General Trend:
- Markets await China’s response to Trump tariff threat
- China Vice Premier Liu He likely to delay trip to US by 3 days and shorten trip to only 1 day for trade talks this week (in response to Trump’s tweets on raising tariffs) – SCMP
- Trade-related concerns weigh on Shanghai IT, Consumer Discretionary and Telecom Services sectors after recent holiday break; ZTE drops over 6%
- China confirms new bank rules related to recognition of non-performing loans (NPLs)
- Westpac declines as profits dropped y/y
- Korean Won (KRW) declines amid China and North Korea-related concerns
- Indonesia’s economy moves into ‘technical recession’ in Q1
- (IR) National Sec Adviser Bolton: Deploying bomber task force to send a message to Iran regime, in response to a number of troubling and escalatory indications and warnings (timing uncertain)
- Some analysts see volatility for Aussie and Kiwi this week, markets are divided on upcoming RBA and RBNZ decisions
- RBA due to meet on May 7th (Tuesday) and RBNZ to meet on May 8th (Wed)
- Japan due to return from Golden Week holiday on Tuesday
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.6%
- WBC.AU Reports H1 (A$) Cash profit 3.18B v 4.20B y/y, Net interest income 8.26B v 8.28B y/y, Net Op Rev 9.9B v 11.1B y/y
- FCG.NZ Switzerland’s Froneri in exclusive talks to buy Tip Top from Fonterra for NZ$375M – AFR
- (NZ) New Zealand Shadow Board reiterates no recommended change in RBNZ rates
- (AU) Some expect the May 7th RBA meeting to be the most contentious policy meeting in years for the central bank, markets are pricing in even chance of rate cut – US financial press
- CIM.AU HK’s GMT releases research report accusing CIMIC of inflating profits by ~100% in the last 2-yrs and hiding poor performance
- (NZ) New Zealand Apr Commodity Price Index 2.5% v 1.4% prior
- (AU) Australia Apr Melbourne Institute Inflation m/m: 0.2% v 0.4% prior; y/y: 1.8% v 2.1% prior
- (NZ) New Zealand Treasury: H1 GDP may be slightly below forecast, notes business pessimism about tax policy
Japan
- Nikkei 225 closed for holiday
Korea
- Kospi closed for holiday
- (KR) North Korea shot several short range missiles which traveled 70-200km, leader Kim told troops to keep on high alert posture – South Korea press
- (US) Pres Trump tweets on North Korea and Russia relations; North Korea’s Kim “knows that I am with him & does not want to break his promise to me. Deal will happen!”
- (KR) US Sec of State Pompeo: US still has every intention to negotiate with North Korea over its nuclear program despite its weapons tests over the weekend – Yonhap
- (KR) South Korea parliament leader Moon Hee-sang to visit China this week for talks on bilateral cooperation in building peace on the Korean Peninsula – Yonhap
China/Hong Kong
- Hang Seng opened -2.5%; Shanghai Composite opened -3.0%
- (CN) CHINA PBOC: CUTS RESERVE RATIO REQUIREMENT (RRR) FOR SMALL AND MEDIUM SIZE BANKS BY IMPLIED 350BPS TO 8% (PRIOR 11.5%), CNY280B of long term funds to be released, effective May 15th
- (CN) China Vice Premier said to be considering canceling trade talks this week after Trump threats – US financial press
- (CN) CHINA APR CAIXIN PMI SERVICES: 54.5 V 54.2E ; PMI COMPOSITE: 52.7 V 52.9 PRIOR
- (CN) US President Trump told Aide: Significant hurdles remain to reaching a trade deal with China
- (CN) President Trump tweet: For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
- (CN) China May 1-4 holiday period revenue from tourism +16.1% y/y to CNY117.7B – US financial press
- (HK) Hong Kong Apr PMI: 48.4 v 48.0 prior, New business from China falls for the 12th consecutive month
- (CN) China PBoC Open Market Operation (OMO): Injects CNY20B in 7-day Reverse Repos v skip prior; Net injects CNY20B v nil prior
- (CN) China PBoC sets yuan reference rate: 6.7344 v 6.7286 prior (weakest setting since Feb 20, 2019)
- (CN) PBoC backed China Financial News reiterates still room for targeted cuts to the RRR
- (CN) China CBIRC: Will impose a 60-day threshold for non-performing loans (NPL) recognition, to communicate NPL rules through window guidance
Other Asia
- (SG) Singapore Apr PMI: 53.3 v 51.8 prior
- (ID) Indonesia Q1 GDP Q/Q: -0.5% v -0.4%e (2nd consecutive contraction, enters technical recession); Y/Y: 5.1% v 5.2%e
North America
- BRK.A Reports Q1 Net earnings per A share +$13,209 v -$692 y/y, Rev $60.7B v $58.5B y/y
- BRK.A Warren Buffett: See little chance a Tesla introduced insurance product will impact existing insurers; Over time, Berkshire could repurchase $100B in shares – AGM comments
- DIS ‘Avengers: Endgame’ top movie in the N. American box office with $145.8M in sales, global sales total $2.19B in the 12-days after release, putting it on track to be the most successful movie of all time
- APC Occidental submits revised acquisition proposal for $76/shr compromised of $59.00/shr cash and 0.2934 shares (prior $38.00/shr cash and 0.6094 shares); offers to pay $1.0B break up fee to Chevron if Occidental offer is chosen
- (US) White House Chief of Staff Mulvaney said to be saying that Trump’s infrastructure plan is too costly and unlikely to succeed – US press
- OXY Reports Q1 Core $0.84 v $0.73e; Rev $4.09B v $3.96Be
Europe
- (UK) PM May was warned that more than 100 MPs would try to block a soft Brexit – UK press
Levels as of 01:20ET
- Hang Seng -3.3%; Shanghai Composite -5.6%; Kospi closed; Nikkei225 closed; ASX 200 -0.8%
- Equity Futures: S&P500 -1.7%; Nasdaq100 -2.0%, Dax -1.9%; FTSE100 closed
- EUR 1.1171-1.1203; JPY 110.30-110.86; AUD 0.6963-0.7000; NZD 0.6602-0.6629
- Commodity Futures: Gold +0.2% at $1,283/oz; Crude Oil -2.25% at $60.53/brl; Copper -1.4% at $2.78/lb
