Equity markets trade generally lower as tariff concerns won’t go away amid the new month

General trend

- US Pres Trump says he will double US steel tariffs from 25% to 50% "to protect American industry", effective on June 4th.

- Asian steelmakers drop; automakers also move lower.

- Cleveland-Cliffs [CLF]: Shares rose by >33% on Friday after hours; Copper rallies.

- Trouble in the US/CN talks?

- USD generally declines; Offshore Yuan [CNH] also drops amid Shanghai holiday.

- Equities drift lower in Asia.

- New World Development [17.HK] Deferred coupon payments related to perpetual bonds; Property and Mainland Banks indices decline.

- Hang Seng Mainland Banks index down >3.0%.

- Hang Seng Tech index also drops.

- US said planning wider sanctions on Chinese tech companies with inclusion of Chinese subsidiaries – press [from May 30th].

- Trump is finalizing an executive order for new restrictions that could effectively end Chinese drone sales to the US - Washington Post.

- (US) White House Deputy Chief of Staff Miller: US has many options to hold China accountable.

- US-China trade truce said to risk breaking down over access to rare earths – WSJ (late Friday update].

- HK casino stocks trade mixed; Macau May (MOP) Casino Rev Y/Y: 21.1B +5.0% (v 1.9e) [highest since pre-Covid].

- Bluescope Steel [BSL.AU]: Rises by >8% [Reminder May 27th: S&P affirmed rating at BBB-; Outlook Positive; Mitigating the effect of weaker Asian steel pricing is the strength in steel spreads in the U.S., which are benefiting from tariffs.].

- Crude oil supported by OPEC+.

- Quiet session seen for JGBs.

- Upcoming US data includes ISM Manufacturing.

- RBA May minutes due on Tues, Japan to sell 10-year JGBs.

- BOJ Gov Ueda to also speak on Tues.

Looking ahead (Asian-weighted releases, listed as per Asian time zone)

- Mon Jun 2nd (Mon night US May Manufacturing ISM, US Fed Powell).

- Tue Jun 3rd (Tue eve EU May CPI, US Apr JOLTS).

- Wed Jun 4th (Wed night US May Services ISM, CA BOC Rate Decision, US Fed Beige Book).

- Thu Jun 5th (Thu night EU ECB Rate Decision).

- Fri Jun 6th IN RBI Rate Decision (Fri US May jobs).

Holidays in Asia this week

- Mon Jun 2nd China, Malaysia, New Zealand.

- Tue Jun 3rd South Korea, Thailand.

- Fri Jun 6th Indonesia, Singapore, South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,431.

- Australia May Final PMI Manufacturing: 51.0 v 51.7 prelim (confirms 5th month of expansion).

-Australia May Melbourne Institute Inflation M/M: -0.4% v 0.6% prior; Y/Y: 2.6% v 3.3% prior.

- Australia May ANZ-Indeed Job Advertisements M/M: -1.2% v 0.5% prior.

-Brickworks [BKW.AU]: Soul Patts and Brickworks agree to transformative A$14.0B merger; implied equity value A$30.28/share.

China/Hong Kong

- Hang Seng opens -1.1% at 23,043.

-Shanghai Composite closed for holiday.

- China Commerce Ministry (MOFCOM) issues comments on the US: 'Urges' the US to safeguard the consensus reached during the Geneva talks [no specific countermeasures seen].

- (US) Pres Trump: I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen; The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US - Truth Social post [from May 30th].

- US Pres Trump: Reiterates China violated big part of agreement; Will speak with China Pres Xi.

- China May Manufacturing PMI (GOVT OFFICIAL): 49.5 V 49.5E (2nd contraction in a row).

-China PBOC Gov Pan: China economy maintaining trend of improvement [from May 30th].

- China CAICT: Apr shipments of smartphones within China Y/Y: -1.7% v +6.0% m/m.

-BYD [1211.HK]: Reports May Total Vehicle Production: 349.8K units v 344.1K y/y; vehicle sales 382.5K v 331.8K y/y.

-CK Hutchison [1.HK]: MSC and BlackRock held talks with China SAMR [competition regulator] regarding the Panama Canal; the 2 companies said to consider possible changes to the final transaction - FT.

- (US) Defense Sec Hegseth: US does not seek conflict with China; China's military is planning every day for a Taiwan invasion - Shangri-La Dialogue in Singapore [late Fri update].

Japan

- Nikkei 225 opens -1% at 37,594.

-Japan Q1 CAPITAL SPENDING (CAPEX) Y/Y: 6.4% V 3.8%E [reminder May 16th: JAPAN Q1 PRELIMINARY GDP Q/Q: -0.2% V -0.1%E; ANNUALIZED Q/Q: -0.7% V -0.3%E; Business Spending Q/Q: 1.4% v 0.6%e].

- BOJ: Confirms that levels of provision for possible losses on bond transactions was 100% for fiscal 2024 [comments on press report].

- BOJ leaves Jun bond buying pace unchanged vs May.

- BOJ: Announced relaxation of the Terms and Conditions for the Securities Lending Facility for the Cheapest-to-Deliver Issues.

