Lower VOL in Asia as Nikkei tech again outperforms ahead of weekend uncertainty

Asia Market Update: Lower VOL in Asia as Nikkei tech again outperforms ahead of weekend uncertainty; Fed’s Warsh time arrives today.

General trend and developments

-Lower volatility in Asia equities and bonds, with markets green although tepid (HK +1.2%), with the exception being Japan where the Nikkei +2.7%, extending yesterday’s 3.5% rally as Softbank Group up another +12% today on top of yesterdays’ +20% gains. Note that unit ARM also +16% overnight. Chip-related Renesas +6.5%.

-Lenovo surged +15% on FY26 earnings release today, outperforming on all metrics and seeing AI-related growth continuing.

-AMD’s CEO Lisa Su spoke from Taiwan, asking partners to 'ramp faster', as she sees demand for CPU growing 35% y/y for the next five years.

- More uncertainty ahead of yet another weekend (Iran, Samsung strike situation; Japan intervention risk cited by US financial press amid Monday’s US holiday).

-Japan’s National CPI for April came in as soft, [echoing the Tokyo April CPI a few weeks ago]. Core was slowest since Mar 2022, while ‘core core’ (ex-fresh food/energy) the slowest since July 2024.

-Japan BOJ meeting with market participants last night indecisive as some believed BOJ should pause tapering while others said it should continue. Today Japan Fin Min Katayama refrained from commenting on size of (potential) extra budget. OIS overnight chances of a BOJ rate hike in June hovering around 80% and 97% by July.

-Concerns in Asia that the SpaceX IPO may pull liquidity away from Asia into the US [and note that does not even include planned blockbuster IPOs from OpenAI and Anthropic thereafter - although overnight OpenAI CEO Sam Altman said to be casting some doubt as to actual timing of his IPO].
-Interesting comment out of China’s NDRC, claiming that China has 'never' asked technology firms NOT to take foreign investment [responds to question over investment from the US. Comes after the META's ~$2.5B purchase of Manus was forced to be unwound by Chinese authorities earlier this year].

-Note New Zealand RBNZ rate decision and NZ’s 2026 Budget over successive days mid-next week.

-Bank of Korea (BOK) rate decision also next week.

-Walmart -7% in NY session following earnings; Co warned of inflationary pressures building and that could affect consumer spending as tax return fillips dissipate.

-Pres Trump to host incoming Chair Warsh's ceremonial swearing in Friday at 11am ET

- US equity FUTs +0.4% to +0.5% during Asia trading.

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

-Fri May 22nd: (Fri night, US Final May Michigan Consumer Sentiment).

Holidays in Asia this week

-No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens +0.5% at 8,660.

-(NZ) New Zealand Q1 Retail Sales Q/Q: 0.9% v 0.5%e.

-(NZ) RBNZ Nowcast estimate of Q2 GDP declines to approx. 0.0% v 0.1% prior.

-(NZ) New Zealand BNZ Apr Job Ads M/M: +0.8%.

China/Hong Kong

-(HK) Hang Seng opens +1.0% at 25,641; (CN) Shanghai Composite opens +0.5% at 4,096.

-(CN) China to roll out measures to promote market unification; this relates to improving evaluation systems for areas including fiscal/taxes and statistics – Chinese press.

-(CN) NDRC: China has 'never' asked technology firms NOT to take foreign investment [responds to question over investment from the US]

-DEEPSEEK.IPO Founder: AGI is the goal; Funding round increases to $10B (prior CNY50B).

-(CN) China lithium battery makers (incl several A-listed companies) said to be 'rushing' to expand manufacturing capacity since April - China Securities Daily.

-(CN) China APEC meeting opening: China calls for APEC cooperation; [Commerce Min misses opening on 'urgent official business'.
-SpaceX IPO ‘sparks’ liquidity fears - SCMP.

-(CN) Follow Up: NDRC says China to invest >CNY5.0T on the building of new power grids over 5 yearsh.

