Markets mixed amid softer Dollar after Monday’s burst higher

Asia market update: Markets mixed amid softer dollar after Monday’s burst higher; Focus on Trump trip to Mid-East.

General trend

- Hang Seng outperformed +1.8% in a mixed session with the Nikkei lagging despite US equities continuing higher towards three month highs - along with a stronger Yen and generally softer dollar; Commodity currencies Kiwi and Aussie continuing to rebound off the Monday lows and back to last week’s levels.

- Bank of Japan rate-hike odds rebounded higher following the US-China tariff progress with OIS swaps seeing an overall 79% chance of a 25bp hike this year, with a 63% chance by Oct (v 41.5% day before) and a 17% chance by July (v 14% day before).

- Gold, Silver, Copper and Oil all softer following yesterday’s gains.

- US confirmed the "de minimis" tariff on China shipments reduced to 54% from 120%, but with a minimum flat fee of $100 to remain starting from today (May 14th).

- Aussie wage growth ticked up for the first time since the June quarter 2024.

- South Korea think tank KDI halved its 2025 GDP growth forecast for Korea down to 2020 pandemic levels.

- China PBOC kept up its recent string of strong fixes, again below the 7.20 handle, but USD/CNH nevertheless rebounded off its November-level lows yesterday from 7.17 handle to 7.21.

- New Zealand Apr Total Card Spending was better on a m/m basis, up to nearly flat, further indicating some degree of economic recovery.

- Sony as expected saw profits rebound after the prior year's disappointing results, but guided flat profits moving forward.

- China's e-commerce company JD.com rose up to 4% after overnight beating estimates and recording its fastest sales growth since 2022.

- US equity FUTs up slightly higher again over elevated NY levels during Asian trading.

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

- Thu May 15th AU jobs, (Thu eve UK Q1 GDP, US Apr PPI, US Apr Retail Sales).

- Fri May 16th NZ Apr Business PMI, JP Q1 Adv GDP, (Fri night US prelim Apr Michigan Consumer Sentiment).

Holidays in Asia this week

- Mon May 12th Indonesia, Philippines, Singapore, Thailand.

- Tue May 13th Indonesia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,265.

- Australia Q1 Wage Price Index Q/Q: 0.9% v 0.8%e; Y/Y: 3.4% v 3.2%e.

- Australia Q1 Home Loans Value Q/Q: -1.6% v 0.0%e.

- Australia sells A$1.2B v A$1.2B indicated in 3.50% Dec 2034 bonds: Avg Yield: 4.4349% v 4.2878% prior; bid-to-cover: 3.17x v 3.99x prior.

- New Zealand Apr Total Card Spending M/M: -0.2% v -1.6% prior.

- New Zealand Mar Net Migration: 2.5K v 4.0K prior.

- RBNZ plans to launch new business expectations survey on May 21st.

China/Hong Kong

- Hang Seng opens +0.9% at 23,316; Shanghai Composite opens flat at 3,374.

- China companies' stock buybacks reported to have 'surged' during April - China Securities Journal.

- China Premier Li Qiang said willing to promote 'ties' with Canada - Xinhua.

- (IR) US State Dept announces new sanctions on shipping network that sent millions of bbls of Iranian oil to China.

- China issues first rare earth magnet export permits to at least 4 producers – press [overnight update].

- JD.com Reportedly China held meeting with JD.com, Meituan and Alibaba's Eleme; Asked food delivery platforms to strengthen internal management and compete fairly [overnight update].

- JD.com Reports Q1 $1.16 v $1.05e (2 est), Rev $41.5B v $40.2Be; Notes improving consumer sentiment, also seeing encouraging signs from new initiatives [overnight update].

- (US) USTR Greer: Will take time to end non-tariff barriers with China; Moving quickly with other deals; Flying to South Korea today – CNBC [overnight update].

- (US) Treasury Sec Bessent: Had a very 'active' dialogue in Geneva with China this weekend; There’s a possibility of ‘big beautiful’ re-balancing - comments from Saudi-US investment forum. [overnight update].

- Flexport CEO: Our ocean freight bookings from China to US increased 35% in the first day since the trade deal. A big backlog is looming, soon the ships will be sold out. [overnight update].

- China PBOC sets Yuan reference rate: 7.1956 v 7.1991 prior [strongest level since Apr 3rd].

