General Trend:
- Uncertainty remains regarding which specific US companies could be potentially blacklisted by China
- Little news seen in China’s white paper on trade talks with the US
- Previously announced tariffs by the US and China took effect on June 1st (as expected)
- Brent Crude Futures extend declines
- Mexican Peso (MXN) remains weaker after recent tariff threat by Trump, but pares opening declines
- Japanese equities trade at Jan 2019 lows, automakers remain generally weaker on Mexico concerns
- Softbank Group declines over 4%, funding raising plan for second Vision Fund said to have issues
- Trade-sensitive IT index underperforms in Shanghai
- Chinese courier firms rise, China opens probe into FedEx
- Markets generally ignore China Caixin PMI Manufacturing beat (data flat m/m)
- Offshore Yuan(CNH) rises after stronger Yuan fixing
- Chinese property firm CIFI Holdings addresses press speculation about open market financing restrictions in China
- State brokerage firm in China suggested the RRR could be cut if the situation worsens
- Baoshang Bank expected to sell first NCDs since recent announcement regarding takeover by the Chinese government
- Aussie Q1 inventories unexpectedly rise, GDP data seen on Wed
- South Korea exports decline for 6th straight month in May, drop in chip exports worsens
- Big US brokerage firms comment on possibility of US Fed rate cuts amid trade concerns; EUR/USD extends gain from Friday’s session
- Yen and Swiss Franc rise on safe-haven demand; Gold also adds onto recent gains
- Asian currencies generally gain against the US dollar, some focus on Yuan gains and Fed policy outlook
- South Korea final Q1 GDP data due on Tuesday, no revision expected to Q1 contraction
- Japanese companies start to prepare for possible sales tax hike in Oct 2019
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.2%
- (AU) AUSTRALIA Q1 CORP OP PROFIT Q/Q: 1.7% V 2.8%E; INVENTORIES Q/Q: 0.7% V 0.0%E
- (AU) Australia May AIG Performance of Manufacturing Index: 52.7 v 54.8 prior
- BXB.AU Completes sale of IFCO RPC pooling business, intends to begin on-market buyback in early June 2019
- GCY.AU Trading halted; placed into voluntary administration, names FTI Consulting Administrator; CEO Richard Hay and CFO Mike Ball resigned
- (AU) US decided against tariffs on Australia imports last week amid opposition from US military officials – NYT
- LYC.AU Wesfarmers will not increase offer for Lynas, to drop bid altogether – Aussie press; Wesfarmers denies press speculation on Lynas deal
- (AU) Australia May ANZ Job Advertisements m/m: -8.4% v -0.1% prior
Japan
- Nikkei 225 opened -1.3%
- (JP) JAPAN Q1 CAPITAL SPENDING (CAPEX) Y/Y: 6.1% V 2.6%E; CAPITAL SPENDING EX-SOFTWARE: 6.9% V 2.3%E; Company profits: 10.3% v -7.0% prior; Company Sales: 3.0% v 3.7% prior
- (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ will continue easing to support economy; Inflation, wage growth have remained weak – speaking to parliament
- (JP) Japan will form multiple funds related to infrastructure exports – Nikkei
- (JP) Japan PM Abe to visit Iran June 12 to 14; will meet with President Rouhani and Leader Khamenei to mediate with US – Japan Press
- 9984.JP Said to be having trouble raising $100B for new tech fund, spokesperson denies report – press
- (JP) Japan May Final PMI Manufacturing: 49.8 v 49.6 prelim
- (JP) Former BOJ Chief Economist Momma: BOJ may take minor steps like tweaking forward guidance is economy slumps again; central bank efforts to keep interest rates artificially low for too long can hurt inflation expectations
Korea
- Kospi opened -0.5%
- (KR) South Korea May Trade Balance $2.3B v $2.5Be; Semiconductor exports Y/Y: -30.5% v -13.7% prior ; Exports to China Y/Y: -20.1% v -4.5% prior
- (KR) Bank of Korea (BOK) Gov Lee: Uncertainty over future of global linkages is growing – speaking at conference
- (KR) South Korea May PMI Manufacturing: 48.4 v 50.2 prior; New exports order 10th consecutive contraction (longest since 2015)
