China trade balance in-line; Oil holds higher awaiting Iran outcome

Asia Market Update: Aussie retail sales weaker; China trade balance in-line; Oil holds higher awaiting Iran outcome

General Trend:

-Asian equity markets trade generally higher, in line with US session

-Australia March and Q1 retail sales miss ests; Australian dollar and 3-year yield decline

-Japan household spending declines for 2nd straight month, leads to questions about whether weakness is temporary

-China April Trade Surplus and Exports beat ests

-China 2018/19 soy imports expected to decline for the first time in over 10 years (CNGOIC)

-US/China trade talks to continue: China's top economic advisor will be in Washington next week

-May 8th deadline for Takeda’s approach for Shire in focus

-US President Trump is expected to make decision on Iran deal later on Tuesday (18:00 GMT); WTI Crude Futures decline in Asia

-Indonesia 2-year bond yields rise over 25ps; tracks recent weakness in Rupiah currency (IDR)

-NZ Shadow Board sees no changes at Thursday’s RBNZ policy meeting

-Australia’s budget due for release later today

 

Headlines/Economic Data

Japan

-Nikkei 225 opened -0.1%; closed +0.2%

- TOPIX Info & Communications index +0.5%, Electric Appliances +0.2%; Real Estate -0.6%, Retail Trade -0.5%

- Automakers decline ahead of Wednesday’s expected earnings report from Toyota Motors

- (JP) BoJ to explain why it omitted inflation target timing – Japanese Press

- (JP) Japan Govt to set new fiscal reform target that keeps ratio of FY21 deficit to nominal GDP at 3% of below – Japan press

- (JP) Japan Fin Min Aso: No answer on timing of new fiscal reform target yet

- (JP) Japan Mar Household Spending y/y: -0.7% v 1.0%e

- Takeda, 4502.JP Comments on press reports: talks continue with Shire on possible offer, will make announcement if firm offer is made

-(JP) Japan MoF sells ¥2.2T v ¥2.2T indicated in 0.1% (prior 0.1%) 10-yr JGB; avg yield 0.046% v 0.032% prior; bid to cover 4.20x v 4.16x prior

-(CN) China Premier Li: China will grant RQFII quota to Japan; will also sign a currency swap agreement during visit to Japan

Korea

-Kospi opened +0.3%

- (KR) Korea International Trade Association report: South Korea needs more attention to avoid US anti-dumping moves as the bulk of its exports overlaps with already regulated Chinese goods - Korean press

- (KR) Bank of Korea (BoK) sells KRW500B in 6-month monetary stabilization bonds (MSBs); yield 1.72%

- 005380.KR Hyundai/Kia expected to report stronger sales due to recovery in China - Korean press

- (KR) South Korea sells KRW1.70T in 5-year bonds: avg yield 2.59%

-SK Telekom, 017670.KR To pay KRW702B to acquire 55% stake in Siren Holdings which owns 100 percent of ADT Caps; Macquarie Group bought 45% for KRW574B

China/Hong Kong

-Hang Seng opened +0.4%, Shanghai Composite flat

- Hang Seng Info Tech index +2.7%, Financials +1.5%, Consumer Goods +1.4%

- Shanghai Composite Property sub-index rises over 1.5%

- (CN) CHINA APR TRADE BALANCE: $28.8B V $27.8BE; Exports Y/Y: 12.9% v +8.0%e ; Imports Y/Y: 21.5% v 16.0%e

- (CN) CHINA APR TRADE BALANCE (CNY): 182.8B V 189.2BE; Exports Y/Y: 3.7% v +4.0%e ; Imports Y/Y: 11.6% v 10.4%e

- (CN) CHINA APR FOREIGN RESERVES: $3.125T V $3.131TE (2nd monthly decline)

- (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the second consecutive day; Net: CNY0B drain v CNY0B drain prior

- (CN) China PBoC sets yuan reference rate: 6.3674 v 6.3584 prior

- (CN) China may release detailed rules on CDRs in 2-3 months - China Securities Journal

- (CN) China President Xi top economic adviser to visit the US for trade talks

- (CN) PBoC: Reiterates to boost cross-border usage of yuan (CNY); held meeting on yuan cross-border business on May 7th

