Asian equities bounce back, EU firms see CN biz sentiment at all-time-low

Asia Market Update: Asian equities bounce back; EU firms see CN biz sentiment at all-time-low; USTR CN Tariff report next wk; TSM Apr Rev at 1:30ET, UK GDP tonight, CN CPI/PPI tomorrow (Sat).

General Trend

- A better day for equities in Asia following yesterday’s mixed session. Significant up or down price volatility in JP stocks on earnings, with Nissan +3% in early trade on improved profit and guidance, but then lost all gains and fell -3%. Sony lost another -1% today and -10% for the week, hitting a 52-week low ahead of its FY earnings next week (May 14th) and amid the ongoing uncertainty of its bid with Apollo for Paramount.

- China property indices rose throughout, as high as 10% for the day, with developer Shimao + over 70%. Overall conditions said to be due to relaxing of govt restrictions on new property purchases throughout major cities. Some independent analysts say the relaxing simply allows more fraudulent transactions to take place, with Chinese banks eventually to be saddled with Non-Performing Loans.

- New Zealand PMIs continued to under-perform with its 14th straight contraction, though did rise m/m.

- Japan’s Finance Ministry reported that Japan recorded its biggest-ever currency surplus of ¥5.4T this past fiscal year. Today Japan’s Current Account and Trade Balance for April was more or less inline.

- 529 European firms reported their overall China business sentiment falling to an ‘all-time low’ in an annual survey conducted by the EU Chamber of Commerce

- Japan 30-yr JGB bond auction today had a large tail of 30bps (v 13bps prior one month ago), with the average yield rising to nearly 2%.

- Japan confidence still looking shaky with Apr Eco Watchers Current Survey reading at its lowest level since Aug 2022.

- Confirmation that the long-awaited USTR Report on China tariff reviews is due to be released, with the Biden Admin to announce decision on tariffs as early as next week.

- US Biden Admin not sure how to move forward with paused weapon shipments to Israel, while Sec of State Blinken’s “Israel Conduct" Report to Congress on Friday will reportedly NOT say that Israel broke weapons use terms, just criticize Israel ‘strongly’.

- US equity FUTs down slightly up during Asian trading.

Looking ahead (Asian time zone)

- Fri May 10th TSM Apr Rev, (Fri eve UK Q1 GDP, Fri night ECB meeting minutes, Michigan May Consumer Sentiment.

- Sat May 11th CN PPI/CPI.

Holidays in Asia this week

- Fri May 10th Indonesia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,728.

- New Zealand Apr Manufacturing PMI: 48.9 v 46.8 prior (14th straight contraction).

China/Hong Kong

- Hang Seng opens +0.7% at 18,669; Shanghai Composite opens 0.1% at 3,158.

- (US) Follow up: Reportedly confirmation that US set to impose tariffs on China EVs and key sectors after Trade Review - US press.

- EU Chamber of Commerce: China business sentiment for EU firms plunges to ‘all-time low’ - SCMP.

- (US) Treasury Sec Yellen: US/China relationship has improved decidedly over the past year - press interview.

- China PBOC sets Yuan reference rate: 7.1011 v 7.1028 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net injects CNY2B v injects CNY2B prior.

Japan

- Nikkei 225 opens +0.8% at 38,361.

- Japan Mar Current Account: ¥3.40T v ¥3.455Te.

- Japan Apr Eco Watchers Current Survey: 47.4 v 50.3e (lowest since Aug 2022) ; Outlook Survey: 48.5 v 51.6e.

- Japan Apr Bank Lending Y/Y: 3.1% v 3.2% prior.

- Japan Mar Household Spending Y/Y: -1.2% v -2.3%e.

- Japan releases weekly flows data [period ended May 3rd]: Foreign buying of Japan equities: +¥268.8B v -¥492.4B prior; Japan buying of foreign bonds: -¥1.01T v ¥648.1B prior.

