China/US Trade Tensions Weigh On The Region

General Trend:

• Asian equity markets trade generally lower in the face of lingering trade concerns
• Market participation limited by holidays in China, Hong Kong and Taiwan
• Energy shares decline, oil prices drop over 1%
• ASX under pressure from commodity related names, while Nikkei pinned lower by financial names
• Earthquake rocks Osaka Japan region, more than 200 reported injured, so far no reports of issues with nuclear plants or major damage; several companies closing production plants to assess damages
• Japanese shipping-related firms underperform
• South Korean chipmakers decline, Hynix drops over 3%
• Australian aluminum miner South32 to pay $1.3B to acquire Arizona Mining
• Japan reports trade deficit in May, imports above ests
• NZIER cut New Zealand’s growth forecasts ahead of Thursday’s Q1 GDP release
• South Korean Won (KRW) extends declines seen at the end of last week
• Trade sensitive currencies move generally lower, AUD near 1-year low; MXN, CAD and NZD also decline

Headlines/Economic Data

Japan

• Nikkei 225 opened -0.2%
• TOPIX Marine Transportation index -3%, Iron & Steel -1.8%, Securities -1.3%, Electric Appliances -1.2%, Real Estate -0.7%
• (JP) Officials seeking to arrange a summit between PM Abe and North Korea Kim – press
• Hitachi, 6501.JP Said to target margin of 10% (timing uncertain), reiterates considering ¥1.0T in acquisitions- Japanese Press
• (JP) Japan May Trade Balance: -¥578.3B v -¥205.2Be; Adj Trade Balance: -¥296.8B v ¥144.1Be; Exports y/y: 8.1% v 7.5%e; Imports y/y: 14.0% v 8.0%e
• (JP) Japan 10-yr JGBs did not trade June 11th or 13th, making 5 days of no trading in 2018 to date v 2 days in 2017 – Japan press

Korea

• Kospi opened 0.0%
• (KR) South Korea employment indexes continued to struggle amid controversies on increased minimum wage, the job decreasing rate turned out to be the most drastic for the primary labor force age clusters in their 30s and 40s – Korean press
• (KR) Moody’s affirms South Korea Sovereign rating at Aa2. Outlook stable
• (KR) South Korea May Foreign Net Investment in Local Bonds (KRW): +3.27T v +0.71T m/m – FSS

China/Hong Kong

• Hang Seng and Shanghai Composite closed for holiday
• (US) US ANNOUNCES TARGET LIST OF CHINESE GOODS; to pursue more tariffs if China retaliates in imposing new tariffs or take punitive action against American companies; To implement 25% tariff on $50B in Chinese imports (Friday)
• (CN) China Commerce Ministry: to impose additional 25% tariff on chemicals, medical equipment, energy products, commodities from U.S. (Friday)

Australia/New Zealand

• ASX 200 opened -0.1%
• ASX 200 Resources index -1.6%, Telecom -1.5%, Energy -1.1%; REIT +0.6%, Financials +0.5%
• (NZ) New Zealand May Performance Service Index: 57.3 v 55.9 prior
• (NZ) New Zealand Institute of Economic Research (NZIER): Economists lower GDP growth forecasts, notes weaker forecasts for exports
• AZ.CA To be acquired by South32 for $1.3B cash, C$6.20/shr
• 88 Energy, [-21%], 88E.AU Operations update: Icewine#2 wellhead pressure 370psi with a flowback rate of 166 barrels of water per day
• (AU) Australia sells A$800M v A$800M indicated in Nov 2029 bonds, avg yield 2.7059% v 2.8273% prior, bid to cover 3.62x v 5.21x prior
• Rio Tinto, RIO.AU Affirms FY18 Pilbara iron ore 330-340M tons; Guides FY19 Iron Ore Capacity 360MT – Presentation for Iron ore unit

Other Asia

• (SG) Singapore May non-domestic Exports m/m: 10.3% v 6.5% prior; y/y: 15.5% v 4.6%e; Electronic Exports y/y: -7.8% v -6.9% prior; Exports to China -5.9% y/y; EU +97.5% y/y; US +54.0% y/y

North America

• PCG PG&E said to be considering bankruptcy protection – CBS
• AutoCanada, ACQ.CA Appoints special committee to review strategic alternatives
• JD Google to invest $500M into JD.com for 21.1M class A shares At $20.29/shr or $40.58/ADS in a strategic partnership
• Perry Ellis [PERY]: Agrees to going private transaction led by founder Feldenkreis; Shareholders to get $27.50/shr in cash in $437M deal
• TSLA Tesla belonging to British 13 Reasons Why director Michael Morris has burst into flames while he was driving in Hollywood – AFR

Europe

• (DE) Germany CSU party is expected to decide on Monday whether to go against Chancellor Merkel and implement plan aimed at limiting immigration – financial press
• (EU) German Chancellor Merkel to call for a special EU summit on the migrant crisis – press
• (AT) Austria calls on Germany to clarify spying allegations that German intelligence agents systematically spied on politicians – press
• (GR) On Saturday, Greece PM Tsipras survived no-confidence vote, motion was defeated by a 153 to 127 margin – financial press
• Virgin Money [VM.UK]: Expected to accept offer from CYBG – UK press

Levels as of 01:30ET

• Hang Seng -0.4%; Shanghai Composite -0.7%; Kospi -1.4%; Nikkei 225 -0.8%; ASX 200 +0.3%
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.6%, Dax -0.5%; FTSE100 -0.3%
• EUR 1.1576-1.1603; JPY 110.31-110.74; AUD 0.7426-0.7448;NZD 0.6920-0.6944
• Aug Gold +0.3% at $1,282/oz; Aug Crude Oil -1.8% at $63.64/brl; Jul Copper -0.2% at $3.13/lb