Asian equity markets pare losses amid Trump comments and PBoC liquidity operation

Asia Market Update: Asian equity markets pare losses amid Trump comments and PBoC liquidity operation, upside capped as US/China trade war said to escalate

 

General Trend:

- Trump comments during Asian session: Reiterates we'll know in 3-4 weeks if talks with China are successful, feels they will be [Reminder: The US is said to have told China that it had 3-4 weeks more to get a deal before the Trump administration would enact additional tariffs on $325B of Chinese imports that are not right now covered by tariffs (according to a press article from May 10th)]

- Chinese financials outperform amid PBOC MLF operation, cautious broker comments weigh on airlines

- Aluminum producer Rusal trades lower by over 6% in Hong Kong post earnings

- Softbank Group continues to track declines in shares of Uber

- National Australia Bank (NAB) declines over 5% as the company is trading ex-dividend

- In March, Japanese investors purchased a record amount of French bonds (current account data)

- BoJ Gov Kuroda comments on exposures of Japanese banks to CLOs

- Nissan Motor is expected to report results after the equity close in Japan

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.3%

- (AU) AUSTRALIA APR NAB CONFIDENCE: 0 V 0 PRIOR; BUSINESS CONDITIONS: 3 V 7 PRIOR

- IFT.NZ To acquire Vodafone NZ for enterprise value of NZ$3.4B, announces NZ$400M equity raise

- (NZ) New Zealand Fin Min Robertson: Budget will re-allocate NZ$1.0B of spending over forecast period, IMF sees NZ 2019 GDP at 2.5% and 2020 at 2.9% - Pre-Budget Speech

- (AU) Australia sells A$150M v A$150M indicated in 3.00% Sept 2025 bonds, avg yield 0.0924%, bid to cover 4.30x

Japan

- Nikkei 225 opened -1.5%

- (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BoJ needs to continue easing for a while; Japanese banks making 'reasonable' management of CLOs

- (JP) JAPAN MAR PRELIMINARY ADJUSTED CURRENT ACCOUNT: ¥1.27T V ¥1.72TE; CURRENT ACCOUNT BALANCE: ¥2.85T V ¥3.0TE

- (JP) JAPAN MAR PRELIMINARY TRADE BALANCE (BOP BASIS): +¥700.1B V -¥839.5BE

- (JP) Japan Fin Min Aso: China, US trade moves don't benefit anyone, unclear how it will impact Japan; affirms raising sales tax

- (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.50% (prior 0.50%) 30-yr JGBs, avg yield: 0.5290% v 0.540% prior, bid to cover 4.65x v 4.55x prior

Korea

- Kospi opened -0.9%

- (KR) South Korea Defense Ministry: South Korea will continue to strengthen its missile defense capabilities to better counter all kinds of threats, including North Korea's short-range missiles – Yonhap

- (KR) North Korea: US seizure of ships directly violates June 12th summit agreement

- (KR) South Korea Apr Export Price Index M/M: 0.5% v 0.2% prior; Y/Y: -0.4% v -0.9% prior; Import Price Index M/M 1.5% v 1.3% prior; Y/Y: 4.8% v 4.3% prior

- (KR) South Korea Vice Fin Min: Will hold policy meeting this week and next on currency and trade risks; policy efforts are on monitoring and containing risks from FX volatility, US-Trade dispute

China/Hong Kong

- Hang Seng opened -2.1%; Shanghai Composite opened -1.1%

- (US) President Trump: Reiterates we’ll know in 3-4 weeks if talks with China are successful, feels they will be

- (CN) China to raise tariffs on part of $60B of US goods from June 1st to 25% from 10%, including many agricultural products

- (CN) US Trade Rep's office posts details of potential tariffs on additional $300B of Chinese goods; to hold public hearings on June 17

- (US) Pres Trump: will meet with China Pres Xi at G20 (June 28-29), believes US-China meeting at G20 could be fruitful

- (US) Treasury Sec Mnuchin: confirms we're still in negotiations with China; no further rounds are planned and confirmed at this point - CNBC's Tausche

- 486.HK Reports Q1 adj Net -$103M v +$317M y/y; adj EBITDA $226M v $572M y/y; Rev $2.17B v $2.7B y/y

- (CN) China Apr passenger auto sales y/y: -14.6% v -5.2% prior - CAAM (10th consecutive decline)

- (CN) China PBoC sets yuan reference rate: 6.8365 v 6.7954 prior (weakest sine Jan 2019)

- (CN) CHINA PBOC ANNOUNCES CNY200B 1-YEAR MEDIUM TERM LENDING FACILITY (MLF) V CNY200B PRIOR AT 3.30% V 3.30% PRIOR; Confirms skip of regular OMO

- (CN) China Customs Tariff Commission of the State Council expected to announce list of tariff exemptions for US imports, after examining the applications of relevant interest parties on a trial basis - Xinhua

Other Asia

- Olam International [OLAM.SG] Reports Q1 (S$) Net 168.9M v 158M y/y, Rev 7.35B v 6.30B y/y

North America

- (US) Fed’s Rosengren (moderate, voter): trade tariffs may have a lasting impact on inflation - press interview

- S T-Mobile and Sprint reportedly mulling concessions in bid to salvage merger; considering sale of prepaid units – press

- BAYN.DE Loses in trial over allegations that Roundup weed killer causes cancer; Jury awards $2B in punitive damages to married couple that claims Roundup caused their cancer ($1B each in punitive damages) - press

- (US) US defense official presented an updated military plan to Trump administration that shows deploying 120K troops to Middle East if Iran attacks American forces - US press

Europe

- (UK) Prime Min May reportedly considering 'definitive votes' on a selection of Brexit options if talks with the Labour Party falters - The Telegraph

- (UK) Cross-party Brexit talks are said to have broken up without any significant progress - press

- (UK) UK govt spokesperson: talks with Labour took stock of a range of issues and we continue to seek to agree to a way forward in order to secure an orderly Brexit

 

Levels as of 1:20 ET

- Nikkei 225, -0.9%, ASX 200 -0.9%, Hang Seng -1.3%; Shanghai Composite +0.1%; Kospi +0.2%

- Equity Futures: S&P500 +0.6%; Nasdaq100 +0.8%, Dax +0.4%; FTSE100 +0.2%

- EUR 1.1223-1.1242 ; JPY 109.64-109.14 ; AUD 0.6960-0.6939 ;NZD 0.6592-0.6564

- Gold -0.1% at $1,300/oz; Crude Oil +0.3% at $61.23/brl; Copper +0.5% at $2.732/lb