traded much higher following afterhours Q1 results, with Net KRW518B v KRW401Be on Rev KRW4.4T v KRW3.9Te. CURRENCIES/FIXED INCOME/COMMODITIES - In currencies, Canadian Dollar continues to strengthen, with USD/CAD at lowest level since mid-2008 below 0.9950 as markets took today's BOC statement to read that the central bank is on the cusp of tightening. Also in commodity FX, the Aussie is slightly firmer just above 0.9330. In European majors, EUR/USD was weighed down ahead of the EU/IMF officials descending on Athens to lay the groundwork for a potential bailout, but found some support as ECB's Weber denied reports he anticipated Greek fiscal needs to reach €80B. EUR/USD bounced from 1.34 handle, while GBP/USD briefly tested 1.54. USD/JPY remained thin, trading in narrow 93.00-30 band. - Most commodity prices are higher on the gains in Asian equities. Crude oil is gaining by over 0.4% and trading above $84/bbl. In addition to the rise in stock prices, oil prices have been supported by last week's US API inventories data, which was released after yesterday's US equity close (API PETROLEUM INVENTORIES: CRUDE: -740K V -500KE; GASOLINE: -1.74M V +500KE; DISTILLATE: -3.1M V +800KE; UTILIZATION: 85.1% V 86.0%E). Another factor supporting the oil market is the resumption of more flights in Europe, following the recent delays due to the presence of volcanic ash in Europe's airspace. - Spot Gold is higher and trading above $1,140/oz. Gold has been supported by gains in XAU/EUR and XAU/GBP on continued concerns about Greece and the possibility of a hung parliament in the UK. At the end of last week, gold prices were weighed down by the SEC"s recently disclosed probe of Goldman Sachs because the investigation mentioned hedge fund manager John Paulson, who is the largest holder in the SPDR Gold Trust ETF. Today's WSJ reported that Paulson held a press conference with investors on Monday in order to reassure them that his firm would not be hurt by the SEC probe of Goldman. The WSJ added that there were indications from some of Paulson's clients that they might withdraw some of their funds from the firm, but one investor said most people on the call were supportive of Paulson. The deadline for investors who want to withdraw their funds on June 30th is April 30th. In terms of the technical outlook for gold prices, one large bank sees possible support near $1,124/oz and resistance around $1,146/oz. Also, the $1,145/oz level was seen as a pivot point during the prior week. - In corporate news, miner BHP reported that its Q3 iron ore production totaled 31.2M tons, which was a decline from Q2 production of 32.5M tons (record), but higher by 11% on a year over year basis. BHP's Q3 Pilbara Australia iron ore production was 28.4M tons and Pilbara shipments were 28M tons. The company said its iron ore production was impacted by weather conditions in the quarter. BHP's third quarter copper production declined by 15% q/q and 19% y/y to 229.1K tons, as the company said production was partially hurt by the shutdown of its Olympic Dam mine. In terms of the coal market, BHP's metallurgical coal output totaled 8.2M tons, which was a decline of 8% q/q and gain of 7% on a year over year basis. In comparison to Rio Tinto's quarterly production update (released on April 15th), BHP's quarterly iron ore production grew at a much slower rate than the 39% y/y increase reported by Rio Tinto. However, both companies reported double digit y/y decreases in their quarterly copper outputs. - In press news, the Australian Financial Review reported that US coal producer Peabody Energy might start conducting due diligence on Australia's MacArthur coal by as early as today. On April 15th, MacArthur said it was willing to engage with Peabody, after the US coal producer raised its offer to A$4.1B from A$3.6B.

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