Asian equity markets trade mostly lower as G20 remains on radar

Asia Market Update: Asian equity markets trade mostly lower as G20 remains on radar; NZD fluctuates after RBNZ rate decision; USD/JPY rises after Fed comments

 

General Trend:

- US official seemingly plays down expectations for Trump/Xi G20 meeting

- Financials continue to weigh on Shanghai Composite

- Asian chipmakers rise, Micron gains in afterhours trading following its earnings/outlook

- China battery manufacturer CATL plans to raise investments in European production base

- RBNZ left rates unchanged (as expected), said lower cash rate may be needed over time, did not express concerns about currency

- NZD rises and falls after RBNZ decision, little reaction seen in bond market

- Probability of 50bps July US Fed rate cut declines after Fed comments

- USD/JPY rises with US bond yields

- Thai Baht (THB) weakens, Deputy PM supports 2019 rate cut

- US gasoline futures rise over 5% on possible closure of Philadelphia Energy Solutions refinery

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.1%

- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.50%; AS EXPECTED; MEMBERS DISCUSSED A RATE CUT AT THIS MEETING

- (NZ) IMF: New Zealand Dollar is not immediate concern, still a bit above long-term average

- BNO.AU Announced the top line results of the exploratory trial of BNC210 for the treatment of agitation in elderly patients in a hospital setting

- MOY.AU Announces first gold discovered from sulphide ore at Nullagine; Commissioning of Stage 1 sulphide plant produces first gold

-(NZ) Reserve Bank of New Zealand (RBNZ) Dep Gov Bascand RBNZ is renewing approach to financial stability

Japan

-Nikkei 225 opened -0.6%

- 723.JP CEO Bunsei Kure to step down (3 months after reappointing him), CFO Hidetoshi Shibata to be named as the new CEO, effective end of June

-5938.JP Shareholders bring back ousted CEO Kinya Seto, re-naming him CEO; Seto comments he is targeting to return to company to profit this FY19/20, main issue is high fixed costs – AGM

- (JP) According to a joint study between Japan Center for Economic Research and Nikkei the USD/JPY at 107 is right around its equilibrium exchange rate, based on most recent economic data, 5 other regional Asian currencies are undervalued - Nikkei

- 8233.JP To exit China and close its Shanghai store by as early as 2020

- 3659.JP Founder stops process related to sale of stake - Korean press

- (JP) Japan Govt announced plans to hold Upper House election on July 21st

Korea

-Kospi opened slightly lower

- (KR) South Korea Fin Min Hong: To provide KRW70T over the next 5 years to support its services sector, will spend 70% of extra budget in Q3 if approved - Local Press

China/Hong Kong

-Hang Seng opened -0.5%; Shanghai Composite opened -0.6%

- (US) Senior Trump Administration official: no broad trade deal is expected to be made at the G20 meeting between Trump and Xi; US is not willing to come to the Trump-Xi meeting with concessions on trade; It’s possible that US and China may agree on no new tariffs as a goodwill gesture, but not clear if that will happen

-(CN) China Q2 Beige Book notes domestic economy shows modest improvement, manufacturing and retail outperformed; Risks ahead look more serious

- (CA) China Embassy in Canada confirms China has halted imports of Canadian meat after finding pork with residue of feed additive Ractopamine

- (CN) China PBoC Open Market Operation (OMO): Skips for the 3rd consecutive session

- (CN) China PBOC sets yuan reference rate: 6.8701 v 6.8580 prior

- (CN) CNOOC Energy Tech IPO opens for trade at CNY2.45 v CNY2.04/shr pricing, rises 44% to daily limit

- (CN) China PBOC sells CNY30B in 1-month and 6-month bills in Hong Kong

Other

- (JP) G20 draft communique: Calls for promotion of free trade as a means for strong global economic growth; calls for need to create positive economic cycle of growth and distribution (will not explicitly oppose protectionism due to opposition from US) - Japan press

North America

- (US) Philadelphia Energy Solutions expected to close oil refinery after recent fire (largest refinery on east coast) - press

- (US) Weekly API Oil Inventories: Crude: -7.6M v -0.8M prior

- (US) Fed Chair Powell: Monetary policy shouldn't overreact to short-term swings in sentiment; doing so would risk adding even more uncertainty to the outlook

- (US) Fed's Bullard (dove, voter, dissenter): a 50bps cut in July would be overdone; 50bps cut is not called for right now

- (US) Fed's Bullard (dove, voter, dissenter): Think 2 rate cuts before the end of the year would ensure a soft landing, move policy from slightly restrictive to slightly accomodative; if Fed does cut rates in July do not feel a need to also end reduction in the balance sheet since that is already going to end in Sept; Was approached by Trump administration about a possible seat on Fed board, but said was happy in current job

- (US) Fed's Barkin (hawk, non-voter): Fed policy stance is modestly accommodative; doesn't know whether rates should be cut this year

- MU Guides Q4 $0.45 +/-$0.07 v $0.72e, Adj Rev $4.5B +/-$0.2B v $4.70Be - earnings call

- (US) Special Counsel Mueller to testify before House Committee on Intelligence and Judiciary July 17th

- TSLA CEO Musk reiterates on track to set all-time delivery record, has enough vehicle orders to set the record - US financial press

Europe

- (UK) New UK PM to be announced on Jul 23 – press

- (EU) Reportedly Germany Chancellor Merkel says she hopes EU Parliament selects candidates by midweek; calls for an EU Commission solution by June 30th - closed-door comments to lawmakers

 

Levels as of 1:20 ET

- Nikkei 225, -0.6%, ASX 200 -0.1%, Hang Seng +0.1%; Shanghai Composite -0.2%; Kospi -0.1%

- Equity Futures: S&P500 flat; Nasdaq100 flat, Dax flat; FTSE100 -0.3%

- EUR 1.1373-1.1353 ; JPY 107.50-107.09 ; AUD 0.6971-0.6950 ;NZD 0.6663-0.6594

- Gold -0.6% at $1,410/oz; Crude Oil +1.8% at $58.88/brl; Copper -0.1% at $2.728/lb