Asia tracks US gains amid dearth of significant fresh news

Asia Market Update: Asia tracks US gains amid dearth of significant fresh news; we have yet to see any comments out of the US or China about HK’s peg

General Trend:

- Shanghai Composite rises 1% during morning session despite concerns in the local press about illegal margin lending; IT shares outperform, financials lag

- Technology names trade generally higher in HK after the Nasdaq’s rise

- Nikkei outperforms TOPIX ahead of earnings from Fast Retailing, Real Estate stocks drop in Japan; Softbank rises over 4% amid gains in the US tech sector and Alibaba

- Japanese companies expected to report earnings after the market close include Fast Retailing (largest Nikkei component) and Seven & I

- Gainers in Australia include Energy, Resource and Telecom companies

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

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened +0.3%

-(HK) Australia PM Morrison: To allow immigration program to offer opportunities to Hong Kong citizens; Australia will suspend Extradition treaty with Hong Kong (in line) - Statement on Hong Kong

-*(AU) AUSTRALIA MAY HOME LOANS VALUE M/M: -11.6% V -5.5%E; INVESTMENT LENDING M/M: -15.6% V -4.2% PRIOR

-(AU) Australia Jun Port Hedland Iron Ore exports: 51.8Mt (record high) v 47.8Mt prior (2 straight months of record exports)

-(NZ) New Zealand Jul Prelim ANZ Business Confidence: -29.8 v -34.4 prior; Activity Outlook: -6.8 v -25.9 prior

-(NZ) New Zealand Debt Management Office (DMO) sells NZ$950M v NZ$950M indicated in bonds due 2023, 2029 and 2033

China/Hong Kong

-Hang Seng opened +0.9%, Shanghai Composite opened flat

-Alibaba [9988.HK] Reportedly its financial arm Ant Financial considering IPO in Hong Kong, targeting >$200B valuation - press

-(CN) China Securities Regulatory Commission (CSRC) is warning investors about illegally financed margin trading due to run up in China stock markets - Press

-*(CN) CHINA JUN CPI M/M: -0.1% V -0.8% PRIOR; Y/Y: 2.5% V 2.5%E; PPI Y/Y: -3.0% v -3.2%e (prior largest drop since 2016)

-(CN) China PBOC sets Yuan reference rate: 7.0085 v 7.0207 prior (Strongest fix since Mar 16th)

-(CN) China PBoC Open Market Operation (OMO): Skips reverse repos v Skips prior; Net drain CNY0B v Net drain CNY0B prior (9th straight skip)

-(CN) China Foreign Min Yi: Relationship is facing most serious challenges since relationship was established

Japan

-Nikkei 225 opened flat

-Softbank: Reported that Japan Mobile Unit is delaying bond offering – Press

-(JP) Bank of Japan (BOJ) Gov Kuroda: CPI likely to be negative for time being; Japan economy is a 'extremely' severe situation; Will not hesitate to add easing

-(JP) Tokyo reports at least 220 additional coronavirus cases

-(JP) JAPAN MAY CORE MACHINE ORDERS M/M: +1.7% V -5.0%E; Y/Y: -16.3% V -16.8%E

-(JP) Japan Jun M2 Money Supply Y/Y: 7.2% v 5.1% prior; M3 Money Supply Y/Y: 5.9% v 4.1% prior (fastest since comparable data became available in 2004)

-(JP) Japan Jun Tokyo Avg Office Vacancies: 2.0% v 1.6% prior

-(JP) Japan MoF sells ¥2.5T v ¥2.5T indicated (¥1.9T prior) in 0.10% 5-year JGB: avg yield -0.103% v -0.119% prior, bid to cover 4.25x v 3.78x prior

-(JP) Tokyo Gov Koike: Tokyo coronavirus cases 'very high' today; More testing leading to more confirmed virus cases

-(JP) Japan Economy Min Nishimura: Need to analyze whether coronavirus is spreading in Japan cities; No need to declare state of emergency (in line)

Korea

- Kospi opened +0.6%

- (KR) South Korea reported to be announcing tax hike for Koreans who own multiple homes - Korea Press

- (KR) Recent satellite imagery reportedly shows activity at previously undeclared North Korean nuclear facility which researchers believe is being used to build nuclear warheads - CNN

Other Asia

- (MY) Malaysia May Industrial Production Y/Y: -22.1% v -29.0%e

- (SL) Sri Lanka Central Bank (CBSL) cuts Key Rates by 100bps (Market expected 50bps cut)

- (TW) Taiwan reported to consider stopping Japan and Korea business travel into Taiwan, cited the recent rise in new coronavirus cases - Press

North America

- United Continental [UAL]: Cancels US to Hong Kong flights through July 10th (Friday) citing medical testing changes imposed by China

- Ford [F]: Q2 China vehicle sales 158.6K, +3.0% y/y - financial press

- (US) Fed's Rosengren (hawk, non-voter): Sees more US businesses needing rescue, Main Street lending facility may need to be extended - FT

Europe

- (UK) Jun RICS House Price Balance: -15% v -25%e

Levels as of 1:20 ET

- Nikkei 225, +0.6%, ASX 200 +0.9% , Hang Seng +0.4%; Shanghai Composite +1.4% ; Kospi +0.7%

- Equity S&P500 Futures: -0.1%; Nasdaq100 flat, Dax +0.3%; FTSE100 +0.6%

- EUR 1.1370-1.1327 ; JPY 107.36-107.18 ; AUD 0.6996-0.6968 ;NZD 0.6591-0.6562

- Gold flat at $1,821/oz; Crude Oil -0.3% at $40.79/brl; Copper +1.2% at $2.8570/lb