JP/KR equities not far behind as USD/JPY retakes 146

Asia market update: US equity FUTs rip back to Feb levels on US Court ruling against Trump tariffs; JP/KR equities not far behind as USD/JPY retakes 146; US Q1 GDP 2nd Est. tonight and Tokyo May CPI tomorrow.

General trend

- The Manhattan-based Court of International Trade blocked and declared illegal Pres Trump's "Liberation Day" tariffs made under the IEEPA Act of 1977, imposing a nationwide injunction on the tariffs. The decision throws Trump’s tariff strategy into turmoil, with market optimism that the ruling appears to be immediately effective. Moreover, if the CIT's decision is upheld (likely to be in a case ultimately making its way to the Supreme Court) Trump may need to seek Congressional approve for future tariffs. Congress would be a less- than-sure exercise with a razor-thin Republican majority.

- Gold sank -1.3%, NASDAQ ripped higher 500 points [+2.0], starting after-hours with Nvdia earnings, but accelerating in the Asian session on the breaking trade news. After hours Nvdia +4.9%, Apple +3.5%, Amazon +3.5%.

- All Asian indices higher with equities in Japan +1.7% and Korea +1.8% on the weaker Yen and Won amid reduced fears about US tariffs and trade war outcomes.Chip-related and autos led gains. [Advantest +4.5%, Tokyo Electron +3.0%, Toyota +3.8%]. USD/JPY shot through 145 and topped 146. Trump Admin quickly said it will appeal, but the ruling does likely complicate the ability of Pres Trump to use tariffs as a negotiation tool in the US trade wars.

- Bank of Korea cut rates by 25bps, as expected, in a unanimous decision bringing total cuts in this easing cycle to 100bps as the BOK continues to hope to spur domestic growth. Also halved GDP growth projections for 2025 (blaming weak construction industry) while still seeing somewhat of a recovery next year. 2025 CPI forecast for 2025 maintained. Gov Rhee indicated room for further cuts, as KRW/USD lost some of its recent gains.

- Australia first quarter private Capex unexpectedly fell into negative territory ahead of Aussie GDP figures next week (Wed, Jun 4th). Machinery, plant and equipment fell the most.

- New Zealand’s May Business Confidence and Activity Outlook both dropped sharply, with the May reading being the first where all participants had time to assess the impact of the Trump tariffs, with Construction down at 24.4 pulling the whole index down.

- Japan May Consumer Confidence beat expectations.

- US equity FUTs +1.7% to +2.0% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu May 29th (Thu night US Q1 GDP 2nd Est.).

- Fri May 30th JP Tokyo May CPI, JP Industrial Production & Retail Sales, AU Retail Sales, IN Q1 GDP, (Fri night US Apr Core PCE).

Holidays in Asia this week

- Mon May 26th (US Memorial Day).

- Thu May 29th Indonesia.

- Fri May 30th Indonesia, Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,400.

- Australia Q1 private capital expenditure (CAPEX): -0.1% V 0.5%E.

- New Zealand May ANZ Business Confidence: 36.6 v 49.3 prior; Activity Outlook: 34.8 v 47.7 prior.

- RBNZ Acting Gov Hawkesby: Seeing weaker demand and weaker inflation pressure than in Feb; Modest revisions to OCR forecast reflect this weakness - Parliamentary testimony.

- New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030, 2036 bonds.

China/Hong Kong

- Hang Seng opens flat at 23,240; Shanghai Composite opens flat at 3,340.

- Hong Kong Financial Sec Chan: US Federal Court ruling against US President Trump tariff measures would at least 'bring Trump to reason'.

- (US) Sec of State Rubio: US will start to revoke visas of Chinese students, includes those studying in 'critical fields' - post on X.

- US to pause exports of jet engine technology and chip software to China - NYT.

- US Commerce Spokesperson: US is reviewing exports of strategic significance to China and has suspended some export licenses while the review is ongoing.

- Pres Trump said to order US chip designers to cease China sales – FT.

- China Vice Premier He Lifeng: Welcomes more US financial institutions to work in Chinese capital markets.

- China Foreign Min Wang Yi: China willing to speed up talks on bilateral free-trade agreement with Pacific island countries.

- Former China Vice Fin Min Zhu Guangyao said the earlier move by China to 'hit back' at US tariffs was aimed to protect not only Chinese interests, but also the global trade system - US financial press.

- Reportedly China's MOFCOM announcement on the export control policy of rare earths may indicate potential relaxation of exports to European chip companies - Chinese press.

- SHEIN.IPO Reportedly now plans Hong Kong IPO as UK listing stalls – press.

- (HK) UBS analysts on Hong Kong: Raises 2025 GDP growth forecast from 1.0% to 2.2%; Cites de-escalation of China/US trade war.

- (CZ) Czech Foreign Min Lipavsky: China is installing itself into our society. Through manipulation, propaganda, cyberattacks - X post.

- China PBOC sets Yuan reference rate: 7.1907 v 7.1894 prior.

