Indian Bond Prices Rise As Oil Moves Lower

May 28 18, 08:34 GMT

General Trend:

Asian equity markets trade mostly higher amid renewed hopes for June US/North Korea summit and US holiday; Kospi outperforms
Energy prices extend losses seen on Friday’s session amid production increase speculation based on comments from Russia and Saudi Arabia; WTI Crude Futures lower by over 2%, Brent Crude Futures down over 1%
Hang Seng Utilities index declines over 1%; China announced increase in gas prices
Indonesian assets rally as central bank announces ‘additional’ meeting: 10-year bond yield declines over 15bps, Rupiah (IDR) rallies
Indian bond prices rise as oil moves lower
Japanese Yen (JPY) trades generally weaker, JPY/KRW -0.5%: US President Trump noted ‘productive talks’ about reinstating June 12 summit with North Korea
EUR/JPY and EUR/USD trade higher: Italy’s President rejected Savona for economy minister position
PBoC raised rates on 28-day reverse repo operation (in line with increases in the 7 and 14-day rates)
Analysts continue to push back BoJ rate hike calls into 2019
US May jobs report due for release on Friday, June 1st
MSCI expected to add China large-cap A-shares to EM index at the end of this week
US Commerce Sec Ross scheduled to visit China from June 2-4th to discuss trade

Headlines/Economic Data

Japan

Nikkei 225 opened +0.2%; closed +0.1%
TOPIX Real Estate index +1.1%, Electric Appliances +0.3%; Marine Transportation -1.4%, Securities -0.5%, Info & Communications -0.5%
(JP) JAPAN APR PPI SERVICES Y/Y: 0.9% V 0.5%E
(JP) Japan PM Abe cabinet approval rating flat at 42% – Nikkei
Nomura, 8604.JP Said to consider delaying EPS target of ¥100/share, cites markets – press
Kansai Electric, 9503.JP Exec: To cut spot purchases of LNG and will likely not sign any long term LNG contracts as it moves to make nuclear power the largest part of its mix – financial press
(JP) Japan PM Abe: Automakers have created jobs and made huge contributions to US economy; TPP is best trade format for japan and US and will keep explaining it to President Trump

Korea

Kospi opened +0.2%
(KR) North Korea state news: leader Kim expressed “his fixed will” for a summit with Pres Trump; Kim and S Korea Pres Moon agreed to high level talks on June 1st
(KR) Pres Trump tweets that US is having “productive” talks about reinstating June 12 summit with North Korea; says no disagreement in the White House about how to deal with North Korea
(KR) Follow Up: US Senior Diplomat Sung King said to be in North Korea for meetings related to the coordination of US/North Korea summit – US financial press
(KR) South Korea President Moon met with N. Korea leader Kim in a surprise meeting over the weekend; Kim affirms commitment to complete denuclearization and meeting with Trump – press
(KR) South Korea President Moon may join President Trump for a 3-way summit with N. Korea Kim – Korean press; Follow up: South Korea Govt: Trilateral meeting depends on result of meeting between N. Korea Kim and President Trump
(KR) South Korea to require tougher mortgage rules in H2 of this year as part of govt effort to reduce household debt – Korean press
(KR) Bank of Korea (BOK) sells 1-yr Monetary Stabilization Bonds (MSB) at 1.89% v 1.88% prior
(KR) South Korea sells KRW1.65T v KRW1.65T indicated in 3-yr govt bonds at 2.235%

China/Hong Kong

Hang Seng opened +0.6%, Shanghai Composite -0.1%
Hang Seng Industrial Goods index +1.5%, Services +1.4%, Consumer Goods +1.3%, Financials +0.5%; Utilities -0.7%, Energy -0.3%
763.HK Pres Trump defends his strategy on ZTE and says the company will pay a $1.3B fine
(CN) US pressuring China to sign long term import agreements – FT
Alibaba, Tencent, Baidu to each hold 3.7% stakes in Foxconn Industrial Internet – SCMP
(CN) Yuan to remain stable with two way fluctuations – China Securities Journal
(CN) CHINA APR INDUSTRIAL PROFITS Y/Y: 21.9% V 3.1% PRIOR (6-month high)
(CN) China should prevent bond default’s market impact; gov’t said to examine rules aimed at limiting bond default risk – Chinese press
(CN) China PBoC Open Market Operation (OMO): Injects CNY30B in 7-day and 28-day reverse repos v skips prior; Net: injects CNY30B v CNY0B prior
(CN) PBOC RAISES OPEN MARKET OPERATION (OMO ) RATE ON 28-DAY REVERSE REPO BY 5BPS TO 2.85% FROM 2.80% (AS EXPECTED)
(CN) China PBoC sets yuan reference rate at 6.3962 v 6.3867 prior

Australia/New Zealand

ASX 200 opened -0.2%, closed -0.5%
ASX 200 Energy index -3%, Resources -2.2%, Telecom -1%, Financials -0.3%; Utilities +1%, REIT +0.7%
Wesfarmers, WES.AU In exclusive talks with KKR about hotel and retail liquor portfolio – Australian
IGO.AU Announces agreement to divest Jaguar operations for A$73.2M cash to unit of Washington H. Soul Pattinson, Copperchem
APN Outdoor, APO.AU Guides FY18 (A$) EBITDA 92-96M; CAPEX 25-30M; Guides H1 Rev tracking mid-single digit growth y/y
Investa office Fund,[+11%], IOF.AU Receives A$5.25/share cash proposal from Blackstone (~13.4% premium to prior close)
(AU) Reserve Bank of Australia (RBA) Harper: Wage ‘hot spots’ are not obvious, wage growth ‘is all slow’; RBA has ‘steady as she goes’ policy approach

Europe

(UK) UK government is said to not have a plan for a Brexit ‘no deal’ – FT
(UK) Foreign Sec Johnson Op Ed reiterates call for UK to leave the customs union – Telegraph
(IT) Italy President Mattarella on Sunday blocked the formation of a new government amid concerns that the coalition could hurt the country’s membership in the Euro; Italy President and Cottarelli expected to meet on Monday – US financial press
(IT) Moody’s puts Italy’s Baa2 rating on downgrade review (Fri, after the close)

Levels as of 02:00ET

Hang Seng +0.7%; Shanghai Composite -0.1%; Kospi +0.7%
Equity Futures: S&P500 +0.4%; Nasdaq100 +0.6%, Dax +0.4%; FTSE100 +0.3%
EUR 1.1727-1.1652; JPY 109.83-109.31; AUD 0.7581-0.7547;NZD 0.6957-0.6915
Jun Gold -0.5% at $1,297/oz; Jul Crude Oil -2.5% at $66.22/brl; Jul Copper +0.5% at $3.09/lb