Equities trade modestly lower after mixed US session

Asia Market Update: Equities trade modestly lower after mixed US session, various ex-dividends seen; 10-yr UST yield declined ahead of the month and quarter-end, Asian 10-yr yields also trade mostly lower.

General trend

- Financials decline amid lower 10-yr yields.

- Energy shares track weakness in the US.

- Nikkei 225 has remained lower during the session [Automakers move lower after US declines; Topix Iron & Steel, Banks, Air Transportation and Information & Communication indices also decline]; Various companies impacted by ex-dividends (including Canon Inc, Japan Tobacco, Kirin, Inpex); Sugi Holdings and J. Front Retailing may report results.

- Hang Seng has declined after opening slightly higher [Financials trade generally lower; TECH index drops over 1%]; China Gas declines following the earnings report, L’Occitane rises.

- Shanghai Composite ended morning trading lower by ~1% [Financials extended declines; Consumer, IT and Property indices also drop].

- S&P ASX 200 has declined after opening flat [Financial, Resources, Utilities, and Energy indices decline; REITS weighed down by ex-dividends]; Genworth Mortgage drops after issuing an update on large mortgage insurance contract.

- Rizal Commercial Bank [RCB.PH] rises 50% on stake acquisition by Sumitomo Mitsui Banking.

- Vietnam Q2 GDP data missed ests [first Asian country to issue Q2 data].

- Excess cash at ES accounts in Australia continues to hit record highs into month-end [Drawings under the RBA’s TFF are due to end on Jun 30th].

- Thailand Central Bank said it will deal with FX volatility amid THB weakness.

Headlines/Economic data

Australia/New Zealand

-ASX 200 opened 0.0%.

- STO.AU Launches Dorado feed with Carnarvon, on schedule for FID in Mid 2022; Estimates phase 1 cost $2.0B.

- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$307.9B v A$289.40B prior (record high).

- (NZ) New Zealand to reopen the travel bubble with the majority of Australian states on July 4th (Sunday).

- (NZ) Reserve Bank of New Zealand (RBNZ) Statement of Intent July 2021 to June 30, 2024: We are mindful of our mandate, including maintaining low and stable consumer price inflation while contributing to maximum sustainable employment, and our role promoting and maintaining a sound and efficient financial system.

- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Economic activity in NZ is returning to pre-COVID levels, divergences in economic activity remain significant.

Japan

-Nikkei 225 opened –0.4%.

- 9984.JP Softbank backed warehouse robotics company, AutoStore, planning to IPO with $10B valuations, expected to be in Europe this year – press.

- (JP) Bank of Japan (BOJ) considering adding interest rates on lenders’ deposits according to the size of loans and investments made that contribute to combating climate change in a funding scheme that BOJ will roll out this year – Nikkei.

- (JP) JAPAN MAY JOBLESS RATE: 3.0% V 2.9%E.

- (JP) JAPAN MAY RETAIL SALES M/M: -0.4% V -0.7%E; Y/Y: 8.2% V 8.1%E.

- (JP) Japan Fin Min Aso: Declines to comment on Toshiba, it is natural for shareholders to exercise rights.

- (JP) Japan Chief Cabinet Sec Kato: Job market weakening due to coronavirus impact, warrants investigation, to further focus on employment trends going forward.

- (JP) Japan MOF sells ¥3.0T v ¥3.0T indicated in 0.00% (prior 0.10%) 2-year JGBs: avg yield: -0.116% v -0.1250% prior; bid to cover 4.29x v 3.97x prior.

Korea

-Kospi opened +0.1%.

- (KR) South Korea Finance Ministry: Raises 2021 GDP growth from 3.2% to 4.2% (yesterday after the close).

- (KR) South Korea said to be seeking KRW33T in the extra budget (in line with prior speculation of KRW33-35T), planning to offer pandemic relief handouts to 80% of households with its next extra budget - Yonhap.

China/Hong Kong

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

- (CN) China PBOC MPC Statement: Economy is stable with improvement; reiterates stance that prudent monetary policy to be stable, Prudent monetary policy should stay flexible, precise, reasonable and moderate (overnight).

- (CN) Guotai Junan Securities analysts Dong Qi: China PBOC likely to continue injecting a small amount of liquidity into the market via reverse repurchase agreements in coming days by the end of June – press.

- (CN) China PBOC sets Yuan reference rate: 6.4567 v 6.4578 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY30B in 7-day reverse repos v CNY30B in 7-day reverse repos prior; Net inject CNY20B v Net inject CNY20B prior.

- 300750.CN CATL signs agreement to supply Li-Ion battery products to Tesla from 2022 to 2025 – press.

- (CN) China Q2 Beige Book: consumers and businesses are not as optimistic as data may suggest.

North America

- (CN) US President Biden: Will work with congress on China competition bill.

- (US) Fed's Barkin (FOMC voter, hawk): the TIPS market is showing inflation at about 2%.

Europe

- (UK) BOE Haldane (outgoing chief economist): The notion that bitcoin could ever play the role of a payments medium is totally fanciful and should fill us with horror, We've got house prices rising at double-digits, that's punchy - MoneyWeek Podcast.

- GSF.NO Confirms ongoing discussions regarding the potential sale of Shetland operations (UK).

Levels as of 01:15ET

- Hang Seng -1.1%; Shanghai Composite -0.9%; Kospi -0.6%; Nikkei225 -1.0%; ASX 200 -0.2%.

- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.1%; FTSE100 -0.0%.

- EUR 1.1932-1.1907; JPY 110.66-110.45; AUD 0.7571-0.7550; NZD 0.7052-0.7024.

- Commodity Futures: Gold -0.2% at $1,776/oz; Crude Oil -0.4% at $72.65/brl; Copper -1.1% at $4.23/lb.