General Trend:
- US markets rose on Tuesday amid comments from Fed officials (Powell, Clarida, Evans)
- Gainers in Japan include auto-makers, large tech firms and financials; Trade-sensitive Marine/Transportation companies also rising
- Property and financial shares rise in Shanghai
- Chinese property developers rise on speculation Nanjing eased property curbs
- Chinese rare earth firms gain, China said to have held meeting on rare earth industry
- Shanghai Health Care index drops over 2%, China plans to audit various drug companies
- China Caixin Services PMI hit 3-month low, the gauges for new business and employment declined
- Little initial market reaction seen to Aussie GDP data
- South Korea confirms April current account deficit on dividend related flows
- JGB Futures trade at highest level since July 2016 despite gains in the Nikkei
- NZD rises on session, RBNZ official reiterated main view is for rates to remain around current levels
- Philippines Central Bank Chief plays down higher than expected May CPI data
- Taiwan Semi continues to target improving H2 conditions
- Samsung said to revise production at mobile phone plant in China
- Australian IoT and cloud company Buddy Technologies [BUD.AU] said its smart lighting solutions are not currently subject to the higher US tariffs on China, notes its prior efforts to reclassify products under non-tariffed import codes.
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.3%
- (AU) AUSTRALIA Q1 GDP Q/Q: 0.4% V 0.5%E; Y/Y: 1.8% V 1.8%E (slowest annual pace since 2009)
- (AU) Australia May AiG Performance of Services Index: 52.5 v 46.5 prior (highest since Nov 2018, first expansion since Dec)
- (NZ) RBNZ Assistant Gov Hawkesby: RBNZ central view is interest rates to remain broadly around current levels for foreseeable future; have room to provide stimulus if needed
- VOC.AU EQT withdraws A$5.25/shr takeover offer
- (AU) Reserve Bank of Australia (RBA) Gov Lowe: It is not unreasonable to expect a lower cash rate but limits to what cuts can achieve; Economic forecasts had assumed rates at 1.00% by year end, the board has not yet made a decision, reiterates stance that such depends on labour market – speaking at RBA Board Dinner (after the close yesterday)
- DCN.AU Starts strategic review; cuts Q1 Mt Morgan production 36-38K oz (prior 50-55K) at AISC A$1,500-A$1,600/oz (prior 1,050-1,150)
- (AU) Australia sells A$900M v A$900M indicated in 2.50% May 2030 bonds, avg yield 1.5477% v 1.8222% prior, bid to cover 2.67x v 3.17x prior
Japan
- Nikkei 225 opened +1.3%
- (JP) Japan PM Abe: Fundamentals that support domestic demand are firm
- TM Issues letter to US dealers that estimates potential tariffs on imports could cost suppliers $0.2-1.1B – press
- 5301.JP Cuts graphite electrode prices by more than 10% – Nikkei
- 4010.JP Acquired US based Advanced Polymer Technologies for $13.9M (~¥1.5B) – Nikkei
Korea
- Kospi opened +0.8%
- (KR) South Korea Apr Current Account: -$0.66B v $4.8B prior (1st deficit since April 2012); Goods Balance: $5.7B v $8.5B prior; April dividend payments overseas rose to $6.8B (second highest level on record)
- (KR) Bank of Korea (BOK): Current account likely to return to surplus in May
- 005930.KR Adjusting production volumes at mobile phone factory in Huizhou china due to increasing competition, including cutting jobs
China/Hong Kong
- Hang Seng opened +1.3%; Shanghai Composite opened +0.7%
- (CN) CHINA MAY CAIXIN PMI SERVICES: 52.7 V 54.0E (3-month low)
- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v CNY60B prior; Net: drain CNY210B v CNY90B prior
- (HK) Former HKMA Chief Yam: see China govt keeping yuan at 7 to the USD
- (CN) US Treasury Dept Spokesperson: PBoC Gov Yi Gang to meet with US Treasury Sec Mnuchin at G20 Finance Meeting
- (CN) China National Development and Reform Commission (NDRC) held meeting seeking advice from industry experts on rare earths industry; raised issues ranging from unauthorized exploitation and production, inefficient environmental protection, to the insufficient utilization
- (CN) China President Xi: China’s economy is stable and improving, confident of handling various risks, challenges; China has ample room to use policies to deal with risks
- (CN) China Automobile Dealers Association (CADA): Estimated CNY500B worth of dealer inventories will be illegal to sell after new emissions standards take effect July 1 – Chinese press
- (CN) Concerns related to trade war drive record foreign outflow from China stocks; Chinese equity markets had largest foreign capital outflow on record of $12B in April and May – FT
- (HK) Hong Kong May PMI: 46.9 v 48.4 prior; New orders has largest contraction in 3-years
- (CN) China steel making city Tangshan extends pollution related production cuts to the end of June – China local press
- (CN) China PBoC sets yuan reference rate: 6.8903 v 6.8822 prior
Other Asia
- (PH) Philippines May CPI Y/Y: 3.2% v 2.9%e (first acceleration since Oct 2018)
- (PH) Philippines Central Bank (BSP) Chief Diokno: Sees Q3 CPI at ~2%; CPI to avg ~3% to 2020
North America
- (US) Interior Dept plans to accelerate permitting process for rare earths mining
- (US) Fed’s Kaplan (dove, non-voter): wants to see if trade tensions ease before considering a rate cut; right now it pays to be patient and vigilant – press interview
- GM Trump Administration denies GM request for tariff relief for China-made Buick Envision SUV – financial press
- (MX) President Trump: Not bluffing on Mexico tariffs (responding to Schumer)
- (US) Former Treasury Sec Summers: Urges Fed to cut 50bps this summer; Fed should be ready to do more if needed in the fall
Europe
- (UK) US President Trump: ‘I don’t see it [NHS] being on the table. That’s something I would not consider part of trade. That’s not trade.- interview with Piers Morgan (full interview out later today)
- (UK) Conservative Party spokesperson: confirms party will name new PM by week of July 22nd – press
Levels as of 01:20ET
- Hang Seng +0.6%; Shanghai Composite +0.7%; Kospi +0.2%; Nikkei225 +1.8%; ASX 200 +0.5%
- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.1%; FTSE100 +0.1%
- EUR 1.1251-1.1266; JPY 108.03-108.28; AUD 0.6986-0.7005; NZD 0.6604-0.6637
- Commodity Futures: Gold +0.2% at $1,331/oz; Crude Oil -0.7% at $53.13/brl; Copper +0.2% at $2.67/lb