- China PBOC Open Market Operation (OMO): Injects CNY266B in 7-day reverse repos; Net injects CNY112B v injects CNY59B prior.

Japan

- Nikkei 225 opens +0.9% at 38,054.

- Japan PM Ishiba: Sees good signs in the economy following wage hikes; Reiterates will continue to seek lifting of US tariffs - financial press.

- Japan Chief Cabinet Sec Hayashi: Declines comment on how tariff ruling may impact talks with the US.

- Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: Our basic position is to strongly request review of tariff policy (referring to the US) - financial press.

- Japan releases weekly flows data [period ended May 23rd]: Foreign buying of Japan equities: ¥309.3B v ¥715.3B prior; Japan buying of foreign bonds: ¥92.0B v ¥2.83T prior.

- Bank of Japan (BOJ) announcement related to outright bond buying operations for; 3~5 Years; 5~10 Years and 10~25 Years; Plus Inflation-indexed JGB’s: Purchase amounts unchanged.

- Toyota Reports Apr Parent-only Global Vehicle Output 814.8K units, +7.8% y/y.

- Japan said to be considering sharing the cost of US military hosting costs - Japanese press.

- BOJ's end-March JGB holdings ¥575.9T v ¥589.7T prior; BOJ's govt bond holding paper losses tripled y/y to ¥28.6T [overnight update]

Korea

- Kospi opens +0.8% at 2,691.

- Bank of Korea (BOK) cuts 7-day repo rate by 25BPS TO 2.50%; as expected.

- Bank of Korea (BOK) Gov Rhee: Today's rate decision was unanimous; Sees bigger room for further rate cuts given downside risks to growth - post-rate decision press conference.

- South Koreans reported to be turning out in record numbers for early voting in key Presidential election next week (Tue, Jun 3rd) - financial press.

Other Asia

- Foxconn (2317.TW) Chairman: Guides 2025 sales >NT$7.0T v NT$6.86T y/y; Has established comprehensive manufacturing platform for robots

- Taiwan Q1 Preliminary GDP Y/Y: 5.5% v 5.4%e [overnight update].

North America

- (US) Pres Trump files appeal (as expected) against US Court of International Trade's blocking of "Liberation Day" tariffs and imposing of a nationwide injunction on the tariffs - US press.

- US (Manhatten-based) Court of International Trade has blocked and declared illegal Pres Trump's "Liberation Day" tariffs made under the IEEPA and imposed a nationwide injunction - US press.

- (US) MBA Mortgage Applications w/e May 23rd: -1.2% v -5.1% prior.

- (US) May Richmond Fed Manufacturing index: -9 V -9E; Backlog of orders: -19 v -24 prior.

- (US) Nevada reports April casino gaming Rev $1.23B, -0.5% y/y, Las Vegas strip Rev $646.9M, -2.9% y/y.

- OPEC+ confirms agrees to keep current group-wide quota plan; To discuss July 2025 production increase in separate meeting on May 31st - press cites statement.

- (UR) US Pres Trump: We'll find out in 2 weeks if Russia Pres Putin wants to end war; Find out soon if Putin tapping us along or not - comments to media at White House.

- (US) Treasury $70B 5-Year note auction draws 4.071% V 3.995% prior, BTC 2.39 V 2.41 prior and 2.39 over the last 12.

- (US) FOMC Apr minutes: Participants saw uncertainty about economic outlooks as unusually elevated; participants noted that durable shift in those correlations or a diminution of perceived safe-haven status of US assets may have lasting implications for economy.

Europe

- UK is seeking to "accelerate" implementation of trade deal with the US - FT.

- (EU) EU said to formulate plan to work with private investors to introduce privately managed help startup/scaleup fund for Europe - press.

- (UR) Germany Chancellor Merz: Europe ready to support Russia-Ukraine technical talks; Will continue to increase pressure on Russia; Will make sure Nord Stream 2 never comes online.

- (UR) Russia govt: Germany Chancellor Merz comments on long-range missiles provokes war; Germany's position on weapons is irresponsible - Russia state media.

- (US) EU Trade Commissioner: In constant conversations with US; Looking at tariff lines and fields of cooperation.

- OPEC+ Delegate: Joint Ministerial Monitoring Committee (JMMC) makes no production policy recommendations (as expected) - press.

- (EU) ECB's Knot (Netherlands): Near-term growth and inflation risks are to the downside; Medium-term inflation outlook is more unclear.

Levels as of 01:20 ET

- Nikkei 225 +1.7%, ASX 200 +0.3%, Hang Seng +1.2%; Shanghai Composite +0.8%; Kospi +1.8%.

- Equity S&P500 Futures +1.6%; Nasdaq100 +2.0%; DAX +1.2%; FTSE100 +0.5%.

- EUR 1.1210-112.98; JPY 144.76-146.28; AUD 0.6407-0.6436; NZD 0.5926-0.5977.

- Gold -0.9% at $3,294/oz; Crude Oil +1.6% $62.85/bbl; Copper +0.3% at $4.6975/lb.