I. Yesterday's News
International News
1. The U.S. economy is back to normal, the labor market is healthy again and inflation is headed higher, Philadelphia Federal Reserve Bank President Patrick Harker said on Tuesday in repeating that he expects the Fed to raise interest rates three times this year. He also suggested he would support an interest rate increase at a mid-March policy meeting.

2. Growth in Germany's private sector picked up in February to reach its highest level in nearly three years, driven by humming factories, a survey showed on Tuesday. Markit's flash composite Purchasing Managers' Index (PMI), rose to 56.1 from 54.8 in January. The reading, comfortably above the 50 line that separates growth from contraction, marked a 34-month high and came in much better than the consensus forecast in a Reuters poll of 54.7.

3. French business activity surged passed expectations in February to near a six-year high, led by resurgent services, unfazed by political uncertainty two months from a presidential election. Data compiler IHS Markit said its preliminary composite purchasing managers index jumped to 56.2 in February from 54.1 in January, reaching the highest level since May 2011. The increase beat economists' expectations for a decline to 53.7 according to a Reuters poll.

4. Minutes of its February meeting showed the Reserve Bank of Australia (RBA) was in an optimistic mood when it kept rates at a record low of 1.5 percent for a seventh straight month, following easings in August and May last year. Australia's central bank is sanguine about the country's economic prospects as the drag on growth from falling mining investment was likely to wane sooner rather than later, bolstering views further cuts in interest rates were off the agenda.

5. India has extended anti-dumping duty on some steel products from China by five years, in a bid to retain protectionist barriers and stem the tide of cheap foreign products. The long-term measure, on the import of seamless tubes, pipes and hollow profiles of iron, alloy or non-alloy steel, stands effective as of May 17 last year when the government had imposed a provisional anti-dumping duty, according to the circular.

Domestic News
6. China's commerce minister on Tuesday sought to assuage concerns that foreign investment is leaving the country, regardless of complicated situations faced by foreign trade and rising uncertainties, saying claims to that effect were "biased as the drop of foreign investment in January did not represent the big picture. In terms of outbound investment, he said data have shown a pick up in outbound investment as China is shifting away from sole commodity export to the higher phase of commodity and capital export.

7. China's central bank said yesterday that bank reserve requirement ratio cuts would continue this year to reward commercial banks that support agriculture and small businesses. The central bank has cut the reserve requirement ratio this year for most of the country's commercial banks as they provided credit support as required for agriculture and small businesses in 2016, said an official with the People's Bank of China. The cuts will be effective from next Monday.

8.The People's Bank of China raised funding costs to stabilize the rates banks pay each other to borrow money in financial markets as the central bank continues its deleveraging campaign. China's regulator's efforts in curbing idling capital had taken effect. But banks and non-bank financial institutions were still rushing in interbank lending due to existing arbitrage profits and loss of liquidity amid insufficient supervision.

9. The Shanghai branch of China's banking regulator has launched an inspection of the inter-bank lending business of small- and medium-sized financial institutions in the city, two sources with direct knowledge of the matter said. The aim of the China Banking Regulatory Commission (CBRC) inspection is to prevent risks that may arise from using inter-bank loans as a channel to invest in wealth management products, the sources said.

10. The annual investment yield for the national social security fund averaged 8.4 percent in the 16 years since it was established, according to Wang Zhongmin, vice chairman of the National Council for Social Security Fund (NCSSF).

II. Market Overview
FX
1. Global Market
The U.S. dollar rose broadly on Tuesday, following hawkish comments from Federal Reserve officials, and boosted by European political uncertainty. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.4 percent at 101.370 after hitting a six-day high of 101.600 earlier. Against the yen, the dollar was up 0.5 percent at 113.61 yen. The euro fell as much as 0.8 percent to a six-day trough of $1.0526 on concerns, but pared some losses later in the session to close down 0.6 percent at $1.0547.

2. Home Market
China's yuan sagged against the dollar along with the central parity rates on Tuesday, hitting a one-week low as the dollar index rebounded. The exchange rate was drawing near to the bottom of previous trading range after touching 6.89 as a stronger dollar boosted bets on FX. But yuan's losses will be limited on the incoming Two Sessions.

Precious Metals
Gold prices pared losses on weaker-than-expected U.S. economic data on Tuesday, after falling 1 percent on renewed expectations of an increase in U.S. interest rates next month that pushed the dollar higher. Spot gold was last at $1,235.90 an ounce. U.S. gold futures settled down 0.02 percent at $1,238.90.

Commodities
1.Crude Oil
Oil prices ended about 1 percent higher after touching three-week highs on Tuesday on OPEC's optimism for greater compliance with its deal with other producers to curb output. Brent crude ended the session at $56.66 a barrel, up 48 cents or 0.9 percent, after hitting its highest since Feb. 2 at $57.31. The U.S. March crude contract expired 66 cents, or 1.2 percent, higher at $54.06, after peaking at $54.68, its highest since Jan. 3.

2.Base Metals
Copper prices slipped on Tuesday due to a rise in the dollar and as investors locked in gains after a rally to above $6,000 a tonne, driven by the prospect of major supply disruptions in Chile and Indonesia. Three-month copper on the London Metal Exchange slipped 0.2 percent to close at $6,060 a tonne.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury debt yields edged higher in rangebound trading on Tuesday, supported by generally improved market appetite for risk as stocks and commodities gained. In late trading, U.S. 10-year notes were last down 1/32 in price to yield 2.427 percent, up from 2.425 percent on Friday. U.S. 30-year bond prices were down 4/32, yielding 3.038 percent, up from Friday's 3.031 percent. U.S. two-year note prices were flat, yielding 1.206 percent.

2. Chinese bonds
China's interbank money rates reversed the losing course, with government bond futures weakening. China's central bank stressed mixed results in evaluation of designated reserve requirement ratio cuts, correcting over-optimistic expectations by some financial institutions. News on loss of liquidity and inspection of the inter-bank lending business also dampened market morale. Profit-taking appeared after recent sharp gains in bond market.

Stock Market
1. U.S. Equities
U.S. stocks rose to fresh record highs on Tuesday, boosted by strong earnings reports from Wal-Mart and Home Depot and continued optimism about the economic agenda of President Donald Trump. The Dow Jones Industrial Average rose 118.95 points, or 0.58 percent, to 20,743, the S&P 500 gained 14.22 points, or 0.60 percent, to 2,365.38 and the Nasdaq Composite added 27.37 points, or 0.47 percent, to 5,865.95.

2. Hong Kong Equities
Hong Kong stocks suffered their biggest one-day loss in a month on Tuesday, hurt by index heavyweight HSBC Holdings PLC after it posted a bigger-than-expected drop in its 2016 profit. The benchmark Hang Seng index erased early gains and ended down 0.8 percent at 23,963.63 points, while Hong Kong China Enterprises Index lost 0.4 percent to 10,408.56.

3. China Equities
China stocks extended gains on Tuesday to close at a near three-month high, as  expectations on corporate earnings were improved on economic recovery, and worries over tightening monetary policy were assuaged. Major indexes remained steam in a upturn market. The Shanghai Composite Index added 13.37 points or 0.41 percent to 3,253.33 points, its highest close since Dec. 1 when the index closed at 3,273.31. The trading volume of Shanghai A shares fell to 233.1 billion yuan from 249.9 billion of the previous session.