-(CN) China Commerce Ministry (MOFCOM): EU using overcapacity as an excuse to concoct new trade tools against China.

-(CN) China MOF sells 3-year and 5-year bonds.

-NIO Reports Q1 (CNY) +0.29 v -3.01* y/y, Rev 25.5B v 25.6Be; Guides Q2 strong [overnight update].

-(HK) Hong Kong Apr CPI Composite Y/Y: 1.7% v 1.9%e [overnight update].

-(CN) China PBOC sets the yuan mid-point at 6.8373 v 6.8349 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY153B in 7-day Reverse Repos; Net injects CNY152.5B v injects CNY99.5B prior.

Japan

-(JP) Nikkei 225 opens +0.3% at 61,913

-*(JP) JAPAN APR NATIONAL CPI Y/Y: 1.4% V 1.6%E; CPI (EX-FRESH FOOD) Y/Y: 1.4% V 1.7%E [slowest since Mar 2022].

-(JP) Japan Chief Cabinet Sec Kihara: Judging the end of deflation involves 'many factors' [comments following soft JP National CPI today].

-(JP) Yen traders said to be 'bracing' for intervention risk as long weekend holiday 'looms' in US - US financial press.

-(JP) Follow up: Japan Fin Min Katayama: US Treas Sec "told Japan to give access to Mythos"; Refrains from commenting on size of (potential) extra budget.

-(JP) Japan's Trade/Industry Min Akazawa: Efforts to strengthen supply chains are 'very important'; To attend APEC Trade Chiefs meeting in China's Suzhou, May 21-23rd.

-Japanese chemical company Konoshima [4026.jp] to hike prices by 10-20% due to Middle East impact.

-JP) Japan sells ¥4.4T vs. ¥4.4T indicated in 3-Month Bills; Avg Yield: 0.8839% v 0.8706% prior; bid-to-cover: 4.24x v 3.77x prior.

-(JP) Japan sells ¥649B vs ¥650B indicated in Liquidity Enhancement Auction.

-(JP) BOJ meeting with market participants: Some believed BOJ should pause tapering while others said it should continue - financial press [overnight update].

-(JP) Japan Fin Min Katayama: Japan's fiscal policy is proactive and not expansionary [overnight update].

Korea

-(KR) Kospi opens +0.7% at 7,873.

-(KR) South Korea May Consumer Confidence: 106.1 v 99.2 prior.

-(KR) KOSDAQ side-car activated to halt program buying at +3.5% (Note: Kospi only +0.3%).

-(KR) South Korea sells KRW1.2T in 3.25% 1-year bonds; Avg Yield: 3.270%.

-(KR) Follow Up: South Korea Dep Fin Min: The reduction of bond issuance planned for June will focus primarily on long-term bonds.

-(KR) South Korea Pension Fund (NPS) may increase its domestic stock holding target by 5 percentage points - financial press [overnight update].

Other Asia

-AMD: CEO comments from Taiwan: Asking partners to 'ramp faster'; 'nobody' really makes money on AI training.

-(MY) Malaysia energy supplies is now expected to last until July - Local press.

-(PH) Philippines President Marcos: Issue order to raise the pork import quota at lower tariffs [amid the country’s inflation situation].

-(PH) Philippines Central Bank (BSP) Gov: Reiterates focus on inflation; notes risk of being behind the curve on inflation; confirms off-cycle rate move is being considered, examining the May inflation figures; raised rates but it did not seems to be enough.

-(PH) Philippines Central Bank (BSP) Gov: Reiterates focus on inflation; notes risk of being behind the curve on inflation.

-(PH) Follow up: Philippines Central Bank Gov Remolona said to be "open" to off-cycle rate hike - financial press.

North America

-(US) US Pres Trump to host Incoming Chair Warsh's ceremonial swearing in tomorrow at 11am ET - press.

-(CA) Alberta Premier Smith: Calls for vote on province's 'future in Canada' - TV address to the province.

