General trend
- Markets rebound snapping last week’s declines with most of the major markets in the region trading higher. Q2 earnings season kicks off, markets process China’s RRR cut From Friday and ECB’s Lagarde notes policy review for July meeting.
- US futures opened higher before pulling back mid-session.
- A$ weaker as COVID lockdown in Sydney expected to be extended beyond Friday as cases continue to rise. Offshore yuan stronger after RRR cut Friday.
- China cut RRR 50bps Friday after the close to support what is increasingly expected to be a weaker H2. Early analysis suggests this move will be a positive for brokers but mixed effect on banks. The cut will release around $154B in liquidity, but a PBOC adviser noted liquidity conditions would remain basically stable despite the cut.
- RBNZ Shadow board points to a tightening within a year.
- G20 Fin Ministers met over the weekend in Italy, worried that lack of vaccine will derail an economic recovery and for the first time mentioned carbon pricing.
- Thailand warns may revises outlooks due to recent COVID resurgence, Vietnam implements new movement restrictions. Tokyo enters state of emergency for COVID other areas are expected to follow soon. Seoul enters is strongest restrictions for 12-25th of July.
- Reminder on Tuesday (July 12th) China to release June trade figures.
Headlines/Economic data
Australia/New Zealand
ASX 200 opened 0.0%.
- (NZ) RBNZ Shadow Board (NZIER): Calling for RBNZ to tighten policy given the pick up in inflation pressures in New Zealand (as soon as July meeting).
- API.AU Received unsolicited, non-binding proposal from Wesfarmers at A$1.38/shr cash; board to review.
- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$90M in government bonds in QE auction v NZ$100M sought.
- (SG) Singapore, Australia travel bubble start, again delayed to end of 2021 due to recent spike in cases in Sydney.
Japan
- Nikkei 225 opened +1.7%.
- 6758.JP Expect that robots will takeover manufacturing of TVs, cameras and smartphones, unmanned production lines expected to cut costs by 70% at main TV factory in Malaysia by 2023 v 2018 – FT.
- (JP) Japan Jun PPI (CGPI) M/M: 0.6% v 0.5%e; Y/Y: 5.0% v 6.3%e.
- (JP) JAPAN MAY CORE MACHINE ORDERS M/M: 7.8% V 2.4%E (largest increase since Oct 2020); Y/Y: +12.2% V 6.3%E.
- 4568.JP Planning large scale non-inferiority COVID vaccine trial this year.
- (JP) Recent review of Japan TSE first section companies finds that 30% will not qualify for prime market when overhaul takes place in April 2022 – press.
Korea
- Kospi opened +0.3%.
- (KR) South Korea will enforce its strictest social distancing measures starting Monday for 2 weeks, aiming to rein in the resurgence of the new COVID cases in the greater Seoul area – Yonhap.
- (KR) Foreign investors net sold KRW500B in Korean equities in June (2nd consecutive month of net selling); Net sold bonds KRW499B – FSS.
- (KR) office of the South Korea President reiterated that the attendance of President Moon to opening ceremony of Olympics in Tokyo, depends on whether the visit would guarantee a fruitful summit meeting between the two countries’ leaders.
- 000660.KR Started mass production of of 8GB LPDDR4 mobile DRAM based on 1a-nm EUV process this month; Expect 1a-nm DRAM to alleviate supply and demand conditions.
- (KR) South Korea Fin Min Hong: It’s not easy for the govt to increase the size of an extra budget (currently under review at parliament) as politicians made the request amid the 4th wave of the pandemic; should sell more bonds but cannot – Yonhap.
China/Hong Kong
- Hang Seng opened +1.2%; Shanghai Composite opened +0.6%.
- (CN) China Sec Journal: GDP may slow in H2; Govt may increase policy support for economy.
- (CN) CHINA PBOC CUTS RESERVE REQUIREMENT RATIO (RRR) BY 50BP; effective Thurs, July 15th (Friday after the close).
- 700.HK SAMR confirms blocking of Tencent, Huya, Douyu merger; merger should not go through despite Tencent’s offer of restrictive conditions.
- (CN) Cyberspace Administration of China orders all companies that have information on more than 1.0M users, to apply for approval when seeking to IPO in other countries – press.
- (CN) China Commerce Ministry calls US blacklist of Chinese companies “unreasonable suppression”.
- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.
- (CN) China PBOC sets Yuan reference rate: 6.4785 v 6.4755 prior.
Other
- (G20) G20 Fin Mins agree on minimum corporate tax of at least 15%, carbon pricing mechanisms can be part of the policy mix used to address climate change (1st mention of carbon pricing).
North America
- (US) Treasury Sec Yellen: Expect to finalize tax changes for large firms in 2022, needs to be faster distribution of COVID vaccines globally or economic recovery will be impacted – speaking from G20.
- (US) Fed’s Quarles (hawk, voter): Financial stability board taking critical role in coordinating global approach to climate related financial risks (no comments on monetary policy or economic outlook).
- WEBER.IPO Grill maker, Weber, planning to IPO; Weber is backed by BDT – press.
Europe
- (DE) ECB’s Schnabel (Germany): do not expect to see ‘excessively high’ inflation; current higher inflation is temporary – press interview.
- (EU) ECB chief Lagarde: ECB policy forward guidance to be reviewed during July 22nd meeting, possible measures for 2022; PEPP may be followed by transition into new format; Must not create anticipation emergency tools near end.
- (IT) Italy beats UK to win European Championship (football/soccer).
Levels as of 01:15ET.
- Hang Seng +0.7%; Shanghai Composite +0.9%; Kospi +0.9%; Nikkei225 +2.2%; ASX 200 +0.8%.
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.1%, Dax -0.2%; FTSE100 -0.2%.
- EUR 1.1880-1.1865; JPY 110.25-110.02; AUD 0.7493-0.7468; NZD 0.7009-0.6977.
- Commodity Futures: Gold -0.4% at $1,802/oz; Crude Oil -0.1% at $74.46/brl; Copper -0.4% at $4.32/lb
