Morning Update – 01/03/16 – by Arjun Lakhanpal

Morning all.. After staging a rally yesterday after Europe closed, stocks turned south as momemtum stalled and Wall St closed down 0.8% and Asia got off to a weak start after poor data from Japan and China but we have seen a small bounce into the close with the Nikkei closing up 0.37% and HK up .9%.. USDJPY and EURJPY fell steeply into the Japan open but both have recovered as stocks rallied. China Feb PMI Mfg small miss; 49.0 vs 49.4 cons..China Feb PMI Non-Mfg fell on month to 52.7 from 53.5 prior.. China Feb Caixin PMI Mfg small miss; 48.0 vs 48.4 cons. PBoC’s Chen: warns of rising spillover effects from diverging global mon policy; global cooperation thru coordinated economic policies may weaken; Yuan is stable against a basket; reiterates there is no basis for persistent depreciation; would have only limited benefit for exports; BIS estimates Yuan REER is ~10% overvalued.. Japan Jan Household Spending missed; -3.1% vs -2.7% cons.. Poor data but stocks seemed to rally on the China RRR cut yesterday and it seems the market was caught short USDJPY.. We have since made a high at 112.93..Sources suggested that Japan PM is putting together a new panel of advisors to look at need for a supplementary stimulus budget and this also helped.. This morning we get PMI data across Europe and the UK.. Good luck..