Asian Market Update: The yen continues to dictate equity trading - U.S. subprime worries: Federal bank regulators ordered Fremont, a major lender in the troubled subprime home-mortgage business, to tighten its loan policies and operations to avoid future losses from defaults by borrowers. It was the first move by federal regulators against an individual subprime mortgage institution. - Doubts over the outlook for U.S. economic growth: The Bank of Korea said its U.S. economic growth forecast is now lower than the pace previously projected in 4Q06. - More signs that risk aversion is set to return: Moody's says that the Australian prime housing market delinquencies continue to rise. - Asian equities: The Nikkei 225 continued to trade cautiously on carry trade unwinding concerns and ahead of the expiration of options and futures on Friday, but staged a strong rebound towards the end of the trading day. During the morning session Japanese tech shares traded down on worries of US economic strength. Japanese chip-related shares rallied after Goldman Sachs upgraded Toshiba, saying that prices of NAND flash memory will likely bottom out in the current quarter. Foreign investors turned net sellers of Japanese stocks in the week to March 3, making them net sellers for the first time in eight weeks. Japanese steel companies also continued to gain on merger speculation, as investors make bets that steel companies will raise their dividends. The KOSPI is higher by more than 0.50% after the Bank of Korea voted to leaves rates unchanged. Chinese equities are currently trading up after choppy trade in the early morning. The ASX 200 is lower by more than 0.32% as metals shares weighed on the index. - Japanese money supply data hints at slowing consumption going forward: Japanese money supply data showed a continuing shift of funds from high-liquidity money to quasi-money (such as time deposits) and investment trusts. Analysts speculated that this may be partly because affluent people are more inclined to invest than consume luxury items now that interest rates and asset prices are rising. This may have a negative impact on consumption going forward. - Signs that Japanese investors continue to sell yen: Japanese investors bought a net Â¥49.2B worth of foreign stocks in the past week, making them net buyers of foreign stocks for the fourth straight week - Chinese bubble fears: The China Securities Journal reported that China's February financial companies CNY loans went up by more than 20% y/y (This is ahead of government target of 16%). US Treasury Secretary Paulson said that Chinese stability is being threatened by the slow pace of reforms. He added that U.S.-China disagreements center on pace of reforms, not the direction of reforms. (Citigroup is bullish on Chinese economic growth outlook: Citigroup upgrades its forecast of iron ore prices, sees increase of +7% vs. prior forecast of -20%, citing stronger Chinese demand) - Foreign exchange: During the early part of the Asian session the JPY rallied, but later gave up gains as high yielding currencies advanced. The NZD ignored RBNZ governor comments that the "Kiwi is past it's peak" and surged more than 0.4% against the USD. In the absence of a strong move in global equity markets, major currencies will likely be consolidating ahead of the ECB monetary policy decision and the release of nonfarm payrolls on Friday. - Commodities: Crude oil is higher and just below $62, as US inventory data came in lower than expected. Spot gold is higher by more than 0.15% and holding above $650 amid cautious and volatile trading in the USD/JPY pair ahead of Friday's US payrolls report. Shanghai Copper opened higher by 2%, tracking gains in the LME contract.