Asian equities recover on reduced EU political tensions and fresh US index highs

Asia market update: Asian equities recover on reduced EU political tensions and fresh US index highs; AU RBA holds rates; Focus tonight on US May adv Retail Sales + May Ind Prod.

General trend

- After a risk-off day yesterday to start the week, Asian markets took comfort today in EU markets settling down somewhat from worries related to France's political turmoil that engulfed trading last week. US broad-based gains in Nasdaq and S&P500 overnight also provided a boost.

- Australian RBA kept rates on hold, reiterating not to rule anything "in or out". Said that inflation remains high, with persistence of services inflation remaining the key uncertainty. Concerned that rising house prices and tax cuts are likely to support consumption over the coming year. (The next AU Jun quarter CPI is due July 31st).

- Australian weekly consumer confidence rebounded as tax cuts and wage hikes come into view for consumers.

- However, the opposite for New Zealand with Q2 Consumer Confidence falling back to its lowest level since Q3, 2023.

- US equity FUTs flat during Asian trading, following large rises in Nasdaq and S&P500 overnight.

Looking ahead (Asian time zone)

- Tue 18th Jun: (Tue eve DE Jun ZEW Econ Sent, Tue night US May Adv Retail Sales & May Industrial Production).

- Wed 19th Jun: NZ Q1 Current Account, JP May Balance of Trade, JP MPM Minutes (2 mtgs ago), (Wed eve UK May CPI).

- Thu 20th Jun: NZ Q1 GDP, CN LPR, (Thu eve UK rate decision, Thu night US May prelim Building Starts).

- Fri 21st Jun: AU Jun prelim PMI, JP Ntnl May CPI, JP Jun prelim Mnfg PMI, India PMI, (Fri eve UK May Retail Sales, DE & EU & UK prelim Mngf PMI Flash. Fri night CA Apr Retail Sales, US S&P Jun prelim Mnfg PMI).

Holidays in Asia this week

- Monday June 17th India, Indonesia, Malaysia, Philippines, Singapore.

- Tuesday June 18th Indonesia.

- Wed June 19th (Note: Wed 19th US time is a US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,702.

- Reserve Bank of Australia (RBA) leaves cash rate target unchanged at 4.35%; as expected.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 80.3 v 77.0 prior.

- China Premier Li Qiang: Feels widespread desire for better Australia-China ties - financial press.

- New Zealand PM Luxon: Will continue to explore AUKUS Pillar 2 - comments to media on Japan trip.

- Reserve Bank of Australia (RBA) Head of Payments Policy Connolly: Policy issues on online retail payments (incl BNPL transactions) - Speech at Merchant Risk Council.

- New Zealand Q2 Consumer Confidence: 82.2 v 93.2 prior (lowest since Q3, 2023).

China/Hong Kong

- Hang Seng opens +0.1% at 17,961; Shanghai Composite opens flat at 3,015.

- China’s June Loan Prime Rates (LPR) seen to stay steady - Chinese press.

- NDRC [China state planner]: Domestic demand for EVs seen to maintain fast growth; reiterates domestic recovery faces challenges.

- China May Electricity Consumption: +7.2% y/y.

- Ex-Trump advisor Robert O'Brien proposes global agenda for 2nd Presidential Term, incl. total China cutoff – financial press.

- Hong Kong's Leader Lee: Hong Kong will no longer halt extreme weather market trading from Sept 25 (not Sept 25), 2024.

- China NPC Standing Committee to hold meetings on June 25-28th to review appointments and removals.

- China Banks May FX (CNY): Purchases 1.25T v 1.23T m/m; Sold 1.36T v 1.50T m/m.

- China increase basic pension by 3% from 2024 – CCTV.

- (EU) Commission spokesperson: China's anti-dumping probe into imported pork: EU takes note and will intervene as appropriate to ensure that investigation fully complies with all WTO rules - press.

- China MOFCOM: Launching anti-dumping probe into EU pork imports.

- China PBOC sets Yuan reference rate: 7.1148 v 7.1149 prior.

- China PBOC Open Market Operation (OMO): Sells CNY86B in 7-day reverse repos; Net injects CNY84B v net injects CNY2B prior.

Japan

- Nikkei 225 opens +0.9% at 38,433.

- Japan BOJ Gov Ueda: Japan's economy is recovering moderately - Parliamentary testimony.

- Japan Fin Min Suzuki: Will continue debt management through dialogue with the markets - Japanese press.

- Japan PM Kishida: Agree with BOJ that consumption lacks strength as wage growth fails to catch up with inflation - Parliament testimony.

- BOJ Gov Ueda: Reiterates watching FX and import prices carefully - Parliament testimony.

- Japan PM Kishida: Will think about how best to fulfill responsibilities amid calls to step down - Parliamentary comments.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years, 3-5 Years, 5-10 Years and 10-25 Years; (lnline with prior purchases).

South Korea

- Kospi opens +0.8% at 2,765.

- Bank of Korea (BOK) Gov Rhee: Need more time to see if inflation to ease to target - Korean press.

Other Asia

- Singapore May Non-Oil Domestic Exports M/M: -0.1% v 1.8%e; Y/Y: -0.1% v -1.1%e.

- Malaysia, China to sign Belt & Road MOU this week – FT.

- Thailand Central Bank (BOT) Gov Sethaput: GDP growth and CPI are moving back to target - TV interview.

North America

- (US) Jun Empire Manufacturing: -6.0 V -11.3E (highest since Feb); New Orders: -1.0 v -16.5 prior (highest since Sept 2023); Optimism about the six-month outlook at 2-yr high; Prices Paid: 24.5 v 28.3 prior (lowest since Jan).

- (US) Fed's Harker (non-voter): See one cut in 2024 if economy evolves as expected; Two cuts or none also quite possible, depends on data; Latest CPI data very welcome, want to see more of it - prepared speech.

- (US) White House's Kirby: We are troubled by deepening relationship between Russian and North Korea.

Europe

- Follow up: EU to delay Basel bank trading reforms following similar move by the US [inline]- FT.

- (IE) Ireland Central Bank Quarterly Bulletin (2nd for 2024): Core inflation to ease to ~2% over forecast period (18 months).

- Reportedly EU leaders' Summit ends without a political deal on the top EU posts, incl. Pres von der Leyen - press.

- (EU) ECB Chief Lagarde: ECB is attentive to proper functioning of markets - speech in France [**Note: likely refers to rising French-German yield spread].

- (DE) Germany Metal Workers Union (IG Metall) reportedly demands 7% higher wages ahead of collective bargaining round - press.

Levels as of 01:20 ET

- Nikkei 225 +0.9%, ASX 200 +0.9%, Hang Seng -0.3%, Shanghai Composite +0.3%; Kospi +1.0%.

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

- EUR 1.0719-1.0741; JPY 157.51-157.74; AUD 0.6585-0.6622; NZD 0.6114-0.6140.

- Gold +0.2% at $2,334/oz; Crude Oil -0.2% at $79.57/brl; Copper -0.2% at $4.4508/lb.