Markets catch up to Oil passing through Hormuz yesterday

Asia market update: Tech focus on Nvidia, OpenAI/Softbank, Anthropic, Samsung; Markets catch up to oil passing through Hormuz yesterday; AU yields down on jobs; US May PMIs tonight.

General trend and developments

-Rebound in Asian equities following positive Middle East news and Nvidia Q1 earnings out of the way. Kospi surged 8% (Hynix +11%) to take back all losses and more from earlier in the week, as Samsung (+7%) and its union, under pressure from the Korean govt, overnight signed a tentative pay deal that resulted in the union calling off its strike that was set to start today. (However, during the session a Samsung shareholder group said it will file injunction if "invalid deal" with the NSEU (Samsung Union) is approved, adding more uncertainty to the situation again).

-Softbank Group rose by 20% after OpenAI reportedly to file confidentially with regulators for IPO as soon as Sept with Initial valuation maybe as high as $1.0T, an IPO premier record.

-Nvidia earnings finally out of the way, the stock down -1.3% after hours, despite comfortably beating nearly every metric for Q1 along with positive forward outlook expectations. and raised div and additional stock buyback (not untypical price action for Nvidia price around earnings).

- AU yields collapse (3-yrs -13bps) on bad jobs numbers and a jump in the unemployment rate for April. NAB bank was quick to push out the next RBA rate hike to August, 2026 (from June).

-Watching for any more ships through the Straight of Hormuz after yesterday's minimum of two Chinese and one Korean super tankers confirmed to have passed, carrying aggregate 6M barrels of oil. WTI Crude near FUTs fell back below $100/bbl and risk assets recovered overnight as Saudi press saying a new round of Iranian-US negotiations to be held in Islamabad after the Hajj Season [which ends May 30th]; Pakistan officials to visit Iran today to announce final draft version of an agreement text. Pres Trump then confirmed that the US is in the final stages of talks with Iran.

-Korea chip exports +202% y/y, to a record to $52.7B for the first 20 days of a calendar month. The share of semiconductor exports of total exports increased by 19.0% to 41.7% compared to the previous year.

-Amid speculation ahead of JGB market participants later today and tomorrow, reports that Japan plans to spend ¥500B in reserve funds on energy measures. Overnight PM Takaichi noted Not in the stage to comment on size of possible extra budget, but to mostly address impact from Mid-East conflict.

-BOJ's Junko Koeda picked up where she left off in November, reiterating need to raise rates in response to economic activity. Earlier, Japan's trade balance came in at a healthy, and unexpected, surplus for April.

-Meanwhile Japan prelim PMIs for May saw Manufacturing stay strong for the 5th month but Services fell to flat, ending an 18-month expansion streak. There was a marked fall in overseas sales across the service sector, while Manufacturers recorded a more pronounced increase in costs than services companies.

-Australia April prelim PMIs saw Manufacturing just stay in expansion.

-(KR) South Korea Apr PPI Y/Y: 6.9% v 4.1% prior -South Korea producer prices rise at fastest pace in 28 years (Yonhap), early export data show another surge in chip shipments (Yonhap).

-Taiwan officials again responded in general terms today to reports that US Pentagon Officials reportedly expressing doubt over the approved $14B arms deal with Taiwan.

-Taiwan’s exceptional export orders continued in April, up 48%, again beating expectations.

-Indonesia bourse -2% after the Indonesia Central Bank (BI) overnight hiked by 50bps - 25bps more than expected. BI Gov justified by saying that domestic growth “expected to remain good| (between 4.9-5.7%) and the BI is strengthening monetary policy to stabilize the IDR currency (Rupiah) amid global volatility.

- China PBOC sets the yuan strongest since Feb 15th, 2023.

- US equity FUTs #% to #% during Asia trading.

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

-Thu May 21st: (Thu night, US Apr Building Permits, US May PMIs).

-Fri May 22nd: KR May Consumer Confidence, NZ Q1 Retail Sales, JP Apr CPI, (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 +1.3% at 8,608.

- (AU) Australia Apr employment change: -18.6K V +15.0KE; unemployment rate: 4.5% V 4.3%E.

-(AU) Australia May preliminary PMI manufacturing: 50.2 V 51.3 prior (2nd month of expansion).

-(AU) NAB bank pushes out next RBA rate hike to August, 2026 (from June); Follows weak Australia jobs numbers earlier today.

-(AU) Australia May Consumer Expectations Survey: 5.6% v 5.9% prior.

-(AU) Australia sells A$150M v A$150M indicated in Sept 2030 Indexed Bonds: Avg Yield: 1.8602% v 1.9698% prior; bid-to-cover: 4.80x v 3.67x prior.

-(NZ) New Zealand Apr Trade Balance (NZD): 1.9B v 0.4B prior.

China/Hong Kong

-Hang Seng opens +0.7% at 25,833; Shanghai Composite opens +0.3% at 4,174.

-(CN) China Apr Swift Global Payments (CNY): 2.9% v 3.1% prior-CN) JPMorgan's Foley: IPO activity in Hong Kong and China 'up significantly'.

-(RU) Russia Dep PM Novak: Russia and China are finalizing contracts for gas supplies via Power of Siberia 2 [overnight update].

-(CN) China PBOC sets the yuan mid-point at 6.8349 v 6.8397 prior (strongest since Feb 15th, 2023).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY100B in 7-day Reverse Repos; Net CNY99.5B v CNY49.5B prior.

Japan

-(JP) Nikkei 225 opens +1.0% at 60,421.

