Equity markets generally see modest gains

Asia Market Update: Equity markets generally see modest gains; HK and CN markets rise after holiday; Quiet session for AU bonds ahead of RBA decision on Tues., AUD trades slightly lower.

General trend

- Offshore Yuan (CNH) declines after holiday.

- Beijing eased COVID measures.

- Copper extends decline.

- Japanese cos. continue to revise Yen-denominated bond sales on market conditions.

- Shanghai Property index drops >2%.

- Australian equities lag [Financials index declines ahead of RBA decision].

- US equity FUTS trade modestly higher after prior declines.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened flat.

- Link [LNK.AU] Australia ACCC [competition regulator] to extend review of proposed merger with Dye & Durham; ACCC has indicated it expects to update the parties on 16 June.

- (AU) Australia sells A$300M v A$300M indicated in 1.75% Jun 2051 bonds; Avg Yield: 3.7995% v 3.5857% prior; bid-to-cover: 2.56x v 2.77x prior [from May 25th].

- (AU) Australia May Melbourne Institute Inflation M/M: +1.1% v -0.1% prior; Y/Y: 4.8% v 3.4% prior [annualized reading is a multi-year high].

- (AU) Australia has accused China of intercepting surveillance plane - press.

Japan

- Nikkei 225 opened -0.8%.

- (JP) Japanese cos. continue to revise Yen-denominated bond sales: Okinawa Electric cancels 10-year bond sale, to only sell 3-year bonds; cites market conditions.

- (JP) Japan Chief Cabiet Sec Matsuno: Planning on a meeting on power supply and demand.

- (JP) Bank of Japan (BOJ) Gov Kuroda: Japan is not in position for monetary tightening; Will continue with monetary easing persistently.

Korea

- Kospi closed for holiday.

- (KR) US and South Korea said to have launched 8 missiles in a test fire in response to North Korea missile launches - Press.

China/Hong Kong

- Hang Seng opens +1.0%; Shanghai Composite +0.1%.

- (HK) Hong Kong Monetary Authority Founder: Hong Kong should stick to the 40 year old USD/HKD peg as the HKMA braces for unusual challenges ahead.

- (CN) China May CAIXIN PMI services: 41.4 V 46.0E.

- (CN) China PBOC sets Yuan reference rate: 6.6691 v 6.7095 prior.

- (HK) Macau said to be pushing for a shorter quarantine period for the summer holiday - Press.

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

- (CN) Beijing to further ease COVID-related curbs, to permit indoor dining on Mon (Jun 6th); the resumption of indoor dining does not apply to Fengtai and certain parts of the Changping district - financial press.

- (HK) At least two investments banks in China to cut Hong Kong workforce by 30%; notes lower revenues - HK Press.

- (CN) China Securities Journal: New Loans to see a rebound in the May figures; liquidity to remain ample in Jun.

North America

- AXON Said to halt development of Taser equipped drone, 9 of the 12 ethics board members to resign - financial press.

- WMT CEO: We are working 'really hard' on costs; Sees a 'couple quarters' for the inventory jump to flatten out; We are concerned about the rate of inflation - analyst meeting comments (Friday).

- (US) WH Econ Advisor Boushey: Current inflation is not driven by the US job market, but is worldwide as we recover from pandemic (Friday).

- (US) Fed's Mester (FOMC voter, hawk): Sept meeting could easily be a 50bps rate hike as well; If we see compelling evidence that inflation is down, maybe could go to 25bps hike in Sept - CNBC interview (Friday).

- (US) May ISM services index: 55.9 V 56.5E (Friday).

- (US) May final S&P/markit services PMI: 53.4 V 53.5E (Friday).

- TSLA CEO tweets: "Total headcount will increase, but salaried should be fairly flat" (walking back prior statement about salaried job cuts).

Europe

- (EU) The European Central Bank (ECB) said to be strengthening plans to keep bond market stress off - Financial press.

- (RU) Russia and Turkey have agreed to a plan to ship Ukrainian Grain - Russia Press.

- (PL) Poland Deputy Foreign Min Yablonskiy: EU has already started work on the 7th package of sanctions against Russia; They could affect Russian gas supplies and cut Gazprombank from SWIFT system (Saturday).

- (FR) French Pres Macron: Must not humiliate Russia so that the day when the fighting stops we can build an exit ramp through diplomatic means; Does not rule out visiting Kyiv (Friday).

- (RU) Russia Pres Putin: We see attempts to blame Russia for problems on the global food market (Friday).

- (RU) Russia Dep Chair of Security Council Medvedev (former Pres): Russia could target Western countries if Ukraine uses rockets supplied by US to carry out strikes on Russia (Saturday).

- (UK) UK PM Johnson is 'widely expected' to face a confidence vote by as early as this week; some MPs expect that the threshold of 54 letters for the confidence vote has already been exceeded - UK press.

- (UK) Govt expected to soon introduce the legislation enabling unilateral disapplication of Northern Ireland Protocol - financial press.

- (CZ) Czech Central Bank's Holub (chief economist): Sees inflation peaking >15%, should peak during early summer.

- (UK) UK Business Sec said to consider providing aid for steel companies - UK press.

Levels as of 01:20 ET

- Nikkei 225, +0.7%, ASX 200 -0.3% , Hang Seng +1.3%; Shanghai Composite +0.9% ; Kospi +0.4%.

- Equity S&P500 Futures: +0.5%; Nasdaq100 +0.7%, Dax +0.3%; FTSE100 +0.7%.

- EUR 1.0736-1.0710 ; JPY 130.99-130.43 ; AUD 0.7220-0.7187 ;NZD 0.6516-0.6496.

- Gold +0.5% at $1,858/oz; Crude Oil +0.6% at $119.55/brl; Copper -1.3% at $4.4175/lb.