General Trend:
- Asian equity markets trade mostly lower despite earlier gains in the US
- Automakers decline after US President Trump ordered probe into auto imports: Toyota and Kia each trade lower by over 2%
- Japanese Yen (JPY ) is higher for the third straight session amid the equity declines
- Bond yields in Australia, Korea and New Zealand move lower, tracking Wednesday’s trade in US Treasury yields
- Some emerging market (EM) assets remain under pressure after FOMC minutes: Indonesia 2-year yield rises over 15bps
- Malaysian equities decline over 2%; Former government said to have used central bank to pay debts of state investment fund 1MDB, says a US financial press report.
- Equities in Indonesia outperform, rise over 1.5%
- Turkish Lira (TRY) in focus after emergency rate hike
- Bank of Korea (BoK) unanimously left rates unchanged
- BoJ’s Sakurai comments on possible side-effects of easy policy; affirms to continue easing ‘persistently’
- China PBoC said to prioritize issues related to systemic risk (Chinese Press)
- New Zealand April trade surplus supported by fruit exports
- North Korea Foreign Ministry official said the country will not beg for talks with the US
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.3%; closed -1.1%
- TOPIX Marine Transportation index -2.7%, Iron & Steel -2.1%, Electric Appliances -1.8%, Securities -1.8%
- Japanese automakers underperform on trade concerns
- Megabanks decline over 1%
- (JP) Japan Investors Net Buying of Foreign Bonds: +¥948.9B v +¥827.0B prior week; Foreign Net Buying of Japan Stocks: +¥99.1B v +¥126.3B prior week
- (JP) Bank of Japan (BOJ) Sakurai: BoJ must aim to hit price goal at earliest date possible, but that does not mean it will do so recklessly
- (JP) Japan Chief Cabinet Sec Suga: Will watch what US does on auto import tariffs
- (JP) Japan LDP Policy Chief: Seeking to reach primary balance surpluses before FY2025
Korea
- Kospi opened +0.2%
- (KR) BANK OF KOREA (BOK) LEAVES REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
- (KR) North Korea Foreign Ministry Official: Will suggest to North Korea leadership to reconsider US/North Korea summit; future of the summit is entirely up to the US
China/Hong Kong
- Hang Seng opened +0.2%, Shanghai Composite 0.0%
- Hang Seng Materials index -0.8%; Energy +1.2%, Services +0.8%, Industrial Goods +0.4%, Financials flat
- Rusal, [+1.9%], 486.HK Unless US sanctions are lifted or a new license is granted by OFAC, international financial institutions are likely to discontinue operations with the Group after Oct 23 2018; CEO and board resigns
- Samsonite [1910.HK]: Declines over 11% after cautious research report, shares later halted
- Lenovo, 992.HK Reports Q4 Net $33M v $107M y/y, Rev $10.6B v $9.60B y/y
- (CN) China plans measures to increase imports of high-end goods – Chinese Press
- (CN) China PBoC said to prioritize handling issues with systemic risk – Chinese Press
- (CN) China PBoC sets yuan reference rate at 6.3816 v 6.3773 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY40B in 7-day and 14-day reverse repos v CNY150B prior; Net: CNY0B drain v CNY30B drained prior
- (CN) China MOFCOM Spokesperson Gao: Will encourage companies to import more from the US; China did not promise a number to US trade surplus cut
- (CN) China Iron and Steel Association (CISA): Steel capacity cuts resulted in 300K job losses
- (CN) China govt said take step to help boost the milk industry
