Thu, May 26, 2022 @ 17:08 GMT
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Market Update – Asian Session: Japan’s Deluge Points To Economic Growth But Soft Inflation

US Session Highlights

Stock were subdued today, with little change in Blue chips and broader market indices. Techs, instead, continued to rally, pushing the NASDAQ to a new all-time high at 6,050, before closing slightly lower. Of the S&P sectors, Energy showed the largest decline at 1.1%, while Consumer Discretionary posted the largest gain at 0.5%.

US markets on close: Dow flat, S&P500 +0.1%, Nasdaq +0.4%

Best Sector in S&P500: Technology

Worst Sector in S&P500: Telecommunications

Biggest gainers: UA +9.9%; INTU +8.5%; XLNX +7.4%

Biggest losers: TDC -8.2%; FFIV -7.5%; EQT -7.0%

At the close: VIX 10.4 (-0.5pts); Treasuries: 2-yr 1.26% (flat), 10-yr 2.30% (-2bps), 30-yr 2.97% (-1bps)

US movers afterhours

WDC Reports Q3 $2.39 v $2.16e, R$4.65B v $4.54Be; +7.0% afterhours

GOOGL Reports Q1 $7.73 v $7.48e, R$24.8B (includes $4.6B TAC) v $19.7Be; +4.3% afterhours

CERN Reports Q1 $0.59 v $0.58e, R$1.26B v $1.23Be; +4.1% afterhours

AMZN Reports Q1 $1.48 v $1.03e, R$35.7B v $35.4Be; +3.9% afterhours

MSFT Reports Q3 $0.73 v $0.69e, R$22.1B v $23.6Be; -0.5% afterhours

INTC Reports Q1 $0.66 v $0.65e, R$14.8B v $14.8Be; -3.6% afterhours

KLAC Reports Q3 $1.62 v $1.54e, R$913.8M v $894Me; -3.6% afterhours

BIDU Reports Q1 $1.00 v $0.85e, R$2.45B v $2.32Be; CFO to step down, effective on appointment of successor; -3.8% afterhours

SBUX Reports Q2 $0.45 v $0.45e, R$5.3B v $5.42Be; -4.7% afterhours

FTNT Reports Q1 $0.17 v $0.15e, R$340.6M v $335Me; -7.2% afterhours

ATHN Reports Q1 $0.32 v $0.46e, R$285M v $297Me; -16.8% afterhours

Key economic data

(JP) JAPAN MAR JOBLESS RATE: 2.8% V 2.9%E (matches lowest rate since Jun 1994)

(JP) JAPAN MAR OVERALL HOUSEHOLD SPENDING Y/Y: -1.3% V -0.5%E

(JP) JAPAN APR TOKYO CPI Y/Y: % V -0.2%E; CPI EX-FRESH FOOD Y/Y: -0.1% V -0.2%E

(JP) JAPAN MAR NATIONAL CPI Y/Y: 0.2% (5-month low) V 0.3%E ; CPI EX FRESH FOOD (CORE) Y/Y: 0.2% V 0.2%E

(JP) JAPAN MAR PRELIMINARY INDUSTRIAL PRODUCTION M/M: -2.1% (biggest decline since June of 2016) V -0.8%E; Y/Y: 3.3% V 3.9%E

(JP) JAPAN MAR RETAIL SALES M/M: +0.2% V -0.3%E; RETAIL TRADE Y/Y: 2.1% (22-month high) V 1.5%E

(JP) JAPAN MAR VEHICLE PRODUCTION Y/Y: 4.7% V 11.2% PRIOR

(AU) AUSTRALIA Q1 PPI Q/Q: 0.5% V 0.5%; Y/Y: 1.3% (5-quarter high) V 0.7% PRIOR

(AU) AUSTRALIA MAR PRIVATE SECTOR CREDIT M/M: 0.3% V 0.5%E; Y/Y: 5.0% V 5.1%E

(NZ) NEW ZEALAND MAR BUILDING PERMITS M/M: -1.8% V +17.2% PRIOR

(NZ) NEW ZEALAND MAR TRADE BALANCE (NZ$): +332M V +370ME; First surplus in 9 months

