NVDA continues to power equities, FOMC May Minutes show uncertainty

Asia Market Update: NVDA continues to power equities; FOMC May Minutes show uncertainty; KR holds rates; CN sabre-rattles TW post-inauguration; EU & US flash May PMIs tonight.

General trend

- Not just equities but all market participants seemed to be focused on Nvidia’s latest earnings report. The CEO said “The next industrial revolution has begun in accelerated computing” and this appeared to be backed up by yet another stellar performance out of the high-end GPU maker; Outperforming on Revenue, earnings and guidance. Stock +6% A/H as the company also confirmed 10-for-1 stock split with 150% increase in div.

- US equity FUTs +0.5% soon after the Nvidia results.

- Taiwan's TSMC +1.2% today, assisted also by an exec saying that the company expects overall foundry business and semi-conductor business combined to grow to $1.0T by 2030. Tokyo Electron +1.8%, Renesas +3.6%, SK Hynix +2.7%,.

- Japan and Korea chip-relateds did well and helped both markets up, in stark contrast to Hang Seng and Shanghai both losing more than -1.0%, with Australia's ASX pulled down -0.5%, mainly by resources amid softer commodities and metals prices.

- Earlier, the US FOMC May Minutes showed uncertainty about degree of policy amongst many members.

- New Zealand’s recent economic woes continued with Fin Min Willis saying that NZ Treasury estimates structural operating deficit of ~1.5% of GDP this year. (NZ Budget on May 30th, with budget policy statement on May 27th). However, in one bright spot today, Retail Sales for the first quarter improved by half a percent when a negative print was expected. Today’s NZ bond auction also saw low bid-to-cover ratios across all three tenors offered.

- Japan Manufacturing PMIs returned back into expansion for the first time in a year, while Australia stayed in contraction for the fourth month.

- Bank of Korea left rates unchanged, as expected, and Gov Rhee indicated that policy is sufficiently restrictive for now, with today’s decision being unanimous.

- After Monday’s inauguration of Pres Lai, China’s Military began drills designed to surround Taiwan, accompanied by bellicose language saying that Lai dared to call Taiwan 'a country', and that its jets are armed with live munitions, while Taiwan for its part stood strong and said it was ready to protect its freedom..
- For the second time this week apparent liquidity issues with the first issuance of China's new special ultra-long bonds; Today’s halt at the Shenzhen exchange was due to a price fall of >10% (following a +20% increase yesterday) Chinese state media said that ‘gains in ultra-long bonds are uncommon, and investors should remain rational”.

- US equity FUTs up 0.6% to 0.9% during Asian trading, with both S&P500 FUTs and Nasdaq FUTs up to new record highs.

Looking ahead (Asian time zone)

- (Note: CN Apr FDI YTD overdue).

- Thu May 23rd (Thu eve EU May flash PMIs + US May flash PMI).

- Fri May 24th JP Apr CPI (National), (Fri night US Durable Goods).

Holidays in Asia this week

- Monday May 20th India.

- Wed May 22nd Singapore, Thailand.

- Thu May 23rd Indonesia.

- Fri May 24th Indonesia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.8% at 7,789.

- AUSTRALIA MAY PRELIMINARY PMI MANUFACTURING: 49.6 V 49.6 PRIOR (4th month of contraction).

- Australia May Consumer Inflation Expectation Survey: 4.1% v 4.6% prior.

- New Zealand Fin Min: Treasury estimates structural operating deficit of ~1.5% of GDP in the current financial year.

- New Zealand Q1 Retail Sales Q/Q: +0.5% v -0.3%e [first rise in 9 quarters].

- RBNZ Gov Orr: Disappointing how stubborn domestic component inflation remains.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2029, 2032 and 2041 bonds.

China/Hong Kong

- Hang Seng opens -0.9% at 19,024; Shanghai Composite opens -0.3% at 3,149.

- China Apr Swift Global Payments (CNY): 4.5% v 4.7% prior.

- TSLA Said to push suppliers to produce parts outside of China and Taiwan - Japanese press.

- China ultra-long special bond again halted (at 9:30am local time), due to a price fall of >10%; Trading to resume at 10am local time.

- China Securities Journal: Gains in China ultra-long bonds are uncommon; investors should remain rational; cites industry experts.

- China PBoC said to be guiding banks to accelerate the pace of lending in May – press [overnight update].

