Equity markets trade generally lower, snap’s profit warning weighs on Nasdaq FUTs

Asia Market Update: Equity markets trade generally lower; Snap’s profit warning weighs on Nasdaq FUTs; RBNZ rate decision due on Wed (May 25th).

General trend

- NZD drops ahead of rate decision; NZ retail sales unexpectedly declined.

- (US) Fed's George (FOMC voter, hawk): Watching market functioning in summer and into fall will be important.

- Chinese automakers rise on stimulus measures.

- Hang Seng extended declines during morning trading.

- Shanghai Composite has also moved lower.

- Japanese equities trade modestly lower after opening flat.

- Toyota issued FY production guidance.

- Indonesia expected to leave rates unchanged later today.

- Companies due to report during the NY morning include Abercrombie & Fitch, AutoZone, Best Buy, Canadian Solar, Citi Trends, Dole Food, Diana Shipping, NetEase, Ralph Lauren, Petco.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened flat.

- (AU) Reserve Bank of Australia (RBA) Research Paper: The Yield and Market Function Effects of the Reserve Bank of Australia's Bond Purchases.

- (AU) Australia May preliminary PMI manufacturing: 55.3 V 58.8 prior.

- (NZ) New Zealand Q1 Retail Sales (ex-inflation) Q/Q: -0.5% v +0.3%e.

- (AU) Australia PM Albanese: Increasing Foreign Aid Budget; To increase support for regional partners - Quad meeting comments.

Japan

- Nikkei 225 opened flat.

- (JP) Japan May preliminary PMI manufacturing: 53.2 V 53.5 prior.

- Toyota Motor [7203.JP] Guides June Production 850K units; initial FY23 Global production 9.7M units; citing spread of COVID and semiconductor shortage.

- Seven & I [3382.JP] Nothing has been decided on sale of Seibu and Sogo; Continuing to review all options, including sale.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Said that the Tokyo Govt will require new buildings to be built with Solar panels installed - Japanese press.

- (JP) Bank of Japan (BOJ) Monetary Affairs Head Nakamura: To patiently continue monetary easing to support economy.

- Rakuten [4755.JP] Will not increase mobile phone fees - Nikkei.

- (JP) Former Japan PM Abe: Japan needs to spend at least ¥6.5T on defense - Nikkei.

- (JP) Japan PM Kishida: Extremely important for the Quad (India, Australia, US, Japan) To show unity.

Korea

- Kospi opened -0.3%.

- (KR) South Korea Q1 Household Credit (KRW): 1,859.4T v 1,862.1T prior (first q/q decline in 9 years).

China/Hong Kong

- Hang Seng opened -0.2%; Shanghai Composite opened +0.1%.

- (CN) China said to issue warning related to convertible bond risks, notes some convertible bond prices have risen by over 150% on the first day of trading - Chinese press.

- (CN) SCMP: Push in China to loosen US dollar dominance takes on new urgency, notes sanctions on Russia; Some Chinese advisers are urging the government to change the exchange rate regime and turn the yuan into an anchor currency.

- (CN) China Sec Journal: China may issue special sovereign bonds to help the economy.

-(CN) China State Council announces additional CNY140B in tax relief measures; also to arrange measures to further stabilize domestic economy; Strive to bring economic operations back to normal track - financial press.

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

- (CN) China PBOC sets Yuan reference rate: 6.6566 v 6.6756 prior.

- (HK) Hong Kong Chief Exec Lam: Unlikely to lift quarantine in my term.

North America

- SNAP Cuts Q2 Rev and adj EBITDA guidance to 'below low end' of prior outlook, citing macro deterioration (prior Q2 Adj EBITDA $0-50M, Rev +20-25% y/y).

- (US) Fed's Daly (non-voter, dove): Economy has a lot of momentum; Don't expect a recession; Fed putting interest rates to where they won't stimulate or bridle the economy.

- (US) Fed's George (FOMC voter, hawk): Expects hikes to lift rates to ~2.0% by Aug; War or lockdowns in China could slow growth.

- (US) President Biden: Quad to focus on COVID, 5G Supply chains and fellowship; Navigating a dark hour (citing Ukraine); Ukraine is a global issue, not regional.

- ABNB Confirms will suspend China ops on July 30th; China customers may still book overseas afterwards.

Europe

- (UR) Ukraine may increase its 2022/2023 grain exports to 39.4Mt up from 33.2Mt y/y.

- (RU) Netherlands PM Rutte: EU needs to quickly find a consensus on sixth package of Russian sanctions.

- (DE) Germany Econ Min Habeck: Hopeful EU will agree Russian oil embargo within days.

- (IT) Italy Energy Min: Italy to ask EU to allow farmers to sell energy surplus.

Levels as of 00:30 ET

- Nikkei 225, -0.6%, ASX 200 flat , Hang Seng -1.4%; Shanghai Composite -1.1% ; Kospi -1%.

- Equity S&P500 Futures: -0.8%; Nasdaq100 -1.4%, Dax -0.4%; FTSE100 -0.5%.

- EUR 1.0694-1.0661 ; JPY 128.09-127.55 ; AUD 0.7111-0.7065 ;NZD 0.6478-0.6428.

- Gold +0.4% at $1,854/oz; Crude Oil -0.6% at $109.63/brl; Copper -0.5% at $4.3177/lb.