- (KR) North Korea close to completing underground missile facility in Hamhung, South Hamgyong Province; Hamhung plant is the leading solid propellant missile production base. – Korean press
China/Hong Kong
- Hang Seng opened flat; Shanghai Composite opened +0.1%
- (CN) China raises tariffs 5-25% on $60B of US goods Saturday, preparing a blacklist of “unreliable” foreign companies
- (CN) China State Council Information Office releases white paper formalizes position on trade negotiations with US: “US government bears responsibility” for setbacks in trade talks; it imposed additional tariffs on Chinese goods that impede economic cooperation between the two countries and globally; China does not want but is not afraid of a trade war
- (CN) Data shows China exports to US are being routed through Vietnam, Taiwan, Mexico in efforts to circumvent tariffs – Nikkei
- (CN) China PBoC sets yuan reference rate: 6.8896 v 6.8992 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY80B in 7-day reverse repos v skips prior; Net: CNY0B (nil) v CNY0B prior
- (CN) CHINA MAY CAIXIN PMI MANUFACTURING: 50.2 V 50.0E
- (CN) US customs agents formally begin collecting the higher 25% tariffs on $200B list of Chinese goods arriving at US seaports (Saturday)
- (HK) Macau May Gaming Rev (MOP) 25.9B v 23.6B prior; Y/Y: +1.8% v 2.1%e v -8.3% prior
- 1234.HK Guides 2019 winter Trade Fair order value +10-13% y/y, lower than expected, saw lower than avg selling prices; US/China trade war and slower retail sales is impacting confidence of distributors
Other Asia
- (IN) US Pres Trump: “It is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019.”
- (TW) Taiwan May PMI Manufacturing:48.4 v 48.2 prior (8th straight contraction)
North America
- SPR Boeing issues statement: 1 batch of 373 and 312 Slat track produced by Spirit Aerosystems with specific lot numbers was found to have potential non-conformance and potential to crack, FAA orders them to be replaced
- FDX China to open probe of FedEx over possible infringement of Huawei’s legal rights over misrouted packages – Xinhua
- (US) JPM cuts 2019 US Treasury yield outlooks due to trade disputes
- (MX) Mexico President Lopez Obrador (AMLO): encouraged by US willingness to have dialogue over trade issues; expect good results from meeting on Wed (June 5)
- (MX) US President Trump: “Mexico is sending a big delegation to talk about the Border. Problem is, they’ve been “talking” for 25 years. We want action, not talk. They could solve the Border Crisis in one day if they so desired. Otherwise, our companies and jobs are coming back to the USA!” – tweet
- (MX) Follow Up President Trump: Mexico delegation to visit White House Wednesday, June 5th
- CY Confirms to be acquired by Infineon Technologies for $23.85/shr in ~€9.0B cash deal
- (US) Fed’s Daly (dove, non-voter): We should think about more monetary policy tools; looking at policy framework more broadly; MMT doesn’t hold up in principal, open to debate, it perhaps on some uses – speaking in Singapore
- Reminder: Trump is on his way to UK for his first state visit, before traveling to Ireland and France
Europe
- AIR.FR Written to airlines asking for support for the company in trade dispute with Boeing, warns that if there is a trade dispute between US/EU it will result in higher aircraft prices and passenger fares for both sides – press
- (DE) German SPD leader Nahles resigns; Germany’s Scholz will not run for Social Democrat Chairman
- (GR) Greece provisional local election results show conservative opposition New Democracy party swept 12 of 13 regions ahead of snap election on July 7
Levels as of 01:20ET
- Hang Seng -0.4%; Shanghai Composite -0.2%; Kospi +1.1%; Nikkei225 -1.2%; ASX 200 -1.1%
- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.8%, Dax -0.6%; FTSE100 -0.5%
- EUR 1.1163-1.1191; JPY 108.08-108.36; AUD 0.6927-0.6959; NZD 0.6528-0.6557
- Commodity Futures: Gold +0.5% at $1,317/oz; Crude Oil -1.0% at $52.97/brl; Copper +0.4% at $2.64/lb
