General Trend:
- Asian equities trade mixed; HK and China property sectors remain weak
- Australia’s Bank of Queensland declines on weaker than expected H1 results
- China/US trade back in the spotlight as US acts against telecom ZTE
- China Q1 GDP in line, industrial production slows in March
- PBoC raises rate on 1-year medium-term lending facility (MLF)
- Reserve Bank of Australia (RBA) minutes reiterate more likely next rate move is up, no strong case for near term adjustment
- Hong Kong Monetary Authority (HKMA) steps up currency market interventions, HKD remains near weaker end of trading band
- Singapore March exports to China decline
- US said to be looking into sanctions against China tech firms, China Commerce dept bans US companies from supplying ZTE
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.2%; closed +0.1%
- TOPIX Retail Trade index +0.1%; Securities -1.1%, Iron & Steel -0.9%, Real Estate -0.9%, Electrical Appliances -0.3%
- (JP) Japan Cabinet Office (Gov’t) Monthly Economic Report for Apr: Maintains its overall assessment that economy was recovering at a moderate pace
- (JP) Japan MoF sells ¥2.0T v ¥2.0T indicated in 0.10% (prior 0.10%) 5-yr bonds; avg yield -0.1200% v -0.108% prior; bid to cover 4.40x v 4.18x prior
Korea
- Kospi opened +0.1%
- (KR) Policymakers and private economists have different opinions if South Korea will reach 3% GDP target in 2018; Most private research institutes expect the 2018 growth rate to hover below the government-set target of 3% – Korean press
- Samsung, 005930.KR Ministry of Trade, Industry and Energy: committee on the protection of industrial technologies failed to reach an agreement on whether to give chipmaking technologies protection as national core assets amid an ongoing dispute over the firm’s workplace safety
- (KR) North and South Korea said to discuss announcing end to military conflict – South Korean Press
China/Hong Kong
- Hang Seng opened +0.1%, Shanghai Composite +0.1%
- Hang Seng Industrial Goods index -1.3%, Consumer Goods -0.8%, Info Tech -0.8%, Property/Construction -0.5%, Telecom -0.4%, Financials -0.3%; Services +0.7%, Energy +0.3%
- Shanghai Property sub-index declines over 0.5%
- (CN) CHINA Q1 GDP Q/Q: 1.4% V 1.5%E; Y/Y: 6.8% V 6.8%E; YTD Y/Y: 6.8% V 6.8%E
- (CN) CHINA MAR INDUSTRIAL PRODUCTION Y/Y: 6.0% V 6.3%E; YTD Y/Y: 6.8% V 6.9%E
- (CN) CHINA MAR RETAIL SALES Y/Y: 10.1% V 9.7%E; YTD Y/Y: 9.8% V 9.7%E
- (CN) China Mar Urban Fixed Assets YTD y/y: 7.5% v 7.7%e
- (CN) China Stats Bureau (NBS): Q1 economic performance set good foundation for full year; china pursues balanced trade
- (CN) US Trade Rep said to be putting together new trade complaint against China over cloud computing and other high-tech services – press
- (HK) Hong Kong Monetary Authority (HKMA): See no need for any interest rate adjustment mechanism; no need for ‘proactive’ rate adjustment mechanism
- (HK) During Monday’s NY session, HKMA purchased additional HK$5.77B in local currency in order to keep HKD within trading band
- (CN) US Treasury Department Feb data shows China holdings of Treasuries rose $8.5B to $1.18T (biggest growth in 6-months)
- (CN) China President Xi: I am personally opposed to life-long rule, foreign observers have misinterpreted a recent constitutional amendment that revoked the two-term limit on the presidency
- ZTE, 763.HK (CN) China MOFCOM to keep a close watch on US order on ZTE, prepared to take necessary measures
- (CN) China PBoC sets yuan reference rate at 6.2771 v 6.2884 prior (2-week high)
- (CN) China PBoC Open Market Operation (OMO): skips OMO v injects CNY150B in 7-day and 14-day reverse repos prior
- (CN) PBOC CONDUCTS CNY367.5B IN 1-YR MLF AT 3.3% V 3.25% PRIOR
Australia/New Zealand
- ASX 200 opened flat
- ASX 200 Telecom index +0.7%, REIT +0.4%, Resources +0.3%; Utilities -0.5%, Financials -0.2%
- (NZ) New Zealand REINZ Mar House Sales Y/Y: -9.9% v +1.2% prior
- OZ Minerals, OZL.AU Reports Q1 copper production 27.5K tons v 25.1K y/y; Affirms all production for FY18 and FY19
- (NZ) IMF comments: NZ Current monetary policy is appropriately expansionary; doubts that New Zealand foreign buyer ban will help housing market
- (AU) Reserve Bank of Australia (RBA) Minutes of April 2018 Monetary Policy Meeting: Reiterates more likely next rate move is up than down, but sees no strong case for near term adjustment
Other Asia
- (SG) Singapore Mar Non-Oil Domestic Exports M/M: -1.8% v +2.4%e; Y/Y: -2.7% v +1.2%e; Electronic Exports Y/Y: -7.1% v -12.3% prior
- (PH) Philippines sells PHP10B in 10-year bonds; Avg Yield: 6.213% (highest since Jun 2011) v 6.184% prior; bid-to-cover: 1.73x
North America
- US equity markets ended higher: Dow +0.9%, S&P500 +0.8%, Nasdaq +0.7%, Russell 2000 +0.9%
- S&P500 Utilities +1.4%, Materials +1.3%
- (MX) Mexico President front runner Lopez Obrador Fin Min pick Urzua: Pledges ‘free floating’ Peso currency (MXN)
- Tesla TSLA Said to be temporarily shutting down production of the ‘Model 3’; The company points to prior statements and says the rampup of the Model 3 includes planned factory downtime to address bottlenecks.
- Whirlpool WHR Raises dividend 4.5% to $1.15 from $1.10 (indicated yield 3%)
- (US) Fed’s Dudley (dove, FOMC voter): 3 or 4 hikes this year seem like a reasonable number; more than 4 hikes would no longer be moving at a gradual tightening pace; 3% is reasonable starting point for neutral rate policy – CNBC interview
- (US) Fed’s Kaplan (dove, non-voter): Near term outlook looks solid, but underlying trends are concerning
- (US) Fed’s Kashkari (dove, non-voter): Main Street hasn’t fully recovered from the financial crisis
- (US) Pres Trump to nominate Richard Clarida as Fed Vice Chair and Kansas banking regulator Michelle Bowman to Fed Board – press
Europe
- (EU) ECB’s Praet (Belgium): an ample amount of monetary stimulus remains necessary
- (EU) EU demands talks with US at WTO, asking for compensation over US steel & aluminum tariffs – press
- (DE) Germany Fin Min Scholz: Germany will maintain its budget without new borrowing
- (RU) Pres Trump reportedly halts plan to implement new sanctions on Russia – Wash Post
- GBP/USD Pound (GBP) trades above $1.4346, highest since June 2016 Brexit vote; Up less than 0.10% on session
Levels as of 02:00ET
- Hang Seng -0.4%; Shanghai Composite -0.7%; Kospi -0.2%; ASX 200 +0.1%
- Equity Futures: S&P500 +0.4%; Nasdaq100 +0.3%, Dax +0.4%; FTSE100 +0.2%
- EUR 1.2388-1.2376; JPY 107.16-106.97; AUD 0.7787-0.7760;NZD 0.7372-0.7339
- Jun Gold -0.2% at $1,347/oz; May Crude Oil +0.5% at $66.52/brl; May Copper +0.2% at $3.09/lb
