US Employment Data And Political Situation In Italy

Jun 01 18, 07:23 GMT

General Trend:

Equity markets trade mixed following declines in the US
Italy’s League and Five Star parties reach agreement on cabinet, formally given mandate from President to form coalition government
Chinese equities open lower following MSCI changes
May Macau Gaming Rev below ests, casino names decline
Samsonite rallies over 9% in Hong Kong, board named new CEO and refuted claims from short seller
Bank of Japan (BoJ) trims purchases of 5-10 yr JGBs in daily operation, USD/JPY and JGB yields rise
Japan Q1 Capex growth slows
Australia housing values decline y/y in May for first time since Oct 2012 (CoreLogic)
New Zealand Q1 terms of trade declines for first time since 2016; dairy product export prices -6.7%
Various global officials comment amid G7 summit including BoJ Gov Kuroda, Germany Fin Min Scholz
There was no debate on bilateral free trade agreement (FTA) or FX in the talks between Japan Finance Minister Aso and US Treasury Sec Mnuchin, said a Japan official
US Commerce Sec Ross confirmed he is still scheduled to travel to China later this week
Upcoming US May employment data in focus
Australia Q1 GDP data due next week (Wed, June 6th)

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.1%; closed -0.3%
ASX 200 Telecom index -0.9%, Financials -0.8%, Utilities -0.7%, Energy -0.7%; Resources +0.3%
ANZ Bank [ANZ.AU] declines over 1% after disclosing criminal cartel probe
(AU) Australia minimum wage to increase by 3.5% to A$24.30/week – Fair Works Council (FWC)
(AU) Australia May CoreLogic House Price M/M: -0.2% v -0.3% prior
(AU) Australia to sell A$2.5B of May 21 2030 bonds on June 8th
(NZ) New Zealand Q1 Terms of Trade Index Q/Q: -1.9% v -2.0%e (first decline since Q3 2016)
(NZ) New Zealand ANZ May Consumer Confidence Index: 121.0 v 120.5 prior; m/m: +0.4% v -5.9% prior

China/Hong Kong

Shanghai Composite opened -0.4%, Hang Seng +0.3%
Hang Seng Services index -2.4%, Consumer Goods -1.1%, Industrial Goods -1%, Materials -0.8%, Financials -0.4%; Telecom +0.4%
(US) Commerce Sec Ross: Still scheduled to travel to China this week; Exploring options that may include keeping ZTE open
(CN) China PBoC may additionally cut the reserve ratio requirement (RRR) by 50-150bps by the end of 2018 – Chinese Press
(CN) CHINA MAY CAIXIN PMI MANUFACTURING: 51.1 V 51.2E
(CN) For the week, the PBoC injects a net of CNY410B through open market operations (OMOs) v CNY30B net drain w/w
(CN) China PBoC Open Market Operation (OMO): To inject CNY80B in 7, 14 and 28-day reverse repos v CNY220B injected in 7, 14 and 28-day reverse repos prior: Net: injection CNY80B v CNY180B injected prior
(CN) China PBoC sets yuan reference rate at 6.4078 v 6.4144 prior

Japan

Nikkei 225 opened -0.3%; closed -0.1%
TOPIX Securities index +1.1%, Marine Transportation +0.7%, Iron & Steel +0.7%, Electric Appliances +0.5%
Toyota trades higher by over 3%; says it is considering various options to enhance competitiveness
(JP) (JP) BoJ announcement related to daily bond buying operation; Trims planned 5-10 year JGB purchase to ¥430B v ¥450B prior [Reminder: In the past, BoJ officials have said the daily bond buying operations are not intended to signal monetary policy changes]
(JP) US Treasury Sec Mnuchin and Japan Finance Min Aso held talks at the G-7 meeting (in line with recent press speculation) – Japanese Press; Japan MOF official says there was no debate on FX
(JP) Japan Q1 Capital Spending (Capex) Ex Software: 2.1% v 3.8%e; Capital Spending Y/Y: 3.4% v 3.1%e
(JP) Japan May Final PMI Manufacturing: 52.8 v 52.5 prelim (confirms a 7-month low)
(JP) BoJ Gov Kuroda: Global trade supports global economy; No big impact likely from political situation in Italy – G7 Comments

