Equity recovery continues in Asia, global yields tick down

Asia market update: Equity recovery continues in Asia; Global yields tick down; Quiet day, “Wait-and-see” ahead of next week's releases [US Fed, US CPI and ECB]?

General trend

- After yesterday saw global yields steepen sharply, overnight yields ticked down. Overnight USD fell ~1%, and WTI oil fell 4% at one point down to $69.

- Nasdaq and S&P500 indices recovered and major Asian markets took up the baton with an all-green day, with the Nikkei leading the way (+1.8%; largest component Fast Retailing +4.6%).

- Australian mining stocks hit a 3-week high with iron ore futures climbing on Thursday as Some focused on China's big banks confirming cuts in deposit rates, possibly leading to hopes of improved economic growth.

- The Aussie mining index AXMM +1.3% (highest since May 19). BHP & Rio Tinto +1-1.5%.

- CN CPI was inline with expectations, but it was PPI at -4.6% y/y that missed ests (largest drop since early 2016).

- Overnight the China Commerce Ministry announced a program to boost vehicle sales, including telling banks to assist with credit for car purchases. But the news did not seem to overly assist CN carmakers as might be expected, with BYD +0.8%, Geely -1.5%; Nio -0.7%, XPeng +1.4%.

- Will we see a RRR cut out of China? [Reminder: On June 5th, Chinese financial press speculated that China likely to cut RRR, interest rates in H2 2023].

- Australia CBA bank puts odds of Australian recession in 2023 at 50%. CBA and ANZ both raised home loan interest rates 0.25% [followed RBA rate hike].

- US equity FUTs slightly down.

Looking ahead

- Around the time of this update Taiwan Semiconductor to report May Rev – will there be an AI-demand bump?
[For comparison last month TSM reported Apr Rev (NT$) 147.9B, -14% y/y and +1.7% m/m].

- No US-Fed speak until FOMC meeting on June 14, having entered the black-out period ahead of June 14 rate decision.

- ECB rate decision on June 15 also firmly in view.

- [Note for Nikkei 225 Traders] Jun 9th (Fri) is the setting of special quotation prices related to index options and futures.[TTN Analysis: Some traders may wait until March 9 special quotation for Nikkei futures and options before considering whether to push market higher.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,109.

- Australia CBA bank puts odds of Australian recession in 2023 at 50%.

- Australia May coal exports to Japan +37% M/M - China Coal.

- New Zealand May BNZ job ads M/M -4.5% v -1.8% prior (second monthly decline).

China/Hong Kong

- Hang Seng opens +0.2% at 19,333.

- Shanghai Composite opens flat at 3,213.

- China May CPI M/M: -0.2% V -0.1% PRIOR; Y/Y: 0.2% V 0.2%E.

- China to promote battery spec standardization, aims to achieve global leadership in this area - comments from former China Industry Minister.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repo; Net injection CNY0B v CNY0B prior.

- China PBOC sets Yuan reference rate: 7.1115 v 7.1280 prior.

- China Pres Xi: China sticking to economic opening [overnight update].

- US Sec of State Blinken delayed Beijing trip now in planning for next week - US press.

- Pentagon: Not aware of China and Cuba establishing spy station; Today's WSJ report is not accurate.

- China Commerce Ministry: Commences 6-month nationwide promotion to boost vehicle sales; Tells banks to offer credit support for car purchases [overnight update].

Japan

- Nikkei 225 opens +0.9% at 31,927.

- Japan May M2 Money Supply Y/Y: 2.7% v 2.5% prior; M3 Money Supply Y/Y: 2.1% v 2.1% prior.

- Japan Fin Min Suzuki: Aware of reports on structured bond sales issue; Confirms currency swap could be discussed in upcoming talks with South Korea.

- Japan to seek international certification for GX bonds - Japanese press.

- Japan BOJ Gov Ueda: Will strive to achieve well-balanced policy.

- Japan sells ¥3.277T in 3-Month Bills; Avg Yield: -0.1683% v -0.1703% prior; bid-to-cover: 3.15x v 2.87x prior (update).

- Japan sells ¥ in 6-Month Bills; Avg Yield: -0.1683% v -0.1684% prior, bid-to-cover: 3.15x v 3.93x prior (update).

- Japan PM Kishida arranging a phone call with Ukraine's Pres Zelenskiy - NHK.

South Korea

- Kospi opens +0.5% at 2,624.

- South Korea Apr Current Account: -$0.8B v +$0.3B prior.

Other Asia

- Taiwan Foreign Minister Wu to visit EU next week - financial press.

- Philippines Apr Trade Balance: -$4.5B v -$4.9B prior.

- Philippines Apr Unemployment Rate: 4.5% v 4.7% prior.

- Thailand Central Bank outgoing Dep Gov Mathee: Low domestic inflation in May is seen as temporary; Inflation may quicken in coming months.

- Malaysia Apr Industrial Production Y/Y: -3.3% v +2.0%e.

- Malaysia end-May Foreign Reserves: $112.7B v $114.7B prior [overnight update].

- Indonesia May Foreign Reserves: $139.3B v $144.2B prior [lowest since Jan].

North America

- Initial jobless claims: 261K V 235KE (highest since Oct 2021); continuing claims: 1.756M V 1.802ME (lowest since end-Mar).

- White House: Report that US and Iran are near a deal on uranium enrichment is false.

- Saudi Arabia said to have threatened US economy with pain over oil supply cuts last Fall - WAPO.

Europe

- Eurozone Q1 final GDP Q/Q: -0.1% V 0.0%E; Y/Y: 1.0% V 1.2%E (1st QoQ contraction since Q1 2021).

- EU reportedly sues Poland over Russian influence law - press.

Levels as of 01:20 ET

- ASX200 +0.4%; Hang Seng +0.2%; Shanghai Composite +0.1; Nikkei 225 +1.8%; Kospi +1.2%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%, DAX +0.1%; FTSE100 -0.3%.

- EUR 1.0784 – 1.0787; JPY 138.76 – 139.32 ; AUD 0.66.94 – 0.6718 ; NZD 0.6084 – 0.6099.

- Gold flat at $1,978/oz; Crude Oil -0.7% at $70.83/brl; Copper -0.3h% at $3.7745/lb.