Asia Market Update: Indices opened generally higher after gains in the US, HK is closed for holiday; China said to consider targeting US media.


General Trend:

-Shanghai Composite index tested the 3,000 psychological level for the first time since March amid easing by the PBOC, sectors moving higher include Consumer Discretionary and Property

-Japanese equities lag amid the stronger Yen; Declining sectors include Real Estate, Insurance and Transportation

-Consumer Discretionary sector rises in Australia, energy sector lags

-FedEx rose over 8% in afterhours trading on better than expected results

-Japan 30-yr JGB yield rises to highest level since March 2019, BoJ’s July bond purchase plan has led to speculation that the central bank may seek to steepen the yield curve; US 30-year Treasury Bond FUTs decline amid the new month and quarter

-Bank of Korea (BOK) plans to conduct outright purchase of KRW1.5T worth of gov’t bonds on Thursday (July 2nd)


Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened +0.1%

-(AU) Australia Victoria state reports 73 additional coronavirus cases v 64 prior (over 2 month high)

-(AU) Australia Jun Final CBA PMI Manufacturing: 51.2 v 49.8 prelim (Move into expansion territory after 3 Months of contraction)

-(AU) Australia Jun AiG Performance of Manufacturing Index: 51.5 v 41.6 prior (Highest since July 2019)

-(AU) AUSTRALIA MAY BUILDING APPROVALS M/M: -16.4% V -7.8%E; Y/Y: -11.6% V -7.8%E

-(AU) Australia May Private Sector Houses Approvals M/M: -4.4% v +2.7% prior

-(AU) Australia May CoreLogic House Prices M/M: -0.8% v -0.5% prior

-(AU) Australia sells A$2.0B v A$2.0B indicated in 2.75% Nov 2028 bonds, avg yield 0.7959%, bid to cover 3.6x

-Air New Zealand [AIR.NZ]: Announces Auckland to Melbourne passenger flights will be suspended from July 1-14 [citing govt restrictions]

-(NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: There is 'nothing magic' about 50% of QE ceiling [relates to indemnity agreement with NZ government]; By August RBNZ will have clarity on LSAP program on delivery stimulus

-(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$390M v NZ$146M prior in government bonds as part of QE v NZ$390M sought

China/Hong Kong

-Hang Seng closed for holiday, Shanghai Composite opened +0.2%

-(CN) China may announce restrictions on US media - Global Times


-(CN) FCC designates Huawei and ZTE as national security threats – press

-(CN) China PBoC said to cut the Relending rate by 25bps to 2.00% on July 1st; to also cut interest rates related to financial stability refinancing loans by 50bps to 1.75% - financial press

-(CN) China PBoC Open Market Operation (OMO): Skips reverse repos v Skips prior; Net drain CNY180B v Net drain CNY90B prior (3rd straight skip)

-(CN) China PBOC sets Yuan reference rate: 7.0710 v 7.0795 prior

-(CN) China to strengthen rules on selling bonds related to coronavirus relief

-(HK) China briefing on Hong Kong national security law: New Law will plug loopholes in Hong Kong legal systems

-(HK) Hong Kong Police Spokesman: People who display pro-independence material will face arrest and prosecution under Hong Kong National Security Law

-(HK) Macau Jun Gaming Rev (MOP): 716M v 1.76B prior; Y/Y: -97.0% v -93.2% prior


-Nikkei opened +0.2%

-*(JP) JAPAN Q2 TANKAN LARGE MANUFACTURING INDEX: -34 V -31E (lowest level since 2009); OUTLOOK SURVEY: -27 V -24E


-(JP) Bank of Japan (BOJ) announces Bond purchases for month of July (June 30th)

-(JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: raises purchases of 3-5 year JGBs (as expected)

-(JP) BoJ Dep Gov Wakatabe: Central banks must consider price stability during coronavirus pandemic - Column in Nikkei

-(JP) Japan Chief Cabinet Suga: Current coronavirus situation does not require emergency declaration currently

-(JP) Japan Dep PM Aso: Snap election in autumn is preferable - financial press (from June 30th)

-(JP) Japan govt reportedly considering loosening travel restrictions with China and South Korea - Japanese press

-(JP) Japan PM Abe said to plan to attend G7 meeting in late Aug, the meeting will be held in the US - Japanese press

-(JP) Tokyo reports >60 cases of coronavirus (3rd straight day of >50 cases)


- Kospi opened +1%

- (KR) South Korea Jun PMI Manufacturing: 43.4 v 41.3 prior

- (KR) South Korea Jun Trade Balance: $3.7B v $4.1Be

Other Asia

- (IN) India Jun PMI Manufacturing: 47.2 v 30.8 prior (3rd straight contraction)

- (PH) Philippines Central Bank (BSP): To issue BSP securities for the first time in Q3 via auction; notes the need for greater flexibility to manage liquidity

- (TW) Taiwan Jun Manufacturing PMI: 46.2 v 41.9 prior

North America

- (US) US Senate passes Paycheck Protection Program extension bill, also passes bill which gives companies more time to apply for relief

- Alphabet [GOOGL]: Google to delay reopening of offices due to coronavirus concerns related to western and southern US states; all of the company's US offices to remain closed until at least early Sept - Press

- Apple [AAPL]: Looking to reduce production delays for its 5G iPhones - Nikkei

- BOC Aviation [2588.HK]: Confirms cancellation of orders for 30 Boeing 737 Max planes, deferred delivery of other 737 Max jets


- Airbus [AIR.FR}: Plans to cut 15K jobs (~11% of workforce)

- SocGen [GLE.FR]: Australia regulator ASIC: SocGen Australia pleads guilty to client money offences


Levels as of 1:20 ET

- Nikkei 225, -1.1%, ASX 200 +0.2% , Hang Seng closed; Shanghai Composite +0.9% ; Kospi +0.1%

- Equity S&P500 Futures: -0.4%; Nasdaq100 -0.3%, Dax -0.2%; FTSE100 -0.3%

- EUR 1.1240-1.1215 ; JPY 108.16-107.58 ; AUD 0.6918-0.6885 ;NZD 0.6466-0.6440

- Gold flat at $1,800/oz; Crude Oil +1.3% at $39.79/brl; Copper +0.6% at $2.732/lb

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