Korea

Kospi opened -0.1%
(KR) North Korea’s Kim Jong Un: hopes North Korea-US ties will be solved step by step – press
(KR) Sec of State Pompeo: after talks with senior North Korea official, he is confident things are going in the right direction
(KR) South Korea May CPI M/M: 0.1% v 0.2%e; Y/Y: 1.5% v 1.7%e
(KR) South Korea Q1 Final GDP Q/Q: 1.0% v 1.1%e; Y/Y: 2.8% v 2.8%e
(KR) South Korea May Trade Balance: $6.7B v $6.6Be; Exports Y/Y: 13.5% v 10.5%e
(KR) South Korea May PMI Manufacturing: 48.9 v 48.4 prior (3rd straight contraction)

Other

(PH) Philippines May PMI Manufacturing: 53.7 v 52.7 prior
(TH) Thailand May CPI M/M: 0.6% v 0.4%e; Y/Y: 1.5% v 1.3%e
(TH) Thailand May PMI Manufacturing: 51.1 v 49.5 prior
(TW) Taiwan May PMI Manufacturing: 53.4 v 54.8 prior
(VN) Vietnam May PMI Manufacturing: 53.9 v 52.7 prior (highest since April 2017)

North America

US equity markets ended lower: Dow -1%, S&P500 -0.7%, Nasdaq -0.3%, Russell 2000 -0.9%
S&P500 Consumer Staples -1.6%, Industrials -1.5%
(US) Fed’s Brainard (voter, dove): gradual rate increases are appropriate in light of tight labor market; alert to emerging risks to adjust policy as needed; Trade is clouding the outlook and could be disruptive; A broader pullback in emerging markets bears watching
(US) Fed’s Quarles (hawk, FOMC voter): trade measures haven’t had big macro effect; There’s reason to think neutral rate is rising; We need to watch Italy but hasn’t changed outlook yet
(US) Fed’s Mester (hawk, FOMC voter): Italy political situation hasn’t changed view of US economic fundamentals
(US) Fed Bullard (dove, non-voter): Trade talks creating more uncertainty in economy; difficult to see if too much will change after talks
(US) DOE CRUDE: -3.6M V -0.5ME

Europe

(IT) Northern League party official confirms Five Star and League have reached agreement on an cabinet, including Economist Giovanni Tria as Fin Min
(IT) Italy Pres formally gives PM-designate Conte mandate to form a Five Star/League coalition govt – press
(IT) PM-designate Conte and his govt will be sworn in on Friday 11:00CET (05:00ET), and will face confidence votes on Monday and Tuesday
(ES) Spain PM Rajoy reportedly does not plan to resign his post ahead of confidence vote on Friday – Spanish press
(DE) Germany Fin Min Scholz: Implementation of US tariffs is wrong and illegal – G7 Comments
(DE) Germany Government Official: Finance Min Scholz had open and honest talks with US Treasury Sec Mnuchin
(UK) Brexit Min Davis reportedly devising new plan that would give Northern Ireland joint EU/UK status and border buffer zone – UK press
(UK) BOE’s Carney: In current US trade dispute, the focus on trade balance in goods is not the right focus
Airbus [AIR.FR]: President said to tell workers that it will be difficult to meet 2018 delivery target – financial press

Levels as of 02:00ET

Hang Seng -0.1%; Shanghai Composite -0.8%; Kospi +0.7%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 flat
EUR 1.1665-1.1707 ; JPY 108.72-109.26 ; AUD 0.7538-0.7575 ;NZD 0.6984-0.7021
Jun Gold -0.3% at $1,297/oz; Jul Crude Oil -0.3% at $66.83/brl; Jul Copper -0.2% at $3.058/lb