Modest moves seen in Asia ahead of US CPI, ECB decision

Asia Market Update: Modest moves seen in Asia ahead of US CPI, ECB decision; Asian 10-yr gov’t bond yields track decline in UST yield; China PBOC Gov suggested inflation will slow in 2021.

General Trend

- Asian equity indices are generally off of the session lows.

- Nikkei rebounded from the opening decline [Topix Marine Transportation index outperforms; Banks index drops amid lower 10-yr UST yield].

- Shanghai Composite ended the morning session higher by 0.8% [Industrials index rises over 2%]; China Three Gorges Renewables rises over 40% in trading debut.

- Hang Seng has remained modestly higher [Property index rises].

- S&P ASX 200 has moved higher after the flat open [REIT and utility indices outperform on the drop in bond yields; Energy and Resources indices decline].

- Taiwan Semi may issue monthly sales today.

- China/US officials continue to hold talks [few specifics seen].

- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thursday.

- Companies due to report during the NY morning include Fuel Cell Energy, Aurora Mobile, Signet Jewelers.

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened 0.0%.

- (NZ) New Zealand Commerce Min Clark: The govt has granted a license to a new share trading market, designed as a gateway to the NZX for the small-to-medium-sized enterprises.

- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$249.5B v A$245.2B prior (Record high).

- (AU) Australia Jun Consumer Inflation Expectations: 4.4% v 3.5% prior.

- (NZ) New Zealand Govt: New builds will be exempt from proposed changes in tax law.

- (AU) Australia PM Morrison: Confirms Australia seeks WTO resolution on China wine tariffs.

- (AU) Australia AOFM (debt agency) CEO Nicholl: Not in a rush to join the world in Green bond offerings, case based on cost isn't there yet and PM has not set a net-zero emissions date.

Japan

-Nikkei 225 opened -0.2%.

- (JP) Japan May PPI (CGPI) M/M: 0.7% v 0.5%e; Y/Y: 4.9% v 4.5%e.

- (JP) According to analysts Bank of Japan (BOJ) will leave the rate and policy unchanged at next week's meeting, but expected to extend aid to pandemic impacted businesses.

- (JP) Reportedly a growing number of Japanese officials expect PM Suga to call for a snap election in Sept and expected to direct ministries to consider a major economic stimulus package as early as this summer – Nikkei.

- (JP) Japan Govt to pay ¥2B in subsidies to companies that make COVID drugs - Japan press.

Korea

-Kospi opened at 0.0%.

- (KR) Bank of Korea (BOK) Senior Official: One or two rate hikes is not tightening.

- 017670.KR Announces split off plan for a new investment company to be called SKT Investment; Announces 5 for 1 stock split.

- (KR) South Korea May Bank Lending to Households (KRW): 1,024.1T v 1,025.7T prior (1st decline since Jan 2014).

- (KR) Bank of Korea (BOK) Quarterly Monetary Policy Report: Imbalances still not likely to hurt the financial system but may hurt growth potential; Reiterates to keep policy accommodative for now; inflation may accelerate faster than expected but will meet inflation (CPI) target in the medium term.

China/Hong Kong

-Hang Seng opened +0.2%; Shanghai Composite opened -0.1%.

- (CN) China PBOC Gov Yi Gang: Sees CPI in 2021 <2.0%; China Potential Economic growth has decreased to a certain extent, China economy growth model by investment capital and labor will be difficult to maintain with aging population trend - Comments at Lujiazui Forum.

- (CN) China Banking and Insurance Regulatory Commission (CBIRC) Chairman Guo: Global CPI higher than expected, China's policy prevented world economy from recession.

- (CN) China Banking and Insurance Regulatory Commission (CBIRC) told major banks [financial institutions with at least CNY300B of adjusted on-balance and off-balance assets] to make their recovery and resolution plans.

- (CN) China SAFE: Current account surplus is at a reasonable range; 2-way fluctuation in Yuan is normal.

- (CN) An analyst at StoneX in Shanghai notes they think the China govt has the ability to influence commodity prices in the short term as part of inflation management – press.

- (CN) China PBOC sets Yuan reference rate: 6.3972 v 6.3956 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.

- (CN) China govt watching challenges faced by exporters, including yuan rate and prices.

- (CN) Wuhan institute asserts that no staff had contracted coronavirus (in 2019 outbreak) - Press.

- (CN) China State Council: Reiterates stance to keep economy within a reasonable range.

Other

- (TW) US and Taiwan reportedly to hold high-level trade talks as soon as tomorrow – press.

North America

- GME Reports Q1 -$0.45 v -$0.67e, Rev $1.28B v $1.18Be; intends to file to sell 5M shares from time to time (7% of shares outstanding).

- COIN To expand the number of states where US customers can borrow cash using Bitcoin as collateral.

- (US) Lawmakers said to be drafting 5 antitrust bills targeting big tech, could be introduced this week - press.

Europe

- (UK) May RICS House Price Balance: 83% v 77%e (multi-decade high).

- (G7) Draft G7 communique: Will commit to paying for 1B extra COVID vaccines, will call for a new study into origins of COVID, call on Russia to crack down on ransomware, cyber attacks-press.

- (SE) Sweden Fin Min Andersson: Need to talk about tax deduction on mortgages - local press.

Levels as of 01:15ET

- Hang Seng +0.4%; Shanghai Composite +0.9%; Kospi +0.5%; Nikkei225 +0.3%; ASX 200 +0.5%.

- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 +0.3%.

- EUR 1.2181-1.2163; JPY 109.67-109.52; AUD 0.7738-0.7722; NZD 0.7186-0.7166.

- Commodity Futures: Gold -0.4% at $1,888/oz; Crude Oil -0.6% at $69.55/brl; Copper -0.2% at $4.51/lb.