Asia Market Update: Asian indices trade lower, China equity FUTs decline amid holidays in CN and HK; Focal points have included the rise in COVID-19 cases and trade; RBA makes largest repo cash injection since late March

 

General Trend:

- Decliners in Asia include travel-sensitive companies, energy firms and financials

- Australian equities underperform amid rise in virus cases in Victoria, Qantas plans to cut thousands of jobs

- Automakers and airlines trade generally lower in Japan, along with banks and real estate firms

- Nippon Steel declines by over 3.5%, Toyota said to have sold stake

- NEC rises on tie-up talks with NTT

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.8%

- (AU) Australia Victoria State reports 33 additional coronavirus cases v 20 prior [overall Australia has largest daily rise in virus cases since April]

- (AU) Australia PM Morrison: Australia can respond to outbreaks and deal with them; Have confidence to move ahead (Comments amid 33 coronavirus cases reported in Victoria State)

- Qantas [QAN.AU]: Announces A$1.9B equity raising; Cutting 6k Jobs (~20% of total workforce), to also stand down ~15K workers; withdraws interim dividend

- (AU) Reserve Bank of Australia (RBA) adds A$4.95B to banking system through repos vs A$4.31B prior [largest daily injection since March 24th]

- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$38.0B v A$43.1B prior [lowest amount of excess cash since March 20th]

- (AU) Australia May Job Vacancies: -43.2% v -0.1% prior

- (NZ) New Zealand May Trade Balance (NZ$): 1.25B v 1.3Be

- (NZ) New Zealand Debt Management Office (DMO) sells NZ$1.05B v NZ$1.05B indicated in 2023, 2029 and 2037 bonds

 

China/Hong Kong

- Shanghai Composite closed for holiday between June 25-26th

- Hang Seng is closed for holiday, trading to resume on Friday (June 26th)

- (US) White House Adviser Navarro: Pres Trump today signed a proclamation to protect the US lobster industry; Considering tariffs on China seafood imports

- (US) Defense Dept releases list of Chinese companies designated as 'owned or controlled by Chinese military,' including Huawei, Hikvision, China Mobile, and other China telecom firms

- (US) White House National Security Adviser O'Brien said to warn of China bid to damage 'our economies' - US financial press

- (CN) China said to add World Bank official Yang Yingming to its trade talks team - financial press [China has yet to comment on the report]

- (CN) US Senator Cramer (R-ND) said to be holding up China bill for changes that would impose punishments on China over Hong Kong National Security Law; White House and US State Dept said to have proposed various technical corrections to the bill - HK Press

- (CN) China publishes its negative list for foreign investment for free trade zones (FTZs); effective July 23rd; Loosens entry to manufacturing and agriculture (June 24th)

- (CN) China 3rd week of June retail car sales -11% y/y - PCA (Industry association) [June 24th]

- (HK) HKMA said to sell HK$3.95B to defend peg as currency hits strong end of trading band

- (HK) Lawmakers in Hong Kong have canceled the vacancy tax bill related to property developers, says there was not enough time to examine the bill before the current legislative session ended - HK press (June 24th)

Japan

- Nikkei 225 opened -1.1%

- Softbank Group [9984.JP]: CEO: Equity Value of holdings recovered to pre-coronavirus levels; Shareholders should not expect dividends; to step down from board of Alibaba as of today - AGM

- (JP) Japan MoF sells ¥898.7B v ¥900B indicated in 0.40% 20-year bonds; avg yield 0.386% v 0.3350% prior; bid to cover 3.9x v 3.58x prior

- (JP) Bank of Japan (BOJ): Japan end of March (Q1) Household Assets: ¥1,845T, -0.5% y/y; BoJ holdings of JGBs: 44.2% v 43.7% q/q - Quarterly Flow of Funds Report

- (JP) Japan Investors Net Buying of Foreign Bonds: ¥1.54T v ¥1.66T prior week; Foreign Net Buying of Japan Stocks: -¥421.9B v -¥440.4B prior week

- (JP) Japan Apr All Industry Activity Index M/M: -6.4% v -6.5%e

Korea

- Kospi opened -1.4%

- (KR) South Korea Fin Min Hong: Confirms capital gains taxes will be applied on stock trading gains exceeding KRW20M/year in 2023; Will finalize new tax plan in July; Will adopt taxes on financial investments starting 2022 [this tax will apply to all financial investments]; Cutting stock transaction tax to 0.15% by 2023 [vs current level of 0.25%]

North America

- IMF TO UPDATE ITS WORLD ECONOMIC OUTLOOK (WEO): CUTS 2020 GLOBAL GDP FORECAST FROM -3.0% TO -4.9%

- (US) NY Gov Cuomo: New York, Connecticut, and New Jersey to impose quarantine-style restrictions on some visitors from Florida and other high-infection coronavirus states – press

- (US) Texas Gov Abbott (R): massive virus outbreak is sweeping the state

- (US) Reported 'dozens' of US Secret Service to quarantine after recent Tulsa Rally by US President Trump - Press

- (CA) FITCH DOWNGRADES CANADA SOVEREIGN RATING ONE NOTCH TO AA+ FROM AAA; OUTLOOK STABLE

- Disney [DIS]: Disneyland California reopening to be delayed

- MGM Resorts [MGM]: Announces extension of nationwide mandatory mask policy to guests and visitors its locations

- American Airlines [AAL]: Prices upsized $2.5B 11.5% senior secured notes due 2025 at 99% (45.4% of market cap); Will not proceed with $500M term loan facility

- (US) WHO's Director Tedros: coronavirus cases to reach 10M worldwide within the next week (June 24th)

- (CL) Chuquicamata Copper mine (Chile) workers reported to seek 2-week shut down due to coronavirus death (Largest copper mine in the world)

Europe

- (US) USTR said to target $3.2B in new tariff targets on exports from France, Germany, Spain and the UK

 

Levels as of 1:20 ET

- Nikkei 225, -1.2%, ASX 200 -2.2% , Hang Seng closed; Shanghai Composite closed ; Kospi -2%

- Equity S&P500 Futures: -0.5%; Nasdaq100 -0.2%, Dax -0.3%; FTSE100 -0.5%

- EUR 1.1259-1.1240 ; JPY 107.26-106.88 ; AUD 0.6876-0.6849 ;NZD 0.6428-0.6399

- Gold flat at $1,774/oz; Crude Oil -0.3% at $37.89/brl; Copper -0.2% at $2.640/lb

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