China Markets Under Pressure Expecting US Tariffs

Jun 13 18, 07:21 GMT

General Trend:

Equity volumes light with Korea closed, little economic data and markets awaiting Fed rate decision tomorrow
USD holds on to its overnight gains, though volatility remains muted
Trump said to have agreed on a step by step denuclearization process with North Korea in exchange for US concessions
Shares of Nintendo fall to a 1-yr low after disappointing Switch sales guidance at the E3 conference
ZTE resumes trade in Hong Kong falling nearly 40%
US said to impose tariffs on China as soon as the end of this week or next week

Headlines/Economic Data

Japan

Nikkei 225 opened +0.1%
(JP) Japan to strengthen oversight of international residents/workers ; after govt pledges to allow more foreign workers – Nikkei
(JP) Japan Defense Min Onodera: There will be no change to joint military exercises with US; no change in stance on keeping pressure on North Korea
Toshiba, [+8.8%], 6502.JP Planning ¥700B share buyback; to take cautious stance against M&A
(JP) Japan Chief Cabinet Sec Suga: North Korea issue will not be solved with one meeting; Japan could only bear the initial cost of North Korea denuclearization after IAEA inspection

Korea

Kospi closed for local elections
(KR) North Korea’s Kim exchanged frank opinions with Trump; praised Trump’s will to resolve issues; this was a great event to promote historic trend of peace – KCNA North Korea state media
(KR) US President Trump said to have agreed on a step by step denuclearization process with North Korea in exchange for US concessions – financial press
(KR) Yonhap poll of 7 analysts think summit meeting between US President Donald Trump and North Korea’s Kim Jung Un is unlikely to have an immediate impact on the South Korean stock market

China/Hong Kong

Hang Seng opened -0.4%, Shanghai Composite -0.3%
(CN) Analysts note China PBOC RRR cut is more likely to boost loans – China Daily
(CN) China Govt to invest CNY1.6T into oil and gas pipeline from 2016-2025 – China Daily
(CN) China PBoC sets yuan reference rate at 6.4156 v 6.4121 prior
(CN) China PBoC Open Market Operation (OMO): Injects combined CNY130B in 7-day, 14-day and 28-day reverse repos v CNY100B prior: Net injects CNY70B v injects CNY30B prior
(CN) China top tier cities seeing property prices remaining stable due to tight regulation, the market in smaller cities has showed signs of picking up – Xinhua
(US) Trade Adviser Navarro: Trump is planning to impose tariffs on a subset of China imports that were part of an original list of ~$50B in goods; speculation they could go into place as soon as Friday or next week – US press
(CN) China MoF sells upsized 2-yr bonds at 3.2784% v 3.29%e, bid to cover 2.19x; sells 5-yr bonds at 3.4763% v 3.50%e, bid to cover 2.64x
(CN) CHINA MAY M2 MONEY SUPPLY Y/Y: 8.3% V 8.5%E; M1 MONEY SUPPLY Y/Y: 6.0% V 7.3%E
(CN) CHINA MAY AGGREGATE FINANCING (CNY): 760.8B V 1.300TE
(CN) CHINA MAY NEW YUAN LOANS (CNY): 1.150T V 1.200TE

Australia/New Zealand

ASX 200 opened 0.0%
Restaurant Brands, RBD.NZ Enters into 10-yr Master Franchise Agreement with Yum! Brands for the continued operation of Pizza Hut brand in New Zealand
(AU) Australia Bureau of Agricultural and Resource (ABARES): Total Australian summer crop production +13% in 2017/18
APA.AU Confirms offer from CKI consortium for A$13B, A$11/shr cash in an indicative non-binding proposal; Offer includes divesting Goldfields pipeline
IOF.AU Blackstone makes offer to acquire at A$5.25/unit
MDL.AU Eramet raises offer to A$1.75/shr (Prior A$1.46/shr); declares offer last and final
(AU) Australia June Westpac Consumer Confidence Index: 102.1 v 101.8 prior; m/m: +0.3% v -0.6% prior
(AU) Reserve Bank of Australia (RBA) Gov Lowe: Reiterates no strong case for near term adjustment in monetary policy; next move likely to be up if economic growth is sustained; March quarter GDP was a bit stronger than we were expecting consistent with central scenario

North America

(US) Weekly API Oil Inventories: Crude: +0.8M v -2M prior
TWX US JUDGE RULES AT&T/TWX MERGER CAN GO FORWARD; IMPOSES NO CONDITIONS ON THE MERGER – PRESS; Urges US govt to not seek stay in ruling; believes it would be unjust to seek stay, which could force AT&T to pay break up fee
FOXA Comcast may make offer for assets June 13th – US financial press

Europe

(UK) Parliament votes in support of PM May’s govt on House of Lords legislation that would have given lawmakers ability to change Brexit strategy if initial deal was rejected – press
(RU) Russia reportedly to ask for oil cuts rollback for most OPEC+ nations; to propose 1.8M bpd shared quota increase – press

Levels as of 01:30ET

Hang Seng -0.6%; Shanghai Composite -0.8%; Kospi -0.1%; Nikkei225 +0.4%; ASX 200 -0.6%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax -0.0%; FTSE100 +0.1%
EUR 1.1734-1.1809; JPY 110.31-110.69; AUD 0.7556-0.7577;NZD 0.6995-0.7014
Aug Gold -0.1% at $1,298/oz; Jul Crude Oil -0.5% at $66.03/brl; Jul Copper -0.5% at $3.23/lb