- (CN) China said to revisit policy related to online prescription drug sales – Chinese Press
- (CN) China State Council Member Wang Yi: China and the US should deepen coordination on Korea issue; should open markets to each other
- (CN) China PBOC has asked branches to check accuracy of financial statistics – Chinese press
- (CN) MSCI Exec: Focused on making sure China index inclusion is successful
- (HK) Hong Kong Monetary Authority (HKMA): Pace of interest rate increases should not be too rapid
Australia/New Zealand
- ASX 200 opened -0.0%, closed -0.0%
- ASX 200 Financials index -0.6%, Energy -0.4%, Resources -0.3%, Telecom -0.3%, Utilities -0.3%; Consumer Discretionary +0.9%, REIT +0.9%
- (AU) Australia Trade Min Ciobo: Media is over exaggerating about Australia/China tensions
- (NZ) NEW ZEALAND APR TRADE BALANCE (NZ$): +263M V +198ME; 12-MONTH YTD: -3.76B V -3.77BE
- (NZ) RBNZ Gov Orr: Financial system is not immune to threats
- (NZ) New Zealand sells NZ$200M v NZ$200M indicated in 2.75% April 2025 bonds, avg yield 2.5632% v 2.6218% prior, bid to cover 3.99x v 3.02x prior
Other Asia
- (SG) SINGAPORE Q1 FINAL GDP Q/Q: 1.7% V 1.6%E; Y/Y: 4.4% V 4.4%E; Narrows higher 2018 GDP outlook to 2.5-3.5% (prior 1.5-3.5%)
- (ID) Indonesia Central Bank Gov Warjiyo: Has purchased ~IDR50T in government bonds year to date; Short-term priority is to stabilize Rupiah currency (IDR)
- (ID) Indonesia said to price ¥100B in 3, 5, 7 and 10-year samurai bonds
- (IN) India said to raise import duty on wheat to 30% from 20%
- (MY) On Wednesday, it was reported that Malaysia’s former government was said to have used the central bank to pay the debt of the country’s 1MDB fund (US financial press)
- (PH) Philippines Central Bank (BSP) Chief Espenilla: Further decline in FX reserves won’t hurt economy
North America
- US equity markets ended higher: Dow +0.2%, S&P500 +0.3%, Nasdaq +0.6%, Russell 2000 +0.2%
- S&P500 Utilities +0.9%, Real Estate +0.8%
- (US) US President Trump: Confirms has given Commerce Dept the order to consider probe on auto imports under Section 232 review (as speculated)
- (US) FOMC MINUTES FROM MAY 2ND MEETING: FEDERAL FUNDS RATE COULD REACH NEUTRAL LEVEL ‘BEFORE TOO LONG’ IF RATE HIKES CONTINUED; OFFICIALS SAW TRADE AND FISCAL POLICIES AS SOURCES OF UNCERTAINTY
- (US) DOE CRUDE: +5.8M V -2ME
Europe
- (UK) UK PM May said to ask EU for new Brexit transition until 2023 – UK Press
- (IT) Italy Pres Mattarella gives PM mandate to Giuseppe Conte; asks Conte to form govt (as expected)
- (EU) China Premier Li comments ahead of Germany Chancellor Merkel’s trip to China: Notes ‘huge’ potential for China-Germany cooperation
- (EU) China MOFCOM Spokesperson Gao: 20 corporate executives from Germany are traveling with Chancellor Merkel to China
- (EU) ECB’s Coeure (France): Euro area expansion is strong and broad-based; ECB not too concerned about recent economic slowdown; Too early to comments on Italy govt spending plans
- Paddy Power Betfair [PPB.UK]: Announces combination of Betfair US with FanDuel; to contribute its existing US assets along with $158M in cash
- DB Finalizes equities business review; to reduce headcount in this area by ~25%
Levels as of 02:00ET
- Hang Seng 0.0%; Shanghai Composite -0.3%; Kospi -0.2%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.2%; FTSE100 -0.1%
- EUR 1.1713-1.1691; JPY 110.04-109.33; AUD 0.7574-0.7542;NZD 0.6937-0.6906
- Jun Gold +0.4% at $1,294/oz; Jul Crude Oil -0.4% at $71.56/brl; Jul Copper 0.0% at $3.07/lb
