General Trend:
- Asian equity markets track declines in US and Italian equities, politics and trade concerns weigh
- Financials track declines in Italy’s banking sector
- US suggests trade war with China is ongoing; US Soybean Futures extend losses
- Shanghai Property index drops over 1%; Local press warned about property bubbles
- Chinese shares listed in HK hit 4-month low; MSCI expected to add China large-cap A-shares to EM index at the end of this week
- Japan retail sales rebound in April: Government previously said that Q1 weakness was temporary
- Yen trades generally lower amid ‘risk-off’; EUR/JPY tests ¥125
- 10-year bond yields in Australia, New Zealand and South Korea track Tuesday’s drop in US Treasury yields; US 30-year Treasury Futures decline in Asia after over 1.5% gain on prior session
- Indonesia Central Bank expected to raise rates at today’s ‘additional’ meeting
- Australia Q1 CAPEX data due for release on Thursday
- Upcoming US data in focus: May ADP report, second reading of Q1 GDP
Headlines/Economic Data
Japan
- Nikkei 225 opened -1.4%; closed -1.5%
- TOPIX Iron & Steel index -2.4%, Securities -1.9%, Electric Appliances -1.7%, Marine Transportation -1.4%
- Megabanks track declines in Italian financial sector
- Automakers trade generally lower, Toyota declines over 1.5%
- (JP) Japan Apr Department Store, Supermarket Sales y/y: -0.8% v 0.2%e
- (JP) JAPAN APR PRELIM RETAIL SALES M/M: 1.4% V 0.5%E; Retail Trade y/y: 1.6% v 1.0%e
- (JP) BoJ Gov Kuroda: Urgent to explore why prices and wages still feel sluggish – BoJ-IMES Conference
- Leopalace21, [-10%], 8848.JP Discloses construction defects: 38 of 290 buildings may be in violation of law
- (JP) Nikkei looks at Japan’s fight against deflation, noting the 4 key indicators tracked by the government have stayed positive for at least three straight quarters through March
Korea
- Kospi opened -0.4%
- (KR) According to US intelligence report North Korea leader Kim is not going to give up nuclear weapons soon, but is open to allowing US businesses – press
- Posco, 005490.KR To build a lithium-ion cathode plant in southwestern region to meet the growing market demand on rechargeable battery
- (KR) South Korea Apr Department Store Sales y/y: -0.2% v 5.4% prior; Discount Store Sales y/y: -4.5% v 1.0% prior
- (KR) North Korea said to have tested torpedo during talks with South Korea and the US (timing uncertain) – South Korean Press
- (KR) South Korea Q1 Short Term External Debt: $120.5B v $115.9B prior
China/Hong Kong
- Hang Seng opened -1.2%, Shanghai Composite -1.3%
- Hang Seng Materials index -1.7%, Property/Construction -1.6%, Financials -1.5%, Industrial Goods -1.5%
- (CN) White House to proceed with plans to impose 25% tariffs on $50B worth of imported goods from China – press – Final list of Chinese imports to 25% tariff will be announced on Jun 15th (US session)
- (CN) China Researcher reiterates yuan currency (CNY) to fluctuate in two ways – China Securities Journal (CSJ)
- (CN) China must curb property speculation in some cities – China Daily
- (CN) China said to be carrying out nationwide spot checks on shadow banking companies – China Securities Journal (CSJ)
- (CN) China PBoC sets yuan reference rate at 6.4207 v 6.4021 prior (weakest setting since Jan 18th)
- (CN) China PBoC Open Market Operation (OMO): Injects CNY270B in 7-day, 14-day and 28-day reverse repos v CNY180B in 7-day and 28-day prior; Net: injects CNY70B v CNY50B prior
- (CN) Global Times Op Ed: US announcement of plans to go ahead with China tariffs, sends a clear message that the China/US trade dispute will be a long term issue
Australia/New Zealand
- ASX 200 opened -0.4%, closed -0.5%
- ASX 200 Financials index -1.4%, Telecom -0.9%, Resources -0.5%, REIT -0.5%; Utilities +1.6%
- (NZ) Reserve Bank of New Zealand (RBNZ) Semiannual Financial Stability Report: New Zealand’s financial system have not changed materially in the past six months; financial system is resilient
- (NZ) RBNZ Gov Orr: No decision on loan-to-value ratios (LVRs) likely until at least next financial stability report
- (NZ) RBNZ Dep Gov Bascand: General picture is very moderate house price outlook; outlook for house price inflation of avg of 2-3% in next few years
- (NZ) New Zealand Apr Building Permits m/m: -3.7% v 13.0% prior
- (AU) AUSTRALIA APR BUILDING APPROVALS M/M: -5.0% V -3.0%E; Y/Y: 1.9% V 4.1%E
North America
- US equity markets ended lower: Dow -1.6%, S&P500 -1.2%, Nasdaq -0.5%, Russell 2000 -0.2%
- S&P500 Financials -3.3%
- (US) US Treasury Official: G-7 Finance Ministers to meet in Canada on May 31-June 2nd, Italy and the volatility in emerging markets to be on the agenda
- GLD SPDR Gold Trust ETF daily holdings +0.4% at 851.45 metric tonnes
- (US) President Trump: Mexico will pay for the wall, they do nothing to help us, HHS Sec coming out with healthcare plan in 2 weeks – rally
Europe
- (IT) Italy PM-designate Cottarelli said to mull giving up mandate and allow for possible election on July 29th
- (IT) Italy’s Five Star leader Di Maio: impeachment of the president is no longer on the table – Italian press
- (UK) May BRC Shop Price Index y/y: -1.1% v -1.0% prior (largest decline since Jan 2017)
Levels as of 02:00ET
- Hang Seng -1.6%; Shanghai Composite -1.5%; Kospi -2.1%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.2%; FTSE100 -0.3%
- EUR 1.1549-1.1519; JPY 108.78-108.35; AUD 0.7509-0.7476;NZD 0.6915-0.6883
- Jun Gold +0.1% at $1,299/oz; Jul Crude Oil -0.3% at $66.53/brl; Jul Copper -0.4% at $3.04/lb
