CN trade surplus missed ests, zero-COVID-19 policy remains in focus

Asia Market Update: Equity markets track losses on Wall St.; USD extends rise; UST yields continue to move higher; CN trade surplus missed ests, zero-Covid policy remains in focus.

General trend

- CNH drops.

- Commodity currencies underperform; Some have focused on growth concerns related to China; Dalian Iron Ore FUTs drop by 6%.

- China’s FX reserves had the largest m/m decline since late 2016 [Apr data].

- Shanghai Composite ended morning trading flat.

- Nikkei 225 declines by over 2.2%; Fast Retailing drops amid China concerns; SoftBank Group tracks decline in US tech stocks.

- S&P ASX 200 drops by over 1% [REIT and Resources indices lag].

- US equity FUTS have extended declines.

- Taiwan Semi may release monthly sales this week.

- Companies due to report during the NY morning include Blue Apron, BioNTech, Coty, Duke Energy, Elanco Animal Health, Energizer, Exelon, Jones Lang LaSalle, Madison Square Garden Entertainment, Palantir Technologies, Party City, Lordstown Motor, Tyson Foods.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened -0.3%.

- FCG.NZ Narrows lower 2021/22 forecast Farmgate Milk Price to $9.10-9.50 per kgMS (prior $9.30 - $9.90).

- WBC.AU Reports H1 (A$) adj Cash profit 3.1B v 3.8B y/y, Net interest income 8.0B v 8.3B y/y, Net Op Rev 10.2B v 10.7B y/y.

Japan

- Nikkei 225 opened -1.1%.

- 9984.JP Reportedly Credit Suisse is seeking £350M from SoftBank in lawsuit over Katerra bankruptcy - UK press.

- (JP) Japan PM Kishida said to have agreed that Japan will ban Russia Crude Oil Imports in principle in alignment with G7 aims to counteract Russia Invasion into Ukraine – Press.

- Follow Up: Japan PM Kishida: Confirms Japan will phase out Russian oil over time, no change to existing plans to restart use of nuclear power.

- (JP) Japan Mar Labor Cash Earnings Y/Y: 1.2% v 0.9%e; Real Cash Earnings Y/Y: -0.2% v -0.6%e.

- (JP) Bank of Japan (BOJ) Mar Meeting Minutes (two decisions ago): Reiterates domestic economy picking up as a trend.

- 5631.JP Unit said to have falsified certain inspection data - Japanese press.

Korea

- Kospi opened -0.4%.

- (KR) North Korea fired ballistic missile from submarine Saturday.

- (KR) South Korea President Yoon takes office today, will start with military briefing – Yonhap.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite opened -0.4%.

- (CN) China Apr trade balance (: $51.1B V $51.9BE; Exports Y/Y: 3.9% v 2.7%e; Import Y/Y: 0.0% v -3.0%e.

- (CN) China Apr trade balance (CNY-DENOMINATED): 325.1B V 339.5BE; Exports Y/Y: 1.9% v 3.1%e; Imports Y/Y: -2.0% v -1.8%e.

- (CN) China PBOC to launch a re-lending facility to aid transport and logistics - press.

- (CN) China Apr Foreign Reserves: $3.1197T v $3.130Te (largest monthly decline since late 2016).

- (HK) Hong Kong elects China backed John Lee its new leader (replaces Carrier Lam).

- (CN) China Premier Li: Cautions on "complicated and grave" employment situation amid Covid curbs – press.

- (CN) China PBOC sets Yuan reference rate: 6.6899 v 6.6332 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net inject CNY10B v Net CNY0B prior.

- (CN) China PBOC Research Paper: Structural monetary policy tools are key to support economy (Friday).

- (CN) US regulatory officials have reportedly arrived to China for 'late stage' audit deal talks; If goes well, next visit said to include on-site inspections of Chinese auditing firms – press (Friday).

Other

- (PH) Philippines Presidential elections taking place today.

North America

- CHDN Deby week expected to raise adj EBITDA $7-9M higher than prior record set in 2019; new record of $391.8M, +25% y/y; +14% from the previous record of $343.0M set in 2019.

- (US) Scientists at the Department of Energy’s Pacific Northwest National Laboratory (PNNL) in the lab were able to extract rare earth elements from various water sources – press.

- TWTR Elon Musk pitch deck for investors projects Twitter finances for the next few years; Quintuple revenue to $26.4 billion by 2028; Cut Twitter’s reliance on advertising to less than 50% of revenue, down from around 90% in 2020 - NYT.

- (US) President Biden said to have sidelined IEA in March with a record large emergency oil release - press.

Europe

- EZJ.UK Has reduced the capacity on some of its planes to cope with a staffing crisis - UK press.

- (EU) ECB's Holzmann (Austria, hawk) said it would be appropriate to take at least 2 or even 3 steps on interest rates in 2022 – press.

- (EU) ECB publishes interview with President Lagarde: Reiterates stagflation is not currently our baseline.

- (RU) EU Foreign Policy Chief Borrell: EU should seize Russia reserve assets to rebuild Ukraine - Press.

Levels as of 01:00ET

- Hang Seng closed for holiday; Shanghai Composite +0.1%; Kospi -1.4%; Nikkei225 -2.4%; ASX 200 -1.2%.

- Equity Futures: S&P500 -1.0%; Nasdaq100 -0.9%, Dax -0.7%; FTSE100 -0.8%.

- EUR 1.0545-1.0503; JPY 131.12-130.54; AUD 0.7074-0.7002; NZD 0.6414-0.6339.

- Commodity Futures: Gold -0.6% at $1,872/oz; Crude Oil +0.1% at $109.84/brl; Copper -0.6% at $4.22/lb.