Asian equities open the week mixed after better Japan GDP

Asia Market Update: Asian equities open the week mixed after better Japan GDP , surprise Aussie election results and lingering trade concerns; CNH gains as PBOC affirmed stability pledge; Key RBA events seen on Tuesday

 

General Trend:

- Little fresh China/US trade news seen over the weekend

- Australian equities continue to trade at 2007 highs amid tax cut speculation, ruling center right coalition unexpectedly won 3rd term

- Aussie banks outperform as less regulatory headwinds seen post elections; Healthcare and property shares also gain in Australia

- In early trade, Chinese equities extend losses seen on Friday’s session

- CNBC from Friday: China-US trade talks reportedly have stalled; scheduling for next round of negotiations is said to be in flux

- Shanghai property index declines, officials said to have warned on property prices in various cities

- Chinese chip makers gain amid focus on US supplier ban related to Huawei

- PBOC issued quarterly monetary policy report on Friday: Trade friction brings uncertainties, impacts supply chain

- Oil prices gain after OPEC members’ comments

- Australian dollar and bond yields rise following election results

- Australia election results give RBA more room to cut rates in near term (analyst)

- Key RBA events seen for Tuesday: The RBA is due to release the minutes for its May policy meeting.

- RBA Gov Lowe is also due to speak on May 21st at the Economic Society of Australia Business Lunch

- Japan Q1 prelim GDP unexpectedly expanded: Capex and consumption not as bad as feared, imports see largest drop since 2009

- Japan affirms plan to raise sales tax after better GDP data

- South Korea Finance Ministry steps up warnings related to the FX market

- South Korea Finance Min said certain central banks purchased domestic bonds last week; No comment if USD/KRW will break 1,200

- South Korea sold less than planned amount in 10-year bond auction

- Indian Rupee (INR) supported by election exit polls

- US and Japan expected to hold trade talks later this week (May 24th)

- US tech companies react to recent Trump move on Huawei

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.3%

- (AU) Australia Election Results: PM Morrison and center right coalition retain power (not expected); Labor Party leader Bill Shorten is expected to step down after the loss, and his deputy Tanya Plibersek is likely to take over party leadership

Japan

- Nikkei 225 opened +0.3%

- (JP) JAPAN Q1 PRELIMINARY GDP Q/Q: 0.5% V -0.1%E ANNUALIZED GDP Q/Q: 2.1% V -0.2%E; Japan Q1 imports fall 4.6% q/q (biggest fall since Q1 2009); Q1 net exports adds 0.4 ppts to Q/Q GDP

- (JP) Japan Economy Min Motegi: No change to view government will raise sales tax to 10% in Oct - Comments after Q1 prelim GDP data

- (JP) Japan Mar Final Industrial Production M/M: -0.6% v -0.9% prelim; Y/Y: -4.3% v -4.6% prelim

- (JP) Japan Cabinet Sec Suga: GDP has no impact on tax hike

- 6758.JP PlayStation team said to have been unaware of Microsoft deal ahead of time - US press

Korea

- Kospi opened +0.5%

- (KR) According to Korea Economic Research Institute; sees potential growth rate for South Korea at 2.5% through 2022 (prior 2.7%)

- (KR) South Korea Fin Min Hong: No comment if USD/KRW will break 01,200; Reiterates ready to respond to any herd behavior in FX market

- (KR) Bank of Korea (BOK) sells 6-month Monetary Stabilization Bonds (MSB), avg yield 1.65% v 1.73% prior

- (KR) South Korea sells KRW850B v KRW1.0T indicated in 10-yr Bonds; avg yield 1.83% v 1.99% prior

China/Hong Kong

- Hang Seng opened +0.1%; Shanghai Composite opened -0.3%

- (CN) China PBoC: To keep balance in prudent monetary policy, Reiterates to keep appropriate liquidity and market rates - Quarterly Monetary Policy Implementation report (Friday)

- (CN) China PBOC Vice Gov Pan Gongsheng reiterates China has confidence in keeping yuan exchange rate largely steady, will adopt necessary counter-cyclical measures

- (CN) Former PBOC official Sheng reiterates China should avoid yuan weakening past 7.00 level vs the US dollar (in line with press article from May 17th)

- US Commerce Dept spokesperson: US may soon scale back the trade restrictions placed on Huawei

- (CN) China PBoC Open Market Operation (OMO): Skips for 7th consecutive session: Net: CNY0B v CNY0B prior

- (CN) China PBoC sets yuan reference rate: 6.8988 v 6.8859 prior (weakest setting since late Dec 2018)

- (CN) China National Development and Reform Commission (NDRC): To annually revises negative list for market access each year - Xinhua

- (CN) China Politburo Standing Committee member Wang Yang: US China trade war could cut 1% of GDP in 2019 worst case scenario - SCMP

- (US) US Embassy Spokesperson: US Ambassador to china Branstad to visit Tibet and Qinghai this week (1st visit to Tibet since 2013)

Other Asia

- (IN) India Election Update: According to exit polls show PM Modi leading

North America

- (IR) US President Trump: If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again! – tweet; Tweet in response to reports that a rocket was fired into Baghdad’s Green Zone less than a mile away from the US Embassy.

- (US) US President Trump on Prerecorded Fox News Interview: Companies are moving out of China to other countries in Asia; Would like to deal with carried interest tax

- (US) President Trump Tweets: "Starting Monday, our great Farmers can begin doing business again with Mexico and Canada. They have both taken the tariff penalties off of your great agricultural product.Please be sure that you are treated fairly. Any complaints should immediately go to @SecretarySonny Perdue!

Europe

- (SA) Saudi Energy Minister al-Falih said there was consensus among OPEC and allied oil producers to lower crude inventories 'gently, possible rollover in H2 2019 of previously agreed output curbs was discussed at Sunday's ministerial panel - financial press

- (RU) Russia Energy Min Novak said the easing of production cuts had been discussed, supply situation would be clearer in a month – financial press

- (CH) Switzerland votes in favor to bring gun laws in line with EU standards (stricter) 63% in favor, 33% against or would have lost the ability to travel to EU without visa

- TCG.UK Have held discussions with a several suppliers to reassure them there is "ample resources" to make it through the summer holiday season

- (UK) Labour Brexit spokesperson Starmer: govt must include provision for a public vote in the Brexit withdrawal agreement bill in order to break the impasse with Labour – BBC

- (KW) Kuwait Oil Min: OPEC+ countries' compliance with oil cuts is very big; Kuwait committed to less oil output

- (DE) Germany Finance Min April Monthly Report: Apr Tax Rev +2.6% y/y; YTD Tax Rev +2% y/y

- (EU) ECB Knot (Netherlands): Euro zone inflation is not where ECB wants it yet, we should keep going

- (UK) PM May said to have offered a "bold" Brexit deal, though parties remain skeptic

 

Levels as of 01:20ET

- Hang Seng -0.5%; Shanghai Composite -0.8%; Kospi +0.3%; Nikkei225 +0.4%; ASX 200 +1.7%

- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.3%; FTSE100 +0.2%

- EUR 1.1152-1.1168; JPY 110.00-110.31; AUD 0.6890-0.6923; NZD 0.6521-0.6542

- Commodity Futures: Gold +0.0% at $1,275/oz; Crude Oil +1.3% at $63.73/brl; Copper +0.1% at $2.74/lb