NEW ZEALAND: Global Factors & Persistent Inflation Pressures Weigh On Sentiment

Asian markets opened the week with cautious optimism on Monday, as investors weighed geopolitical tensions and upcoming central bank policy decisions. The MSCI Asia-Pacific index edged up 0.1%, while Japan's Nikkei is 0.20% lower, while the TOPIX is unchanged, South Korea's KOSPI is 0.50% higher, Taiwan's TAIEX is trading 1% higher

• Japan's GDP growth slowed sharply in 2024, rising just 0.1% for the year compared to 1.5% in 2023, However, Q4 growth accelerated to 0.7% QoQ, exceeding market expectations of 0.3%, driven by strong exports, improved auto production, and a rebound in inbound consumption.
• In Australia, ASX 200 fell 0.8%, primarily due to declines in the financial sector. Westpac shares dropped as much as 6% following a quarterly report that showed a slip in profit and margins.
• Hong Kong's market, which gained 7% last week driven by optimism in Chinese AI firms and a significant rise in Alibaba shares, is poised for a cautious start. Investors are monitoring potential developments, including a possible meeting between President Xi Jinping and e-commerce icon Jack Ma, which could further influence Chinese stocks.
• Geopolitical concerns are heightened as the U.S. and European Union engage in discussions over tariff plans and the ongoing conflict in Ukraine. U.S. President Donald Trump's proposed tariffs have prompted threats of retaliation from the EU, adding to market uncertainty.
• Commodity markets saw oil prices decline for the fourth consecutive day amid concerns over ample supply and potential impacts of tariffs on demand, this has weighed on Australia's market. Gold prices remained steady, trading near record highs as investors sought safe-haven assets amid the prevailing uncertainties
• The US market is closed later today for Presidents day.

The USD/CNY fix printed at 7.1702, versus a Bloomberg consensus of 7.2653.

• We continue to see the fixing error term narrow, now to -951pips. This time last week were -1310pips.
• The actual fixing was only down a touch versus Friday's level (7.1706). 
• USD/CNH is little changed in the first part of Monday dealings, last under 7.2600. We are underperforming the firmer yen trend, with CNH/JPY back sub 21.00. 

• CHINA PBOC CONDUCTS CNY190.5 BLN VIA 7-DAY REVERSE REPO MON