-(AR) Follow up: Argentina Pres Milei: To cut wheat export taxes to 5.5% (from 7.5%).

-OPENAI.IPO CEO Altman reportedly suggested that OpenAI may still hold off on an actual listing even if an IPO filing is made - The Information.

-(US) Trump Administration said to award $2B to nine Quantum Companies through Chips Act and receive equity stakes; IBM to get $1B equity deals pending - WSJ.

- (CA) Canada May CFIB Business Barometer: 46.3 v 58.0 prior.

- (US) INITIAL JOBLESS CLAIMS: 209K V 210KE; CONTINUING CLAIMS: 1.782M V 1.79ME.

- (US) APR HOUSING STARTS: 1.47M V 1.410ME; BUILDING PERMITS: 1.44M V 1.384ME.

- (US) MAY PHILADELPHIA FED BUSINESS OUTLOOK: -0.4 V 17.8E; New Orders: -1.7 v +33.0 prior.

- (US) MAY PRELIMINARY S&P MANUFACTURING PMI: 55.3 V 53.8E; Service and goods inflation accelerated; Manufacturing payrolls largest rise in 11 months.

-(US) WEEKLY EIA NATURAL GAS INVENTORIES: +101 BCF VS. +95 BCF TO +98 BCF INDICATED RANGE.

- (MX) Mexico Central Bank (Banxico) May Minutes: All board members highlighted risk related to mid east conflict.

-(US) Fed's Goolsbee (non-voter): We have a pretty significant inflation problem, but job market is stable.

- (US) Fed’s Barkin (non-voter): Fed is well positioned to respond to risks as appropriate; Consumers are not happy, but continue to spend; Rate hike will depend on how businesses and consumers react to recent developing conditions.

Europe

- (Overnight news only; No fresh news during Asian session today).

- (UK) MAY CBI TRENDS TOTAL ORDERS: -41 V -40E.

- (EU) EU said to seek carve-out for banned China chips to shield auto firms - press.

- (UK) Chancellor Reeves: Prepared to act if market conditions on energy worsen later in the year - Parliament comments.

- (UK) BOE’s Taylor: “Everything changed at the beginning of March” after the Iran conflict, and the Bank now says its February forecast is effectively obsolete because it did not include the energy shock.

- (EU) EURO ZONE MAY ADVANCE CONSUMER CONFIDENCE: -19.0 V -20.6E.

Middle East

- (Overnight news only; No fresh news during Asian session today).

-(IR) US Pres Trump: Negotiations with Iran continue; We'll achieve a deal one way or another, and the conflict will end soon; We've new anti-drone technology not available at the start of the conflict; We're looking into the Oman and Iran Hormuz tolls.

- (IR) Reportedly Iran's Supreme Leader has issued a directive that the country's near-weapons-grade uranium should not be sent abroad; US and Iran have started to narrow some gaps, but still far apart regarding Iran nuclear program - press.

- Senior Iran official denies earlier report of Supreme leader ordering highly enriched uranium to stay in Iran - Al Jazeera reporter on X.

-(IR) Markets reacting to recirculation of social media reports in the last hour suggesting a finalized draft of US-Iran peace deal could be announced within hours.

-(IR) Iran Pres: Iran will not back down in talks for a deal with US.

Levels as of 01:20 ET

Nikkei 225 +2.8%; ASX 200 +0.4%; Hang Seng +1.4%; Shanghai Composite +0.7%; Kospi +0.6%;.

Equity S&P500 Futures +0.5%; Nasdaq100 +0.5%; DAX +0.9%; FTSE100 +0.1%.

EUR 1.1609-1.1626; JPY 158.90-159.13; AUD 0.7135-7156; NZD 0.5870-0.5884.

Gold -0.3% at $4,528/oz; BTC -0.2% at $77,633, Crude Oil -0.3% at $97.70/bbl; Copper +0.4% at $6.3720/lbs.