- China sanctions 12 US military firms and executives for arm sales to Taiwan, effective immediately [overnight update].

- China PBOC sets Yuan reference rate: 7.1098 v 7.1077 prior (weakest fix since Jan 23rd).

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

Japan

- Nikkei 225 opens +0.5% at 38,803.

- JAPAN MAY PRELIMINARY PMI MANUFACTURING: 50.5 V 49.6 PRIOR (1st expansion in 12 months).

- Japan releases weekly flows data [period ended May 17th]: Foreign buying of Japan equities: ¥248.1B v ¥664.8B prior; Japan buying of foreign bonds: ¥2.2T v -¥390.6B prior.

- USD/JPY Rises to ¥156.90 [highest since May 1st].

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years; 3-5 Years, 5-10 Years; (lnline with prior purchases).

- Nearly 50% of Japanese companies see JPY below 155 as 'harmful to business' with one-third wanting the BOJ to raise rates further to protect the Yen - US financial press survey in mid-May.

South Korea

- Kospi opens -0.2% at 2,719.

- BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 3.50%; AS EXPECTED.

- Bank of Korea (BOK): Affirms will maintain restrictive policy stance for sufficient period of time.

- Bank of Korea (BOK) Gov Rhee: Decision to maintain rates was unanimous; chances of policy interest rate increase 'limited'.

- South Korea President Yoon: Unveils KRW26.0T ($19.0B) chip support package (as expected).

Other Asia

- Says its sees 2024 dedicated foundry industry growing 15-20% to $150B; Sees >10% semiconductor industry growth in 2024 to $650B, excl memory chips - Exec comments at HQ event.

- Singapore Central Bank (MAS): Current policy stance remains appropriate.

- Singapore Q1 Final GDP Q/Q: +0.1% v -0.3%e; Y/Y: 2.7% v 2.5%e.

- China Military begins drills 'surrounding' Taiwan; the drills are expected to end on Fri [May 24th] - Press.

- INDONESIA CENTRAL BANK (BI) LEAVES BI RATE UNCHANGED AT 6.25%; AS EXPECTED [overnight update].

North America

- Nvidia CEO: The next industrial revolution has begun in accelerated computing; AI will bring gains to nearly every company - earnings call.

- Nvidia Reports Q1 $6.12 v $5.49e, Rev $26.0B v $24.3Be; Confirms 10:1 stock split following speculation; Increases dividend 150%; "poised for our next wave of growth".

- (US) MBA Mortgage Applications w/e May 17th: 1.9% v 0.5% prior.

- (US) CFPB to take steps to regulate BNPL firms, holding them to same standards as credit card firms - CNBC.

- (US) APR EXISTING HOME SALES: 4.14M V 4.23ME; Months supply: 3.5 v 3.2 prior.

- (US) DOE CRUDE: +1.8M V -2ME; GASOLINE: -1M V -1ME; DISTILLATE: +0.40M V 0ME.

- (US) FOMC MAY MINUTES: MANY PARTICIPANTS COMMENTED ON THEIR UNCERTAINTY ABOUT THE DEGREE OF POLICY; Various participants mentioned willingness to tighten policy further should risk to outlook materialize.

Europe

- Ireland May Consumer Confidence: 65.7 v 67.8 prior.

- (UK) PM Sunak confirms plans for July 4th general election; We will not put economic stability at risk.

- (FI) ECB’s Rehn (Finland): Reiterates strong case to cut rates in June.

- (IE) Ireland Apr PPI M/M: +0.8% v -0.9% prior; Y/Y: 3.8% v 2.0% prior.

- (DE) German Bundesbank Monthly Reports: Domestic economy to grow again in Q2.

- (EU) France Fin Min Le Maire: G7 message needs to be EU needs to waken from economic lethargy.

Levels as of 01:20 ET

- Nikkei 225 +1.2%; ASX 200 -0.5%; Hang Seng -1.5%; Shanghai Composite -1.2%; Kospi +0.3%.

- Equity S&P500 Futures +0.6%; Nasdaq100 +0.9; Dax +0.3; FTSE100 +0.1%.

- EUR 1.0821-1.0833; JPY 156.64-156.91; AUD 0.6613-0.6633; NZD 0.6091-0.6123.

- Gold -0.8% at $2,373/oz; Crude Oil -0.7% at $77.06; Copper -0.1% at $4.7957/lb.