- China PBOC Open Market Operation (OMO): Injects CNY92B in 7-day reverse repos; Net drains CNY103B v drains CNY225B prior.

Japan

- Nikkei 225 opens flat at 38,19.

- Japan Apr PPI (domestic CGPI) M/M: 0.2% v 0.3%e; Y/Y: 4.0% v 4.0%e.

- Bank of Japan (BOJ) announcement related to outright bond buying operations for 1~3 Years; 5~10 Years and 10~25 Years: Purchase amounts unchanged.

Korea

- Kospi opens +0.6% at 2,625.

- South Korea Apr Unemployment Rate: 2.7% v 3.0%e.

- South Korea Apr Total Bank Lending To Households (KRW): 1,150.1T v 1,145.0T prior.

- South Korea Acting Fin Min Kim: South Korea faces uncertainties in trade environment - financial press.

- South Korea KDI [think tank] cuts 2025 GDP growth forecast from 1.6% to 0.8% [would be the lowest growth since the pandemic]; sees 2026 GDP growth at 1.6% - Press.

- (US) USTR Greer: Moving quickly with other deals; Flying to South Korea today – CNBC [overnight update].

Other Asia

- Thailand Central Bank (BOT) releases Apr Minutes: Most MPC members felt rate cut would ease financial conditions.

- Taiwan said to have passed law opening door to restart nuclear power plants – press [overnight update].

- INDIA APR CPI Y/Y: 3.2% V 3.2%E [overnight update].

North America

- Brazil President Lula: Not afraid of retaliation from US over China ties - financial press, from Beijing.

- (US) Pres Trump: We have confines of very strong deal with China - Fox News interview with Sean Hannity.

- (US) Dept of Energy: Announces US and Saudi Arabia Strengthen Alliance with Energy & Critical Mineral Deals.

- US Pres Trump: Will offer Iran a path to better future; We're 'In good shape' to pass the tax bill; Hopes that Saudi Arabia will join the Abraham Accords; Will join 'In your own time' - Saudi Investment Forum.

- (US) White House official Hassett: Administration has more than 20-25 deals on table; When Pres Trump returns, he'll announce the next deal - Fox interview.

- (US) Apr NFIB Small Business Optimism Index: 95.8 v 95.0e.

- (US) US reportedly hopes to strike deals on minerals and chips during Trump's Mideast trip; US mulls to boost Saudi access to AI chips as China issues linger – WaPo.

- (US) Commerce Dept confirms rescinding Biden-era AI diffusion rule; Will issue replacement rule in the future.

- (US) USTR Greer: Will take time to end non-tariff barriers with China; Moving quickly with other deals; Flying to South Korea today - CNBC.

- (UR) US special envoys Witkoff and Kellogg said to travel to Istanbul for Russia-Ukraine talks - press.

- (US) APR CPI M/M: 0.2% V 0.3%E; Y/Y: 2.3% V 2.4%E (Y/Y at 4-year low).

- (US) Apr Real Avg Weekly Earnings Y/Y: 1.7% v 1.1% prior; Real Avg Hourly Earning Y/Y: 1.4% v 1.4% prior.

Europe

- (UR) Germany Chancellor Merz: If there is no progress this week on Ukraine ceasefire, will move to tighten sanctions on Russia, covering energy and financial market.

- Saudi Aramco CEO: Looking to expand into US LNG; Signing MOUs today with Sempra and NextDecade that will avail approx 6.2M tons of LNG.

- (EU) Trade Commissioner Dombrovskis: US tariffs negatively affect EU outlook for 2025; New EU forecast will be released May 19th.

- (EU) ECB's Knot (Netherlands): Uncertainty is negative for both inflation and growth in the short run.

- (EU) ECB's Villeroy (France): Another interest rate cut likely by this summer; US Pres Trump's tariffs fuel inflation in the US, not in Europe - comments to media.

Levels as of 01:20 ET

- Nikkei 225 -0.3%, ASX 200 flat, Hang Seng +1.8%; Shanghai Composite +0.7%; Kospi +1.3%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; DAX -0.1; FTSE100 flat.

- EUR 1.1118-112.01; JPY 146.92-147.67; AUD 0.6464-0.6487; NZD 0.5934-0.5950.

- Gold -0.6% at $3,228/oz; Crude Oil -0.6% $63.27/bbl; Copper -0.4% at $4.6890/lb.