China Takes Steps To Spur Domestic Consumption

May 28 19, 06:35 GMT

General Trend:

Equity markets open little changed with both US and UK markets closed on holiday, so little initial direction offered, as the session progressed markets traded higher, yields continue to decline
Trump wraps up trip in Japan, Abe notes that they did not talk about currency clause, trade deal more likely to come in August
Trump notes that China is ready for a trade deal, but US is not ready to make one with China, little reaction seen in markets or currency, despite the threat of higher tariffs
China markets boosted by two regions relaxation on lottery and bidding indicators as well as Guangdong easing auto license plate restrictions
China President Xi reiterates plans to open up additional sectors to foreigners and notes China is willing to expand service trade cooperation with all nations
Multi year highs in iron ore gave a boost to Aussie market
Japan 20-yr and 40-yr JGB yields fall to multi-year lows

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.1%
SML.NZ Guides initial 2019/20 Milk price NZ$7.00/kgMS; raises 2018/219 milk price to NZ$6.25/kgMS (prior NZ$6.40)
(AU) According to analysts, the interest rate cut in Australia that will go into effect June 4th expected to immediately stop falling house prices – AFR
BKY.AU Strength attributed to election results in Spain and possible authorization to operate uranium mine in Salmanca – Spanish press

Japan

Nikkei 225 opened slightly higher
RNO.FR Any merger with Fiat Chrysler would not include Nissan – financial press
(JP) Japan Fin Min Aso: Japan and US have a deeper understanding of trade, Trump did not talk about currency clause
(JP) Japan government announces new rule to limit foreign ownership of IT and telecom firms, effective Aug 1
(JP) Japan Apr PPI Services Y/Y: 0.9% v 1.1%e
8035.JP To buy back ¥150B in shares (8.5% of shares outstanding) (yesterday)
(JP) Japan Econ Min Motegi: President Trump comments show aim to accelerate talks, no comment if a trade deal will be able to be reached by August
(JP) Japan MoF sells ¥400B v ¥400B indicated in 0.50% (prior 0.80%) 40-year JGBs, highest accepted yield 0.535% v 0.610% prior, bid to cover:3.87x v 3.50x prior

Korea

China/Hong Kong

Hang Seng opened -0.1%; Shanghai Composite opened -0.1%
(CN) US President Trump: China would like to make a trade deal, US is not ready to make a trade deal with China – speaking from Japan
(CN) China PBOC spokesperson: Will monitor liquidity of smaller banks and use various monetary policy instruments such as OMOs to keep banking system liquidity reasonable and sufficient
(CN) China PBoC Dep Gov & CIRC Chairman Guo: Financial industry to encourage exploration of alternative markets for firms experiencing trade frictions – Xinhua
BABA Considering $20B listing on Hong Kong Exchange – press
0175.HK CEO: Auto sales in H1 are not looking optimistic
(CN) China Industry Ministry MIIT Vice Min Wang Zhijun: US tariffs increase will lead to some increase in enterprise operation costs, lower competitiveness and fewer orders, but the impact on China’s manufacturing sector is generally controllable; The $200B in goods that falls under newly raised tariffs accounts for 41.8% of China’s US-bound exports, but only 8% of total exports – Xinhua
(CN) China PBoC Open Market Operation (OMO): Injects CNY150B in 7-day reverse repos v CNY80B injected prior; Net: CNY70B injection v CNY80B prior
(CN) China PBoC sets yuan reference rate: 6.8973 v 6.8924 prior
(CN) China Guangdong to ease auto plate restrictions – Chinese press
(CN) China President Xi: China will increase access for foreigners to further sectors, willing to expand service trade cooperation with all nations – local media

Other Asia

(TH) Thailand Apr Manufacturing Production Index y/y: -2.7% v -0.9%e; Capacity Utilization: 63.9% v 74.3% prior
2353.TW Chairman: continue to finalize production plans outside of China for products bound for the US, all options remain on the table

North America

Markets re-open Tuesday after holiday
TSLA Said to plan announcement on China for Friday, May 31st
(CA) Canada Govt said to give formal notice to bring legislation forward to ratify the new NAFTA treaty – financial press

Europe

RNO.FR Board met today to examine the proposal received from Fiat Chrysler Automobiles regarding a potential 50/50 merger between Renault and Fiat; board decided to study with interest the opportunity of such a business combination, comforting Groupe Renault’s manufacturing footprint and creating additional value for the Alliance
(IT) EU Commission said to consider opening discipline process on Italy as soon as Jun 5th regarding its 2018 debt levels – financial press
(KW) Kuwait Oil Min: Sees balanced market until end of year – financial press

Levels as of 01:10ET

Hang Seng +0.4%; Shanghai Composite +0.9%; Kospi +0.1%; Nikkei225 +0.5%; ASX 200 +0.5%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.4%, Dax +0.2%; FTSE100 +0.4%
EUR 1.1179-1.1203; JPY 109.42-109.64; AUD 0.6916-0.6929; NZD 0.6543-0.6554
Commodity Futures: Gold -0.1% at $1,281/oz; Crude Oil +0.9% at $59.16/brl; Copper -0.2% at $2.71/lb