- Japan MOF may act to ease upward pressure on JGB yields; cites members of JPMorgan Japan Markets Research - US financial press.

- Japan Trade Negotiator Akazawa said to consider another visit to the US later this week - Japanese media; The trip is expected to last for 4 days from Thurs [Jun 5th].

- Japan Econ Min Akazawa met with US Treasury Sec Bessent and Commerce Sec Lutnick 'strongly requested' US to rethink its tariff measures; Made progress in trade talks and agreed to accelerate talks - Japan govt statement.

- Japan PM Ishiba: Reiterates no intention to compromise on US tariffs.

- Japan May Final PMI Manufacturing: 49.4 v 49.0 prelim (confirms 11th month of contraction).

- Japan Chief Cabinet Sec Hayashi: Setting up ministerial meeting on stable rice supply.

Korea

- Kospi opens -0.2% at 2,692.

- South Korea Industry Minister: To respond to 50% tariff on steel products as part of ongoing talks with the US - Yonhap.

-Bank of Korea (BOK) Gov Rhee: Sectoral tariffs are just as important for Korea.

- South Korea May PMI Manufacturing: 47.7 v 47.5 prior [5 month of contraction].

- South Korea MayTrade Balance: $6.9B v $4.9B y/y; US exports -8.1% y/y; Chip exports: +21.2% y/y.

-South Korea Q1 Stablecoin Trading Vol hits $41.0B; cites data from the Bank of Korea (BOK) – Yonhap.

Other Asia

-Goto [GOTO.ID]: Cancels private placement due to market conditions.

- Indonesia May PMI Manufacturing: 47.4 v 46.7 prior [2nd month of contraction].

- Philippines May PMI Manufacturing: 50.1 v 53.0 prior [2nd month of expansion].

-Taiwan May PMI Manufacturing: 48.6 v 47.8 prior [3rd month of contraction].

-Taiwan Central Bank (CBC) confirms 'US debt stability' and the role of the USD as the reserve currency - Press.

- Vietnam May PMI Manufacturing: 49.8 v 45.6 prior.

North America

- Pres Trump says he will double US steel tariffs from 25% to 50% "to protect American industry", effective on June 4th.

-(US) Trump: We haven't set a final deal yet on US Steel; Have to approve a final deal with Nippon Steel.

-(US) US Treasury Sec Bessent said US President Trump and China President Xi to speak 'soon' on minerals trade dispute - Press; Reiterates the US will 'never' default on its debt.

-Fed's Waller (voter): 'Good news' rate cuts remain possible later in 2025.

- Fed's Waller (voter): None of what drove pandemic inflation surge is in place now; reiterates markets determine long-term bond yields, does not see a problem selling government bonds - Q&A.

- Fed’s Daly (non-voter for 2025): April PCE is 'good relief', but incomplete as a picture - Fox Business interview [late Fri update].

- (US) Follow up: Trump administration prepares to ease big bank rules [inline] – Press [update].

-(US) Agriculture Sec Rollins: Heading to Italy next week, then India, Vietnam and Japan; Need to open those markets up - Fox interview.

- White House releases FY26 budget proposal – press [late Fri update].

-Boeing [BA]: Said to be working with the Trump Administration regarding the ability to withstand US-China trade war - US financial press.

-Cleveland-Cliffs [CLF]: Shares rose by >33% on Friday after hours.

-(US) Apr PCE price index M/M: 0.1% V 0.1%E; Y/Y: 2.1% V 2.2%E [late Friday update].

-(US) May final University of Michigan Confidence: 52.2 V 51.5E [late Fri update].

- (US) May Chicago Purchase Managers Index (PMI): 40.5 V 45.0E [late Friday update].

- (US) Apr advance goods trade balance: -$87.6B V -$143.0BE; (below all estimates) Imports drop was largest on record Imports (SA): $276.1B v $342.7B prior, -19.8% v +5.0% m/m (largest drop on record) [late Friday update].

Europe

- OPEC+ delegates agree to 411K bpd oil production in July (in line with initial expectations); Could be paused or reversed subject to market conditions [from May 31st].

- ECB reportedly to plan on-site probes for banks over private market exposures - press.

- (IR) US said to draft IAEA board resolution report to be submitted with UK, France and Germany declaring Iran non-compliance with safeguards requirements; May trigger a report on Iran to UN Sec Council – press [late Fri update].

- Poland Electoral Commission: Candidate Nawrocki expected to win the Presidential vote (as expected).

Levels as of 01:20 ET

- Nikkei 225, -1.3%, ASX 200 -0.3% , Hang Seng -1.9%; Shanghai Composite closed ; Kospi -0.3%.

- Equity S&P500 Futures: -0.5%; Nasdaq100 -0.7%, Dax -0.2%; FTSE100 -0.2%.

- EUR 1.1382-1.1348 ; JPY 143.98-143.32 ; AUD 0.6473-0.6433 ;NZD 0.6010-0.5962.

- Gold +0.7% at $3,340/oz; Crude Oil +2.8% at $62.51/brl; Copper +3.4% at $4.8613/lb.