- (HK) Hong Kong 3-month HKD Hibor continues to trade at highest since 2008; currently near 1.74696%

- (CN) Li Daokui: China unlikely to deprecate yuan for 'trade war'

Australia/New Zealand

-ASX 200 opened +0.1%, closed 0.1%

- ASX 200 Financials index +0.8%, Utilities +0.6%; Energy -1.1%, Resources -0.7%, Telecom -0.5%

- (NZ) New Zealand 9M Budget surplus NZ$910M more than forecasted; Core rev Rev NZ$1.1B more than forecasted

- (NZ) New Zealand Shadow Board: Sees little need for RBNZ to change cash rate

- (AU) Australia sells A$150M v A$150M indicated in 2.50% Sept 2030 indexed bonds, avg yield 0.8357%, bid to cover 3.43x

- (AU) AUSTRALIA MAR RETAIL SALES M/M: 0.0% V 0.2%E

- (AU) AUSTRALIA Q1 RETAIL SALES EX-INFLATION Q/Q: 0.2% V 0.6%E

- (NZ) New Zealand Q2 2-yr Inflation Expectations: 2.01% v 2.11% prior; 1-yr inflation expectations 1.80% v 1.86% prior

Other Asia

- Nanya Technology [2408.TW]: Expects DRAM prices to rise in Q2 - Digitimes

North America

- US equity markets ended higher: Dow +0.4%, S&P500 +0.4%, Nasdaq +0.8%, Russell 2000 +0.9%

- S&P500 Technology +0.7%, Industrials +0.7%, Financials +0.7%

- FOXA Comcast said to be arranging financing with banks for all cash bid for Twenty-First Century Fox - financial press

- QCOM Said to be exploring closing or selling data center business and preparing exit from server chip business - press

- Canadian Natural Resources [CNQ]: Royal Dutch Shell sells 97.6M share stake in Canadian Natural Resources Limited for $3.3B

- (IR) President Trump: I will announce Iran decision tomorrow (Tuesday) at 14:00ET (18:00 GMT)

- (US) Fed's Kaplan (dove, non-voter): base case for 2018 is still three hikes total; 2% is a symmetrical inflation target - Q&A with reporters

- (US) Fed's Barkin (FOMC voter): economic growth is being propelled by unbelievably positive consumer and business confidence

- (US) Senior Trump Administration Official: President Trump to request $15B in spending cuts from Congress

- (US) NY Attorney General Schneiderman to resign amid allegations by multiple women

Europe

- (UK) PM May said to have delayed Cabinet discussion on customs plan - UK press

- (EU) ECB's Praet (Belgium, chief economist): euro area data points to some moderation but remains consistent with a broad-based and solid expansion

- (EU) ECB's Smets (Belgium): recent economic data is consistent with continued robust expansion; ECB may have better understanding of data at June or July meetings; Investors could be correct to push out their forecasts for when ECB might increase rates

- (GR) ESM chief Regling: Greek loan maturities could be extended

- (IT) Italy President Mattarella: confirms there is no possibility of forming a political govt; urges parties to support a "neutral" non-partisan govt

- Virgin Money VM.UK CYBG confirms preliminary approach to acquire Virgin Money; for exchange ratio of 1.1297 new CYBG shares for each Virgin Money share

- Shire [SHP.UK]: Takeda comments on press reports: talks continue with Shire on possible offer, will make announcement if firm offer is made

- Hochtief [HOT.DE]: Reports Q1 op net €106.3M v €93.3M y/y, Rev €5.27B v €5.15B y/y; Affirms FY18 Op €470-520M (prior €470-520M y/y)

- Unicredit [UCG.IT]: Hedge fund Caius Capital alleges that the company misclassified certain capital - FT

 

Levels as of 02:00ET

- Hang Seng +1.2%; Shanghai Composite +0.7%; Kospi -0.3%

- Equity Futures: S&P500 -0.0%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 -0.2%

- EUR 1.1938-1.1909; JPY 109.14-108.85; AUD 0.7528-0.7491;NZD 0.7028-0.7009

- Jun Gold -0.1% at $1,312/oz; Jun Crude Oil -1.1% at $69.94/brl; Jul Copper +0.4% at $3.09/lb