Ahead Today
G3: US Non-Farm Payrolls
Asia: Vietnam exports, Taiwan CPI
Market Highlights
Brent oil prices moderated slightly to US$85/bbl, as reports emerged that the Trump administration is weighing options for addressing the spike in oil and gasoline prices amid the war in Iran, according to US Secretary Doug Burgum. The potential policies being considered include releasing crude from the country’s emergency oil reserve potentially in coordination with other nations to maximise effect, waiving fuel-blending requirements and even direct intervention in oil futures markets. This comes on top of previously announced plans to provide insurance guarantees and naval escorts to ensure safe passage for oil tankers and other vessels through the Strait of Hormuz. In an interesting move as well, the US Treasury just announced waivers for India’s purchase of Russian oil for 30 days until 4 April 2026, in a move that perhaps recognises that one cannot have his cake and eat it too in wars on multiple fronts.
Overall, it is unclear how much impact this could have from a global perspective, including for our region here in Asia. With uncertainty around how the US may react to Iran’s Supreme Leader pick, coupled with possible further escalation by all parties pulling in regional players in the Gulf further into the conflict, we expect markets to remain extremely cautious heading into the weekend on possible gap risks.
In Asia, FX has stabilized to some extent, but we think it may be too early to tell at this point in time. We will have the NFP data later today, and this will be very important if only to ensure that hawkish expectations for the Fed does not build up and add further fuel to the fire so-to-speak at a time when financial conditions are tightening meaningfully and supply chain disruptions potentially building up for Asian economies.
The key event in Asia was a release of a slightly lower growth target of 4.5-5% for China (from around 5% previously), and with the fiscal deficit target left unchanged from last year at 4%. This comes with the release of the Government Work report in China, and during the important Two Sessions and the first year of the 15th Five Year plan. Overall, the message seems to be stability and perhaps keeping some ammunition and bullets for now in a more volatile environment, while continuing the process of economic transformation including to high tech manufacturing such as robotics, AI and diffusion of these technologies to the real economy