Italian And Spanish Political Instability Sends Euro To 6-Month Low

May 29 18, 07:08 GMT

General Trend:

Asian equity markets trade generally lower amid lack of US leads due to holiday
Recent equity declines in Italy banking sector in focus
Various markets are on holiday including Indonesia, Malaysia, Singapore and Thailand
Apple said to place OLED in all new iPhone models in 2019 (Taiwanese Press); Shares of Samsung and Japan Display decline, while LG Display gains
Shanghai Property sub-index drops over 2%; NDRC said to have held meeting with some property developers
Alibaba Health to pay over $1.0B to acquire nutritional product assets from Alibaba
Japanese Yen (JPY) trades generally firmer as equities and US bond yields decline: AUD/JPY declines over 0.8%
PBoC steps up net injection in today’s OMO amid maturities and press speculation of tighter liquidity conditions during the summer
PBOC speculated to cut RRR if liquidity conditions tighten in the months ahead
Hong Kong property firm Country Garden said to halt over $3.0B bond sale
Indonesia Central Bank to hold additional policy meeting on Wed, May 30th
Fed’s Bullard reiterates US rate policy may be at neutral level
(JP) Japan MoF sells ¥500B v ¥500B indicated in 0.90% (prior 0.90%) 40-yr bonds, yield at lowest price 0.865% v 0.885% prior; bid to cover 3.92x v 3.19x prior

Headlines/Economic Data

Japan

Nikkei 225 opened -0.2%; closed -0.6%
TOPIX Iron & Steel Index -1.5%, Securities -1.3%, Marine Transportation -1.1%, Electric Appliances -1%
Megabanks trade generally weaker
(JP) Japan economic policy guidelines reaffirm raising consumption tax to 10% from 8% Oct 2019 and call for economic stimulus in initial budgets for FY19 and FY20 – Nikkei
(JP) Japan FSA said to maintain upper limit on leveraged foreign exchange (FX) trades – US financial press
Nissan Motor, 7201.JP Said to plan up to 20% cut in North America production through the summer – Japanese Press
(JP) JAPAN APR JOBLESS RATE: 2.5% V 2.5%E; JOB-TO-APPLICANT RATIO: 1.59 V 1.60E
Tokyo Electron, 8035.JP Medium-term Management Plan: Sees wafer fab equipment market reaching $55-62B by 2021; sees annual dividend of at least ¥150/share, to consider flexible share buy backs

Korea

Kospi opened -0.1%
(KR) South Korea May Consumer Confidence: 107.9 v 107.1 prior (1st increase in 5 months)
(KR) Dispute rising in South Korea over pace and effect that the minimum wage increase will have – Korean press
(KR) US to hold off on new sanctions on North Korea ahead of summit with US President Trump – financial press
(KR) South Korea Govt sells KRW1.75T in 30-yr treasury bonds; avg yield 2.71% v 2.75% prior
(KR) Top aide to North Korea leader Kim has arrived in Singapore ahead of summit with US; another has flow to Washington DC – press
(KR) US and North Korea said to be far apart of denuclearization terms – Japan press

China/Hong Kong

Hang Seng opened -0.5%, Shanghai Composite -0.2%
Hang Seng Telecom index -1.2% (China Unicom down over 2%), Financials -0.9%, Property/Construction -0.7% ; Consumer Goods +0.5%
(CN) China may face liquidity shortage in June and July, in response PBOC could cut RRR mid-year to increase liquidity – CSJ
(CN) China PBoC Open Market Operation (OMO): Injects CNY180B in 7-day and 28-day reverse repos v CNY30B prior; Net: injects CNY50B v CNY30B prior
(CN) China PBoC sets yuan reference rate at 6.4021 v 6.3962 prior (weakest setting since Jan 22nd)
Alibaba Health,[+6%], 00241.HK To acquire Ali JK Nutritional Products (wholly-owned subsidiary of Alibaba) for HK$10.6B in stock
(CN) PBOC Gov Yi Gang: Financial sector has big room for additional opening up, orderly pushing ahead with other financial opening reforms – speaking at Financial Street Forum
(CN) China Banking Insurance Regulator (CBIRC) Official Huang: Reiterates to move forward with opening up of banking and insurance sectors; to keep regular pace of IPOs

Australia/New Zealand

ASX 200 opened 0.0%, closed +0.1%
ASX 200 Financials index +0.7%, Resources +0.2% ; Telecom -0.6%, Consumer Discretionary -0.5%, Energy -0.3%
(AU) Australia Treasury Sec Fraser: Strong employment conditions to pick up wage growth; non-mining investment continues to show strength
ARV.NZ Reports FY18 (NZ$) Net 58M, +7% y/y; declares special dividend of 0.26/shr (rises to 11-month high)
(AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 117.7 v 121.6 prior (1-month low)
(AU) Australia Debt Agency (AOFM) See total gross issuance to be lower next year

Americas

JBSS3.BR Said to have completely stopped slaughtering in Brazil, rationing feed for chickens and pigs (in response to trucker strike)
AAPL Said to plan to adopt OLED for all new iPhone versions in 2019 – Taiwanese Press
(US) Fed’s Bullard (dove, non-voter): US po icy is possibly at neutral mean, Fed should be cautious with additional rate increases – comments from Tokyo

Europe

(IT) Italy’s Five Star leader Di Maio calling for demonstration in Rome on June 2nd against arrogance of the institutions – Italian press
(ES) Spain parliament fixes date for debate and vote of confidence in Spanish PM Mariano Rajoy for May 31st or June 1st – El Pais
(US) EU is making a final push to avoid punitive US steel and aluminum tariffs that will go into place June 1st; still hopeful Trump administration will grant a full exemption from the measures – press
(UK) Govt preparations for a “no deal” Brexit in March 2019 have all but stopped, which will make it nearly impossible for PM May to walk out of negotiations with EU in the next 10-months – FT
(EU) EU said to consider review of MIFID II if Brexit talks break down – financial press
(UK) Treasury and BOE are at odds over the future of City of London regulation after Brexit – FT
(UK) EU said to be blocking UK companies from new defense fund – UK press
(UK) Manufacturing companies in the UK said to plan to call on the government to end its ‘max fac’ option regarding proposals for customs union, believe the option is not realistic and costly – financial press

Levels as of 02:00ET

Hang Seng -0.8%; Shanghai Composite -0.5%; Kospi -0.6%
Equity Futures: S&P500 -0.1%; Nasdaq100 +0.1%, Dax -0.3%; FTSE100 -0.2%
EUR 1.1635-1.1614; JPY 109.46-108.91; AUD 0.7552-0.7515;NZD 0.6949-0.6921
Jun Gold -0.5% at $1,297/oz; Jul Crude Oil -1.7% at $66.73/brl; Jul Copper +0.2% at $3.08/lb