General Trend:
- Asian equities trade mostly lower to start new quarter, Hong Kong closed for holiday
- Chinese equities decline after Friday’s gain, Shanghai property index drops over 2.5%
- Tariff implementation in focus: Canada’s retaliatory tariffs on US goods due to take effect on July 1st, China’s retaliatory measures scheduled to take effect on July 6th.
- Nissan and Australia’s Automotive Holdings each cancel deals with Chinese companies
- China June Manufacturing PMI data missed ests, exports noted
- Japan Q2 Tankan survey mixed: Capex and large manufacturer outlook above ests, big company sentiment below ests
- South Korea June exports unexpectedly decline
- Australia house prices have 9th straight m/m decline in June (Corelogic)
- New Zealand Treasury sees weak business confidence as risk to growth
- Chinese yuan (CNY) fixed stronger for first time in 9 sessions
- Mexico’s Lopez Obrador said to win presidential elections, in line with press speculation; Peso (MXN) rallies over 1%
- Germany’s CSU party said to raise concerns about recent EU deal on migration; CSU Party head Seehofer expected to talk with CDU’s Merkel later today
- Crude Oil Futures decline over 1% after US President Trump spoke with the Saudi King
- Reserve Bank of Australia (RBA) expected to hold rate decision on tomorrow’s session
- US June employment data due for release on Friday, July 6th
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.3%
- TOPIX Retail Trade -2.7% index, Iron & Steel -1.6%
- (JP) Japan said to see FY19 real GDP growth 1-2% – Japanese Press
- (JP) Japan military said to have eased its defense force vigilance related to North Korea – Japanese Press
- Orix, 8591.JP Confirms to acquire NXT Capital; no terms disclosed
- (JP) JAPAN Q2 TANKAN LARGE ALL INDUSTRY MANUFACTURING INDEX: 21 V 22E; LARGE MANUFACTURING OUTLOOK: 21 V 20E; LARGE ALL INDUSTRY CAPEX 13.6% V 9.3%E
- (JP) JAPAN JUN FINAL PMI MANUFACTURING: 53.0 V 53.1 PRIOR
- (JP) Bank of Japan (BOJ) said to be planning to revise inflation forecast lower to ~1% for FY18 (prior 1.3%); FY19 to 1.5% (prior 1.8%) – Nikkei
- (JP) Japan Govt said to have finalized FY19 GDP forecast in the 1% range (prior 0.8%) – Sankei
Korea
- Kospi opened -0.2%
- (KR) Some speculation that South Korea will not meet its 3% GDP target this year due to challenges ranging from poor employment figures to weak investment and consumption – Korean press
- (KR) According to satellite imagery North Korea is completing a major expansion of a key missile-manufacturing plant – Korean press
- (KR) South Korea announces records on currency market intervention for H2 2018 will be posted on the website of the Bank of Korea in March of 2019
- (KR) South Korea Jun PMI Manufacturing: 49.8 v 48.9 prior
- (KR) South Korea sells KRW350B in 6-month Monetary Stabilization Bonds (MSBs); avg yield 1.73%
- (KR) South Korea sells KRW1.55T v KRW1.55T indicated in 3-year bonds, avg yield 2.14%
China/Hong Kong
- Hang Seng opened closed for holiday, Shanghai Composite -0.2%
- (CN) CHINA JUN OFFICIAL GOVT MANUFACTURING PMI: 51.5 V 51.7E; Non-manufacturing PMI: 55.0 v 54.8e; Composite PMI: 54.4 v 54.6 prior
- (CN) China GDP expected to grow by 6.6% in 2018 – Chinese Press
- (HK) Macau June Gaming Rev MOP22.5B, Y/Y: 12.5% v 18%e (2nd consecutive missed estimate)
- (CN) China Ministry of Commerce (MOFCOM) Min Zhong Shan: Reiterates China will oppose any kind of protectionism, will widen market access significantly
- (CN) China NDRC will improve price mechanism for green development
- (CN) China property investment seen slowing in H2 2018 – Chinese Press
- (CN) China PBoC Open Market Operation (OMO): skips OMO operations v CNY80B injected in 7-day reverse repos prior; Net: CNY20B drain v CNY20B drain prior
- (CN) China PBoC set yuan reference rate at 6.6157 v 6.6166 prior
- (CN) CHINA JUN CAIXIN PMI MANUFACTURING: 51.0 V 51.1E (prior 51.1)
Australia/New Zealand
- ASX 200 opened 0.0%
- ASX 200 Consumer Discretionary index -0.7%, Energy -0.6%, Resources -0.4%, Financials -0.3%; REIT +0.5%, Telecom +0.4%
- RIO.AU Labor costs at iron ore mines in Australia said to rise by up to 10% – AFR
