Mixed China Stocks, Oil Dips on Iran Tensions

Market Snapshot

Asset	Level	Change
Shanghai Composite	3,913.72	+0.63%
CSI 300	4,502.57	+0.56%
Hang Seng	24,951.88	+0.38%
TAIEX	33,112.59	-0.68%
USD/CNY	6.91	+0.01%
USD/HKD	7.84	+0.12%
Copper	5.49	+0.37%
Brent Crude	108.79	-3.36%
Gold	4,540.40	+1.08%
Bitcoin	66,785.45	+1.26%
China 2Y Govt Yield	-	-
China 10Y Govt Yield	-	-

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
NBS Manufacturing PMI	49	50	17:30
NBS Non-Manufacturing PMI	49.50	49.90	17:30
RatingDog Manufacturing PMI	52.10	51.90	17:45
RatingDog Services PMI	56.70	53.70	17:45

Greater China equities mixed: mainland indices rose modestly on industrial gains and stable yuan, while Taiwan's TAIEX declined amid tech volatility.
Oil prices fell sharply due to Iran war disruptions, pressuring China's teapot refineries and commodity supply chains.
Key PMI releases ahead, with consensus suggesting mild manufacturing expansion but services near contraction.

Yesterday's Recap

Mainland China's Shanghai Composite rose 0.63% to 3,913.72, driven by gains in industrial and materials stocks despite lingering property sector concerns, as copper prices edged up 0.37% to 5.49 amid steady demand proxies. The CSI 300 advanced 0.56% to 4,502.57, supported by financials and consumer cyclicals, reflecting mild optimism in cross-strait trade flows. Hong Kong's Hang Seng Index climbed 0.38% to 24,951.88, buoyed by banking sector resilience despite USD/HKD peg pressures rising 0.12% to 7.84.

Taiwan's TAIEX fell 0.68% to 33,112.59, weighed down by semiconductor export uncertainties linked to global AI demand fluctuations. The USD/CNY pair ticked up 0.01% to 6.91, indicating controlled yuan depreciation amid PBoC liquidity management. Brent crude plunged 3.36% to 108.79, exacerbating strains on China's oil-dependent industries like teapot refineries, while gold rose 1.08% to 4,540.40 as a safe-haven asset.

Bitcoin climbed 1.26% to 66,785.45. Overall, Greater China markets navigated global volatility with mainland equities outperforming on domestic stability cues.

The Day Ahead

Mainland China's NBS Manufacturing PMI is due at 17:30 ET today, with consensus at 50 following a previous 49.0, potentially indicating a shift from contraction to expansion amid industrial rebound signals. The NBS Non-Manufacturing PMI follows at the same time, expected at 49.9 versus prior 49.5, offering insights into services sector resilience against deflationary pressures. Tomorrow brings the RatingDog Manufacturing PMI at 17:45 ET, forecasted at 51.9 after 52.1, which could highlight private sector manufacturing trends diverging from official data.

Later this week, RatingDog Services PMI on April 2 at 17:45 ET is anticipated at 53.7 from 56.7, reflecting potential slowdowns in non-manufacturing activity due to oil price volatility. No major Hong Kong or Taiwan data releases are scheduled immediately, but cross-strait trade updates may emerge amid geopolitical tensions. Investors should watch for any PBoC signals on liquidity in response to these indicators.

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Other Economic Notes

China's teapot oil refineries face mounting pressures from surging crude prices tied to the Iran conflict, threatening their thin margins and potentially curbing fuel output that supports broader economic activity. Hog prices in mainland China have hit an eight-year low due to supply gluts from massive pig farms, underscoring agricultural overcapacity and deflation risks, with CPI YoY at -0.10% highlighting persistent price weakness. Hong Kong's tech sector sees mainland firms expanding operations as a global springboard, boosted by AI drug deals like Eli Lilly's $2.75 billion pact with Insilico, signaling cross-border investment flows amid regulatory easing.

Hong Kong schools are urged to address falling student numbers, while national security law updates clarify implementation without expanding powers.

Global Macro News

The ongoing Iran war has disrupted oil shipments through the Strait of Hormuz, driving Brent crude down 3.36% and raising supply chain concerns for Chinese manufacturers, who warn of higher prices for U.S. exports. This conflict has damaged Gulf smelters, potentially tightening global aluminium supplies and strengthening China's trade position in the metal, as Middle Eastern disruptions create opportunities for mainland exporters.

India's growth outlook dims with wider deficits from elevated energy costs, indirectly affecting Greater China's export markets and fertilizer supply chains via West Asia linkages. Greece's political polls and drone industry developments add to global uncertainty, though less directly impacting Asia, while airlines suffer from fuel price volatility. China's digital yuan expansion, with more banks handling it, positions the economy for resilient retail payments amid geopolitical risks.

Hong Kong benefits from mainland tech firms racing to establish bases, testing products for global expansion despite local challenges like falling student numbers and national security updates. Overall, these dynamics heighten safe-haven flows into gold, up 1.08%, and bitcoin, up 1.26% to 66,785.45, as investors hedge against inflation clouded by Mideast tensions.

Greater China Central Banks Watch

The People's Bank of China (PBoC) is expected to maintain key lending rates steady, as Mideast war clouds inflation outlooks and tempers urgency for cuts despite CPI at -0.10% YoY, with focus on potential RRR adjustments to support liquidity amid oil price strains. No recent MLF or LPR decisions were announced, but State Council signals suggest targeted easing for sectors like property and manufacturing if PMI data disappoints. Hong Kong Monetary Authority (HKMA) monitors USD/HKD peg dynamics closely, with the pair at 7.84 showing stability, supported by ample aggregate balance and no immediate intervention needs despite mild appreciation pressures.

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Continuation

Greater China Central Banks Watch (continued)

Taiwan's Central Bank (CBC) remains attentive to FX interventions amid TAIEX volatility, linking policy to semiconductor export outlooks, which face headwinds from global AI demand but no rate changes signaled recently. Across Greater China, central banks prioritize stability over aggressive moves, with PBoC eyeing commodity impacts on yuan, HKMA focused on peg mechanics, and CBC balancing trade flows.

Greater China Macro Daily(Beta Mode)