-(JP) JAPAN APR TRADE BALANCE: +¥301.9B V -¥44.5BE; Adj Trade Balance: +¥236.4B v -¥200.2Be.

-(JP) JAPAN MAY PRELIMINARY PMI MANUFACTURING: 54.5 V 55.1 PRIOR (5th month of expansion); PMI Services: 50.0 v 51.0 prior (flat after 18 months of expansion).

-(JP) Japan Mar Core Machine Orders M/M: -9.4% v -8.4%e; Y/Y: 5.9% v 0.5%e.

-(JP) Japan releases weekly flows data [period ended May 15th]: Foreign buying of Japan equities: ¥949.6B v ¥1.39T prior; Japan buying of foreign bonds: ¥758.7B v ¥1.64T prior.

-(JP) BOJ Outright Bond Purchase Operation for 1~3 Years; 3~5 Years; 5~10 Years and >25 years; (Inline with planned amounts for Q2, 2026).

-(JP) Reportedly Japan's extra budget draft is seen at ~¥3T, as expected - press.

-(JP) Japan plans to spend ¥500B in reserve funds on energy measures - Japanese press [overnight update].

-(JP) Japan PM Takaichi: Not in the stage to comment on size of possible extra budget; to mostly address impact from Mid-East conflict [overnight update].

Korea

-(KR) Kospi opens +3.8% at 7,486.

-(KR) South Korea Apr PPI Y/Y: 6.9% v 4.1% prior.

-(KR) South Korea Fin Ministry: Will extend fuel tax cut by 2 months through July 31st.

-(KR) China President Xi may visit North Korea by as early as next week – Yonhap.

-Samsung shareholder group: Will file injunction if "invalid deal" with the NSEU (Samsung Union) is approved.

- Samsung and union sign tentative pay deal, union calls off general strike [overnight update].

-(KR) South Korea official: Confirms oil tanker is transiting Hormuz in consultation with Iran [overnight update].

Other Asia

-(TW) Follow up: Taiwan Foreign Ministry: In addition to his commitment to maintaining the current stable status quo in the Taiwan Strait, Pres Lai is happy to discuss these matters with Pres Trump.

-(TW) US Pentagon Officials reportedly express doubt over $14B arms deal with Taiwan - press.

-(ID) Indonesia central bank (BI) raises bi rate by 50BPS to 5.25%; more-than-expected [overnight update].

-(ID) Indonesia Central Bank (BI) Gov Warjiyo: Domestic economic growth momentum needs to be maintained - pre-rate decision press conference [overnight update].

-(IN) India Apr Eight (Key) Infrastructure Industries: 1.7% v 1.2% prior [overnight update].

-(TW) TAIWAN APR EXPORT ORDERS Y/Y: 48.1% V 45.0%E [overnight update].

North America

- (US) MBA Mortgage Applications w/e May 15th: -2.3% v 1.7% prior.

- (US) U.S. Department of Housing and Urban Development (HUD) rolls out new regulatory guidance to cut building costs - press.

- Blue Origin CEO Jeff Bezos: Will advocate for no taxes on low-income earners; Think AI is more likely to cause a labor shortage; AI will elevate all these people and likely result in deflation - CNBC.

- (US) DOE CRUDE: -7.9M V -3ME; GASOLINE: -1.5M V -2ME; DISTILLATE: +0.4M V -1ME.

-(US) TREASURY $16B 20-year bond auction draws 5.122% V 4.664% prior, bid-to-cover 2.55 V 2.36 prior.

-(US) APR FOMC MINUTES: Majority sees rate hike likely warranted if inflation persists; Several official said there could be rate cuts later this year if inflation fades.

Europe

- (EU) ECB June rate hike said to be very likely; Will be non-committal about a July move as many prefer to wait until Sep projections - press citing sources.

- (RU) Russia/China joint communique: To increase bilateral trade, and expand joint military exercises and patrols.

-(IR) Iran Foreign Min Araghchi is reportedly preparing to travel to US for a UN meeting - press.

-(IR) Iranian press says US has sent a new text to Iran; Tehran is reviewing the text and has not yet responded.

-(UK) Bank of England (BOE) Gov Baily: Softening picture for growth and labor; Financial market tightening gives us some time to assess whether to raise rates - Parliamentary testimony [overnight update].

-(UK) BOE's Breeden: Finds it notable that businesses are not replacing employees who leave; Indeed, it's good for productivity, but bad for entry-level jobs [overnight update]

Middle East

-(IR) UAE's new pipeline that bypasses the Strait of Hormuz is reportedly ~50% complete - CNBC (update).

-(IR) President Trump: Will wait for Iran to respond for a few days; No sanction relief for Iran until a deal is reached.

- (IR) Iran Parliament Speaker Ghalibaf: Obvious and hidden moves of the enemy show they are seeking a new round of war; US and Iran are in a war of wills.

-(IR) US Pres Trump: US is in the final stages of talks with Iran.

-(IR) Reportedly a new round of Iranian-US negotiations will be held in Islamabad after the Hajj Season [which ends May 30th]; Pakistan officials to visit Iran tomorrow to announce final draft version of an agreement text - Al Hadath (Saudi press) [overnight update].

Levels as of 01:20 ET

Nikkei 225 +3.6%; ASX 200 +1.6%; Hang Seng -0.1%; Shanghai Composite +0.1%; Kospi +8.3%.

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

EUR 1.1613-1.1635; JPY 158.81-159.05; AUD 0.7100-7159; NZD 0.5850-0.5875.

Gold -0.4% at $4,525/oz; BTC +0.9% at $77,885, Crude Oil flat at $102.97/bbl; Copper -0.4% at $6.3080/lbs.