TAIWAN: DBS Sees CBC On Hold Later Today

 *JAPAN 20Y GOVT BOND AUCTION MAY HAVE 99.65 LOWEST PRICE:POLL – BLOOMBERG

Asian equities are mixed today with ranges narrow ahead of the RBA’s policy decision. Hong Kong stocks extended gains, with the Hang Seng China Enterprises Index rising as much as 1% early in the session, driven by tech stocks like Alibaba and Xiaomi. Optimism grew following President Xi Jinping’s meeting with business leaders, signaling a more supportive stance toward the private sector.

• Japan’s markets advanced, with the Nikkei rising 0.40%, supported by gains in defense stocks after European Union leaders discussed increasing military spending. Tech shares also rallied amid expectations that China may ease regulatory pressure on the sector.
• Hong Kong listed equities continue to outperform their mainland peers, with the HSI up 1.20%, while the CSI 300 trades little changed for the session
• Taiwan's TAIEX in unchanged today, while South Korea's KOSPI is 0.20% higher
• Australia’s ASX200 is 0.50% lower as investors awaited the RBA’s policy decision, the AUD is holding near a two-month high. Meanwhile, BHP’s first half profit fell 23%, with weak Chinese demand for iron ore and copper, hurting results

In broader markets, the USD strengthened, while oil held its gains after reports that OPEC+ may delay output increases and Ukrainian drone attacks hit a Russian crude-pumping station.

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• With the economy broadly developing as the RBNZ expected in November with core inflation “converging” to the mid-point of the band and “considerable spare capacity” persisting, another 50bp of easing on February 19 remains the central case. It had this size of cut in its November projections.
• RBNZ dated OIS pricing has 49bps of easing for Wednesday, with a cumulative 112bps by November 2025.
• The RBNZ will also publish updated staff forecasts this month and the revised OCR path will be of particular interest as the policy rate approaches the bank's estimated 2.5-3.5% range for neutral. Given weak growth and inflation around the band mid-point, the projections may show the OCR reaching 3% sooner than expected in November.
• With a 50bp cut unanimously expected for February 19, attention has already shifted to the monetary policy outlook for the April 9 and May 28 meetings. The updated forecasts, especially for the OCR, and whether the MPC is still looking to return to a “neutral world” will be important inputs into rate expectations.