- SIG.AU Revises FY18/19 Underlying EBIT guidance to ~A$75M; unable to reach agreement with Chemist Warehouse regarding terms for contract extension
- (AU) Australia Jun CBA Australia PMI Manufacturing: 55.0 v 53.2 prior
- GTY.AU Hometown announces intention to make cash takeover offer equal to A$2.25/stapled security, represents A$2.3035/stapled security before being adjusted for distribution; willing to raise offer to A$2.30/stapled security (A$2.3535 before being adjusted for distribution)
- (AU) Australia sees 2018 commodity exports at a record A$226B, +18% y/y
- (AU) Australia buys back A$300M in Oct 2019 and April 2020 bonds, bid to cover 4.55x
- (AU) Certain banks in Australia said to have raised mortgage rates amid higher funding costs – US financial press
- (AU) Reserve Bank of Australia (RBA) is now expected by market economists to leave rates hold for another year v 2 rate hikes expected by mid-2019 in March poll- AFR
- (AU) Australia sells A$300M v A$300M indicated in 2.25% Nov 2022 bonds, avg yield 2.2034% v 2.2716% prior, bid to cover 7.68x v 4.03x prior
- (NZ) New Zealand Treasury monthly economic indicators report: Soft business confidence is a risk to GDP outlook; seeing signs of less momentum in the economy
Other Asia
- (ID) Indonesia Jun PMI Manufacturing: 50.3 v 51.7 prior
- (TW) Taiwan Jun PMI Manufacturing: 54.5 v 53.4 prior
- (VN) Vietnam Jun PMI Manufacturing: 55.7 v 53.9 prior (highest level since March 2011)
North America
- (US) President Trump: Will wait until midterm elections to decided on NAFTA, no plans to back down on China tariffs; OPEC is manipulating the oil market – Fox interview
- (SA) President Trump: Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2.0M barrels to make up the difference…Prices to high! He has agreed! – tweet
- (SA) White House corrects Trump tweet on Saudi Arabia oil boost; statement that the Saudis have 2M barrels per day of spare capacity, which would be used prudently if and when necessary to ensure market balance and stability
- (MX) Mexico Presidential election results: Andrés Manuel López Obrador (AMLO) of the MORENA party winner of election
- (MX) Mexico President-elect Lopez Obrador: To respect central bank autonomy; Will seek friendship with US and mutual respect
- (US) US President Trump draft executive order said to authorize the Commerce Secretary to use national security grounds to block transactions which involve US and foreign telecom equipment manufacturers – Washington Post
- TSLA Panasonic Exec said co. is willing to consider investing more in Tesla’s gigafactory if requested – financial press
- (CA) Canada Foreign Minister Freeland: tariffs on U.S. products to take effect on 7/1
Europe
- (DE) Germany Interior Minister/CSU Chairman Seehofer said to have offered resignation to colleagues in CSU Party over migrant issue; CSU Caucus chief Dobrindt said to oppose Seehofer quitting – financial press
- (DE) Follow Up: Germany Interior Minister/CSU Chairman Seehofer said to remain in politics if Merkel’s CDU party backs down over migration – German Press
- (DE) Germany CSU Party Head Seehofer: Wants to avoid collapse of Merkel’s government; seeking one more talk with the CDU party
- (UK) UK PM May Representative in Brexit talks Robbins said to have told ministers that there is no chance for ‘bespoke’ trade deal – UK Press
- (UK) Tory MP Rees-Mogg: Cautions PM May of Tory rebellion if Brexit promise is broken; May must deliver the Brexit she promised or risk collapsing the government – US financial press
- (EU) EU makes written submission to US Commerce Dept warning that EU and others will likely respond to tariffs on foreign autos, by targeting $294B in US goods in retaliation – FT
Levels as of 01:30ET
- Hang Seng closed; Shanghai Composite -1.4%; Kospi 0.0%; Nikkei225 -1.8%; ASX 200 -0.1%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.3%, Dax -0.5%; FTSE100 -0.5%
- EUR 1.1527-1.1692; JPY 110.62-111.06; AUD 0.7373-0.7410;NZD 0.6765-0.6792
- Aug Gold -0.2% at $1,252/oz; Aug Crude Oil -1.0% at $73.42/brl; Sept Copper -0.2% at $2.96/lb
