Asian equities follow NY lead, FTC/DOJ open AI antitrust probe into NVDA, MSDT, OpenAI

Asia Market Update: Asian equities follow NY lead; FTC/DOJ open AI antitrust probe into NVDA, MSDT, OpenAI; JP bonds rise on falling USTs and well supported bond auctions; Eyes on ECB rate decision tonight.

General trend

- Japan chip-related Advantest +5%, mirroring the earlier US gains of Nvidia overnight, in what was a positive session for equities in Asia.

- However, a potential wrinkle for the US AI-driven boom, with US DOJ and FTC announcing antitrust investigations into various AI-related activities of Nvidia, Microsoft and OpenAI.

- Japan 10-year yields fell to a 2-week low of 0.97% (was up to 1.10% last week) after the well-supported 30-yr JGB auction today and falling UST yields earlier. USD/JPY range-traded around 155.30-155.75, with BOJ Ueda and Nakamura both speaking.

- Australia’s April trade balance came in slightly higher than estimates.

- New Zealand reported its total volume of building work in the March 2024 quarter (Q1) was the lowest quarterly volume in the past two years.

- US equity FUTs +0.1% during Asian trading, falling back towards overnight open levels after the FTC/DOJ announcement (at 23:42ET).

Looking ahead (Asian time zone)

- Thu Jun 6th (Thu night ECB rate decision + presser).

- Fri Jun 7th CN Balance of Trade, (Thu night DE May Balance of Trade, US NFP jobs, ECB Lagarde speech).

Holidays in Asia this week

- Monday June 3rd, Malaysia, New Zealand, Thailand.

- Thursday June 6th South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,778.

- Australia Apr Trade Balance (A$): 6.5B v 5.4Be.

- Australia Apr Home Loans Value M/M: 4.8% v 1.5%e.

- New Zealand Q1 Volume of All Buildings Q/Q: -4.0% v -0.5%e.

- New Zealand May ANZ Commodity Price M/M: 1.1% v 0.5% prior.

- New Zealand May CoreLogic House Prices M/M: -0.2% v -0.1% prior.

- Follow up on Australian bird flu: H7 bird flu detected on a fourth poultry farm in Victoria, Australia - Victoria State Govt.

- New Zealand Asst Energy Min Jones: MBIE to halt work on Govt procuring diesel stocks for reserves - New Zealand press.

- New Zealand prices NZ$3.5B May 2028 bond syndicate tap: Yield: 4.62%.

China/Hong Kong

- Hang Seng opens +0.5% at 18,577; Shanghai Composite opens +0.1% at 3,069.

- Reportedly US Congress members are pushing for a probe on Chinese solar companies - press.

- China May Retail Passenger Vehicle Sales -3.0% y/y v -5.3% y/y prelim - PCA.

- Reportedly Shanghai and Shenzhen stock exchanges are considering suspending certain value-added market data feeds to institutions such as computer-driven quant funds – press.

- China Pres Xi calls for more US-China education exchanges - China state media.

- China PBOC sets Yuan reference rate: 7.1108 v 7.1097 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net drains CNY258B v net drains CN248B prior.

Japan

- Nikkei 225 opens +0.9% at 38,841.

- Japan May Tokyo Avg Office Vacancies: 5.5% v 5.4% prior.

- Japan BOJ Gov Ueda: Price expectations must be around the 2% target; Currently still below target - Parliamentary testimony.

- Bank of Japan (BOJ) Board Nakamura: Based on current data it is appropriate to keep policy intact for time being; Reiterates Japanese economy is recovering moderately albeit some weak signs.

- Japan releases weekly flows data [period ended May 31st]: Foreign buying of Japan equities: ¥282.0B v ¥82.4B prior; Japan buying of foreign bonds: +¥1.3T v -¥310.4B prior.

- JAPAN SELLS ¥900B VS. ¥900B INDICATED IN 30-YEAR JGB BONDS; AVG YIELD: 2.1560% V 1.9922% PRIOR, BID-TO-COVER: 3.59X V 3.25X PRIOR.

- Japan sells ¥3.7T vs. ¥3.7T indicated in 6-Month Bills; Avg Yield: 0.0858% v 0.0789% prior, bid-to-cover: 4.22x v 3.24x prior.

South Korea

- Kospi closed for holiday.

Other Asia

- (VN) S&P: The effects of a Vietnam bank failure 'will reach far'.

- US Commerce Sec Raimondo: Coalition [Global Infrastructure Partners, KKR and Indo-Pacific Partners] to invest $25B in Indo-Pacific countries.

- Taiwan Central Bank (CBC) Gov Yang: Inflation gradually coming down, while house prices are still high - press.

- (TW) US State Dept: Approves possible sale of F-16 parts to Taiwan for $80M - US financial press.

North America

- US) Federal regulators incl. FTC and DOJ clear way for antitrust inquiries into Nvidia, Microsoft and OpenAI - NY Times.

- (US) MBA Mortgage Applications w/e May 31st: -5.2% v -5.7% prior.

- (US) MAY ADP EMPLOYMENT CHANGE: +152K V +175KE (lowest since Jan); Cites "notable pockets of weakness tied to both producers and consumers"; Says job gains and pay growth are slowing going into H2 2024.

- (CA) Canada May Services PMI: 51.1 v 49.3 prior (1st expansion in 14 months).

- (CA) BANK OF CANADA (BOC) CUTS INTEREST RATES BY 25BPS TO 4.75%; AS EXPECTED.

- (US) MAY ISM SERVICES INDEX 53.8 V 51.0E; PRICES PAID: 58.1 V 59.0E; New Orders Index: 54.1 v 52.2 prior.

- (US) DOE CRUDE: +1.2M V -1.5ME; GASOLINE: +2.1M V +1ME; DISTILLATE: +3.2M V +1.5ME.

Europe

- (RU) Russian Pres Putin says Russia may send missiles closer to the West - US financial press via foreign news press conference with Pres Putin.

- (IE) Ireland May PMI Services: 55.0 v 53.3 prior (38th month of expansion).

- (EU) ECB reportedly reviews banks' lending to private equity industry - press.

- (DE) Germany May New Car Registrations 236.4K -4.3% y/y - KBA.

- (ZA) Initial ANC statement doesn't mention South African unity government - spokesperson.

- (EU) German Chancellor Scholz: Ready to create EU reinsurance system for national deposit protection schemes.

- (HU) Hungary Central Bank (MNB) May Minutes: Decision to cut Base Rate by 50bps was unanimous.

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

Levels as of 01:20 ET

- Nikkei 225 +0.9%; ASX 200 +0.8%; Hang Seng +0.2%; Shanghai Composite -0.1%; Kospi closed.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; Dax% flat; FTSE100 +0.2%.

- EUR 1.0869-1.0896; JPY 155.38-156.12; AUD 0.6647-0.6683; NZD 0.6185-0.6215.

- Gold +0.5% at $2,388/oz; Crude Oil +0.6% at $74.51; Copper +0.4% at $4.6760/lb.