Asian Equities Track US Declines

May 29 19, 06:37 GMT

General Trend:

Trade and bond yields drive sector movements in Asia
Asian financials trade generally weaker as bond yields decline
Brokerage and electronics firms weigh on the Nikkei
Trade-related concerns continue to weigh on Japanese and South Korean chipmakers
Chinese mobile chipmaker Sanan Optoelectronics rises over 1%
Chinese rare earth firms gain, continued press speculation that China could use rare earth exports as trade weapon
China PBoC continues to step up cash injections after recent bank takeover; Chinese gov’t bond yields decline
China interbank market and NCDs remain in focus after takeover of Baoshang Bank
More analysts see risk of below 1% RBA cash rate; Aussie 10-year yield hits record low and moves below RBA’s 1.50% cash rate
US Treasury Semiannual Currency Report: Declines to name any country as manipulator; adds Italy, Ireland, Malaysia and Vietnam to watch list; Removes India and Switzerland from watch list
US Treasury also lowered 2 thresholds used to designate FX manipulators.
Korean Won (KRW) declines amid equity outflows, Bank of Korea rate decision seen on Friday
Brent Crude Futures decline as China oil product apparent consumption dropped in April
Huawei said its situation will not delay 5G rollout in China

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.1%
(NZ) New Zealand Central Bank (RBNZ) Financial Stability Report: Financial system remains resilient to broad range of economic risks, imperative to improve NZ financial system resilience while conditions are conductive
(NZ) Reserve Bank of New Zealand (RBNZ) Dep Gov Bascand: Banks are passing on about 150bps of recent rate cut, still working its way through the economy
(NZ) New Zealand Central Bank (RBNZ) Gov Orr: Open minded on any parameter of capital review
TLS.AU Raises FY19 restructuring costs to A$800M (prior A$600M); to record impairment and writedown value of legacy assets by ~A$500M; to reduce headcount by 6,000 by end of FY19
(AU) Australia sells A$3.0B v A$3.0B indicated in new 1.50% June 2031 bonds, avg yield 1.6073%, bid to cover 3.29x
(NZ) New Zealand May ANZ Business Confidence: -32.0 v -37.5 prior; Activity Outlook: 8.5 v 7.1 prior

Japan

Nikkei 225 opened -1.0%
TM Expected to make investment of ¥50B in Didi Chuxing, the two companies will also create car leasing jv – Japanese Press (later says has no comment right now)
(JP) Bank of Japan (BOJ) Gov Kuroda: Continued low rates can change risk taking behavior of financial institutions, affect financial stability; no macro prudential tool kit is perfect
(JP) Japan Cabinet Secretary Suga: Unthinkable to call an arbitrary election, has never mentioned dissolving parliament
(JP) Former ECB chief Trichet: Nobody can say BOJ isn’t doing enough and did not do enough in monetary policy with its bold and audacious decisions

Korea

Kospi opened -0.1%
(KR) South Korea Jun Business Manufacturing Survey: 75 v 77 prior; Non-Manufacturing Survey: 72 v 77 prior
005380.KR Hyundai Kia Apr YTD combined sales 396.8K vehicles, +3.7% y/y; Hyundai Kia Apr YTD combined China sales 286.3K vehicles, -18.0% y/y

China/Hong Kong

Hang Seng opened -0.6%; Shanghai Composite opened -0.5%
(CN) China PBoC Open Market Operation (OMO): Injects CNY270B in 7-day reverse repos v CNY150B injected prior; Net: CNY250B injection v CNY70B prior (largest injection since Jan 17)
(CN) China PBoC sets yuan reference rate: 6.8988 v 6.8973 prior
(CN) China National Development and Reform Commission (NDRC) Spokesperson: China will give priority to domestic needs for rare earth, not ruling out using rare earths in trade dispute with US – SCMP
(CN) China Banking and Insurance Regulatory Commission (CBIRC) chairman Guo Shuqing: China has sound economical fundamentals which mean yuan will not see continuous depreciation and speculative short yuan positions will surely lead to a huge loss – Xinhua
(CN) China PBOC Gov Yi Gang: Confident to keep CNY currency (Yuan) stable at reasonable and equilibrium level; Benchmark Deposit Rate will continue to play an important role in promoting market-based interest rate reform – financial press
HUAWEI.CN Files for motion for summary judgement asking US Federal Court in Texas to declare 2019 National Defense Authorization Act unconstitutional

Other Asia

(MY ) Malaysia Central Bank (BNM): Sees no economic impact from being included on US Treasury’s FX watchlist; Malaysia does not practice unfair currency practices

North America

(US) TREASURY DEPARTMENT SEMI-ANNUAL CURRENCY REPORT: NO MAJOR TRADING PARTNER A CURRENCY MANIPULATOR; DOES NOT NAME CHINA A MANIPULATOR
SPDR Gold Trust holdings -0.2% to 737.3 metric tons

Europe

(UK) Govt spokesperson: No deal Brexit has remained the legal default; have the responsibility to prepare for it
(UK) Labour’s Corbyn (opposition) said to be ready to back a second Brexit referendum, may announce it very soon – UK press
(UK) May BRC Shop Price Index: Y/Y 0.8% v 0.4% prior

Levels as of 1:20 ET

Nikkei 225, -1.3%%, ASX 200 -0.7%, Hang Seng -0.3%; Shanghai Composite -0.1%; Kospi -1.3%
Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.5%
EUR 1.1174-1.1159 ; JPY 109.43-109.14 ; AUD 0.6931-0.6919 ;NZD 0.6553-0.6540
Gold +0.2% at $1,279/oz; Crude Oil -1.1% at $58.50/brl; Copper -0.4% at $2.685/lb