- JAPAN SELLS ¥900B VS. ¥900B INDICATED IN 30-YEAR JGB BONDS; AVG YIELD: 1.9920% V 1.8080% PRIOR; BID-TO-COVER: 3.25X V 3.47X PRIOR.

- Japan sells ¥5.8T vs. ¥5.8T indicated in 3-Month Bills; Avg Yield: 0.0476% v 0.0259% prior; bid-to-cover: 3.38x v 2.93x prior.

- Former BOJ Exec Dir Maeda: Next BOJ rate hike could come anytime between July and Oct 2024; BOJ likely eyeing steady rate hikes.

- Saudi Crown Prince (MBS) to visit Japan May 20-23 - Japan Chief Cabinet Sec Hayashi.

- Japan Fin Min Suzuki: Sees wage growth outpacing last year's gains - Japanese press.

- Japan's Rengo Union (largest trade union) FY24 Wage Talks: 5th round base pay 3.57% v 3.70% in 1st round [overnight update].

South Korea

- Kospi opens +1.0% at 2,737.

Other Asia

- Malaysia Mar Industrial Production Y/Y: 2.4% v 1.9%e.

- MALAYSIA CENTRAL BANK (BNM) LEAVES OVERNIGHT POLICY RATE UNCHANGED AT 3.00% (6th straight pause in the current tightening cycle) [overnight update].

North America

- (IL) Reportedly Sec of State Blinken "Israel Conduct" Report to Congress on Friday will NOT say that Israel broke weapons use terms - US press.

- (US) Follow up: Reportedly confirmation that US set to impose tariffs on China EVs and key sectors after Trade Review; Biden administration is expected to announce decision on China tariffs by as early as next week - US press.

- (IL) US White House: Have not made final determination on how to move forward with paused shipment to Israel - US press.

- (US) BOFA INSTITUTE: APR TOTAL CARD SPENDING PER HOUSEHOLD +1.0% Y/Y +0.3% IN MAR; Notes total online retail (card not present) was weak.

- (US) INITIAL JOBLESS CLAIMS: 231K V 212KE (highest since Nov 2023); CONTINUING CLAIMS: 1.785M V 1.782ME.

- (US) TREASURY $25B 30-YEAR BOND AUCTION DRAWS 4.635% V 4.360% PRIOR; BID TO COVER 2.41 V 2.40 PRIOR AND 2.37 OVER THE LAST FOUR AUCTIONS.

- (US) Fed's Daly (voter): Getting different signals from firms who say consumers seem to be getting choosy but input prices are not yet declining.

Europe

- (UK) BANK OF ENGLAND (BOE) LEAVES BANK RATE UNCHANGED AT 5.25%; AS EXPECTED.

- (UK) BOE MAY MINUTES: VOTED 7-2 TO KEEP POLICY STEADY; Ramsden joining Dhingra in voting for rate cut.

- (UK) BOE Gov Bailey: Not yet at a point to cut rates; Possible will need to cut rates MORE than currently priced in - post rate decision press conference.

- (UK) BOE GOV BAILEY: POSSIBLE WE WILL NEED TO CUT MORE THAN CURRENTLY PRICED IN BY MARKETS - Q&A.

- (PL) POLAND CENTRAL BANK (MNB) LEAVES BASE RATE UNCHANGED AT 5.75%; AS EXPECTED.

- (EU) ECB's De Guindos (Spain): Due to slowdown in globalization and regionalization of markets, inflation will probably be higher in the future than we have seen until now.

Levels as of 01:20 ET

- Nikkei 225 +0.3%; ASX 200 +0.6%; Hang Seng +2.4%; Shanghai Composite +0.1%; Kospi +0.9%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; Dax flat; FTSE100 +0.1%.

- EUR 1.0773-1.0786; JPY 155.26-155.77; AUD 0.6600-0.6623; NZD 0.6014-0.6040.

- Gold +0.9% at $2,362/oz; Crude Oil +0.8% at $79.86/brl; Copper +0.8% at $4.6385/lb.