Asian markets spiral lower after initial strength as WTI crude oil dip back below 29 handle. Nikkei lost -218 pts or -1.36% while Hong Kong HSI is trading down -130 pts, or -0.7%. Traders were clearly dissatisfied with the deal between Russia, Saudi Arabia, Qatar and Venezuela to freeze production rather than cutting. Also, the deal was conditional to other producers joining in . In the currency markets, after initial weakness, Yen is regaining some grounds against other major currencies while dollar is generally higher. Meanwhile, Sterling remains the weakest one after yesterday's inflation data.
In Japan an adviser to prime minister Shinzo Abe, Etsuro Honda said that BoJ could deploy extra stimulus "as soon as March". BoJ adopted negative interest rate last month but the impact on markets has been muted. Focus is turning to the BoJ policy meeting on March 14-15. Meanwhile, Honda also urged the government to delay the next sales tax hike by two years to April 2019. He noted that "announcing that there would be no tax increase until prices and employment have stabilized would have a large positive effect" on household sentiment.
In US, Boston Fed president Eric Rosengren said that it's now "somewhat more uncertain" about growth in the economy. Also, "recent global events may make it less likely" to reach the 2% inflation target by the end of the year. He noted that "if inflation is slower to return to target, monetary policy normalization should be unhurried." And, "a more gradual approach is an appropriate response to headwinds from abroad that slow exports and financial volatility that raises the cost of funds to many firms." Philadelphia Fed president Patrick Harker also noted that he's "approaching near-term policy a bit more cautiously than I did a few months ago." And, “it might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike."
In Eurozone, ECB governing council member Ewald Nowotny said that "developments in Brazil, Russia and China are not only leading to a dimming of the overall economic situation but also spurring investors in emerging markets - in particular state funds - to sell."And, "that underscores why measures of the European Central Bank in this phase are of such importance; because the ECB is a certain guarantor that appropriate liquidity backups are possible for banks, at least those in the eurozone."
On the data front, Australia Westpac leading index rose 0.0% mom in January. Japan machine orders rose 4.2% mom in December. UK job data will be a major focus in Europeans session while Swiss ZEW will be featured. US will release PPI, new residential constructions and industrial production. Also, FOMC will release meeting minutes.