(KR) SOUTH KOREA MAR INDUSTRIAL PRODUCTION M/M: 1.0% V 1.5%E; Y/Y: 3.0% V 4.0%E

Asia Session Notable Observations, Speakers and Press

Asian indices are tracking lower despite the modest gains in US indices as traders express caution over geopolitical and policy risks stemming out of Washington and Beijing. In his "100-day in office" milestone interview, President Trump turned his focus to both North and South Korea. On the former, Trump said it is his "biggest worry" and that it would be very difficult to resolve situation diplomatically, adding that "we could end up having a major, major conflict with North Korea." Subsequently, however, Trump criticized the current trade deal with South Korea, noting that US is owed $1B by Seoul for the deployment of THAAD missile defense system. In China, banking regulators have turned more of their focus on the property sector, tightening loans to developers and urging banks to monitor financing risks.

In FX, dollar majors traded little changed despite the cautious tone in stocks, with US GDP report coming into focus in early Friday session. NZD/USD remained in a tight range despite New Zealand hitting a trade surplus for the first time in 9 months, as exports to China jumped over 40% y/y. Japan saw a wide range of mixed economic data – national CPI slowed to a 5-month lows and industrial output y/y decline was the biggest in 9 months, while unemployment was better than expected matching 1994 lows and annualized retail trade reaching near 2-year high.

China

(CN) Some China banks said to have tightened loans to property developers – Chinese press

Japan

(JP) Japan Fin Min Aso: Plan to hold bilateral finance dialogue with China on May 6th – press

Australia/New Zealand

(NZ) RBNZ remains concerned by elevated property prices; Expects to publish debt-to-income consultation paper in about 6 weeks – press

Korea

(KR) US State Sec Tillerson: China has told US govt it warned N Korea not to conduct another nuclear test – Fox interview

(KR) BOK: To keep accommodative policy as demand-side inflation pressures are modest; Consumption rising steadily on perception of economic improvement

(KR) US Pres Trump: To renegotiate or terminate the South Korea trade deal; Wants $1B payment for THAAD missile defense system – press

(KR) South Korea Defense Ministry: Unchanged in view that US should pay for THAAD – Korean press

(US) Pres Trump: North Korea is my biggest worry; Would love to resolve situation diplomatically, but its "very difficult" – press interview

Asian Equity Indices/Futures (01:00ET)

Nikkei -0.4%, Hang Seng -0.5%, Shanghai Composite -0.4%, S&P/ASX200 -0.1%, Kospi -0.2%

Equity Futures: S&P500 flat; Nasdaq flat, Dax -0.1%, FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (01:00ET)

EUR 1.0855-1.0875; JPY 111.05-111.35; AUD 0.7460-0.7475; NZD 0.6870-0.6890

June Gold +0.1% at 1,268/oz; June Crude Oil +1.2% at $49.55/brl; July Copper -0.1% at $2.60/lb

SPDR Gold Trust ETF daily holdings fall 0.9 tonnes to 853.4 tonnes

(CN) PBOC SETS YUAN MID POINT AT 6.8931 V 6.8896 PRIOR; 4th straight weaker setting; weakest setting since Apr 12th

(CN) PBOC to inject combined CNY80B v CNY50B prior in 7-day, 14-day and 28-day reverse repos, 9th straight injection; For the week, injects CNY70B v CNY170B in prior week

(CN) China Finance Ministry auctions CNY10B in 3-month bills at avg yield of 2.944% v 2.919% prior

(AU) Australia MoF (AOFM) sells A$800M in 5.75% 2022 Bonds; avg yield: 2.1198%; bid-to-cover: 4.68x

(JP) Japan MoF sells ¥1.99T v ¥2.2T indicated in 2-yr 0.1% JGBs; Avg yield: -0.193% v -0.206% prior; bid to cover: 5.51x v 3.82x prior

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