General Trend:

  • Chinese equities rise in early trading, on track for first gain in 3 sessions
  • Japanese chipmakers underperform amid focus on Huawei, Chinese chipmakers and Samsung however outperform
  • Chinese rare-earth companies rise on speculated import restrictions
  • Chinese smartphone maker Xiaomi rises less than 2% following earnings report
  • Softbank rises in Japan on hopes that Sprint/T-Mobile merger is approved
  • Australia financial sector rises after regulator (APRA) moves to ease mortgage rules , continued momentum after surprise election results
  • Woolworth’s declines in Australia amid cautious broker commentary
  • Australian building materials firm James Hardie (exposed to US housing market) rises after results and guidance
  • RBA Gov Lowe signals possibility for June rate cut
  • Big three Aussie banks now all call for June rate cut
  • Aussie yields remain above recent lows despite comments by Lowe
  • Some analysts examine if mortgage-related move by APRA will ease some of the rate cut pressure on the RBA
  • Lowe: Move by APRA would complement, not substitute, monetary policy
  • China PBoC injected liquidity for the first time in 7 sessions
  • USD/CNH remains below 6.95 amid stability pledges out of China
  • Chinese bond yields rise as domestic equities and yuan gain
  • Chinese soymeal futures decline over 1.5% in the face of lingering trade worries
  • South Korea chip exports continued decline during first 20 days of May
  • US Fed Chair Powell did not comment directly on monetary policy, mentioned CLOs and leveraged loans
  • Singapore cut top end of 2019 GDP growth target range after mixed final Q1 GDP data; cut forecast for non-oil exports
  • Thailand cut 2019 growth forecast amid expectation for weaker exports
  • Technology companies react to temporary reprieve given to Huawei by US gov’t; Huawei itself plays down the importance of the move

Headlines/Economic Data

Australia/New Zealand

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  • ASX 200 opened +0.1%
  • (AU) RESERVE BANK OF AUSTRALIA (RBA) MAY MINUTES:OUTLOOK WOULD THUS BE LESS FAVOURABLE WITHOUT AN EASING IN POLICY OVER NEXT 6 MONTHS (replacing prior wording of not a strong case for near term adjustment In monetary policy)
  • JHX.AU Reports FY19 Net $228.8M v $146.1M y/y; adj Op $300.5M v $301Me; Rev $2.51B v $2.05B y/y
  • (AU) APRA: Proposes to amend guidance on mortgages, proposes removing the minimum 7% mortgage rate buffer
  • (AU) Australia Treasurer Frydenberg: Tax cuts will be delivered as soon as passed by parliament; affirms budget surplus target


  • Nikkei 225 opened -0.4%
  • 8028.JP Suing to dissolve 15 year JV partnership with Ting Hsin Food Conglomerate – Nikkei
  • 8306.JP Mitsubishi UFJ Financial group reportedly reducing MUFG Bank branches by 35% by FY23 (had prior plans to close 20%) – Nikkei
  • (JP) Japan Fin Min Aso: GDP at 2.1% and two quarters of growth “is not bad”; fundamentals continue to be firm
  • (JP) Japan Q1 Housing Loans Y/Y: 2.4% v 2.4% prior
  • (JP) Japan Econ Min Motegi: Japan and the US will hold working level trade talks today; no decision on Lighthizer talks ahead of Trump’s visit
  • (JP) Bank of Japan (BOJ) Gov Kuroda: Bond buying is to reach price target, no finance Govt debt
  • 6758.JP CEO Yoshida announces mid-term corporate strategy for FY19-21: planning to increase FY20 CAPEX to ¥1.1-1.2T, to stably raise dividend over the long term, want to buyback in an agile manner


  • Kospi opened +0.1%
  • (KR) South Korea Apr PPI Y/Y: 0.6% v 0.5% prior (2nd consecutive increase)
  • (KR) Bank of Korea (BOK) Gov Lee: Not considering currency redenomination; BOK steps to cap won decline not a problem – Yonhap (overnight)
  • (KR) South Korea May 1-20th Exports y/y: -11.7% v -8.7% prior; Imports y/y: -0.1% v -1.2% prior; Chip exports -33% y/y; Car exports +12.6% y/y
  • 005490.KR US will further reduce tariff on cold rolled steel – Yonhap

China/Hong Kong

  • Hang Seng opened -0.4%; Shanghai Composite opened -0.1%
  • (CN) Reportedly China to suspend business with all suppliers who agreed to halt supplying Huawei; may temporarily hike tariffs for Apple; All China trade talks with U.S. said to be halted – Money China twitter (after the close yesterday)
  • (CN) US Commerce Dept: confirms plans in filing to revise ‘entity list’ restrictions on Huawei so existing customers can maintain networks
  • Huawei Founder Ren: Won’t rule out use of US chips, 90-day license [issued by US] does not make much sense for Huawei; Infineon has not stopped supplying chips to Huawei (refutes recent press report) – Chinese Media
  • (CN) China PBoC Open Market Operation (OMO): Injects CNY70B in 7-day reverse repos v skips prior: Net: CNY80B v CNY0B prior (1st injection after 6 skips)
  • 1913.HK Starts strategic review on wholesale channels, considers it essential to ensure greater consistency in pricing policies across retail and digital channels
  • (CN) Not a large chance for the yuan to experience disorderly devaluation, necessary to make counter cyclical adjustments of yuan; Risk of ‘over-depreciation’ of yuan (CNY) are emerging over the short-term – China Securities Journal Front Page Commentary
  • (CN) China is using $25T in equity stakes in state-owned enterprises (SOE) to address pension hole – SCMP
  • (CN) China PBoC sets yuan reference rate: 6.8990 v 6.8988 prior
  • (CN) China said to have extended ban on imports of medium to heavy rare earths, including dysprosium oxide and terbium oxide, from Myanmar; raised rare earth import tariffs from the US to 25% from 10% – Chinese press

Other Asia

  • (SG) Singapore Q1 Final GDP Q/Q: 3.8% v 2.3%e; Y/Y: 1.2% v 1.4%e; Cuts 2019 GDP estimated range: 1.5-2.5% (prior 1.5-3.5%)
  • (TH) Thailand Q1 GDP Q/Q: 1.0% v 1.3%e; Y/Y: 2.8% (slowest pace in 4-yrs) v 2.8%e
  • (SG) Monetary Authority of Singapore (MAS): Current monetary policy stance is appropriate; expects inflation pressures to be stable this year

North America

  • (US) Fed Chair Powell: No direct comments on interest rates; Sees business lending risk as moderate; job creation is strong and wages are rising in context of muted inflation pressures – Speech on assessing risks to the financial system
  • (US) Fed’s Clarida (moderate, voter): Full employment may go at least as low as 3.6%; labor market may not be operating beyond full employment (US session)


  • (IR) Iran President Rouhani: In favor of talks and diplomacy, but under current conditions do not accept

Levels as of 1:20 ET

  • Nikkei 225, -0.3%, ASX 200 +0.2%, Hang Seng -0.1%; Shanghai Composite +1.4%; Kospi +0.7%
  • Equity Futures: S&P500 +0.4%; Nasdaq100 +0.5%, Dax +0.1%; FTSE100 +0.3%
  • EUR 1.1173-1.1162 ; JPY 110.26-110.01 ; AUD 0.6929-0.6885 ;NZD 0.6544-0.6517
  • Gold -0.2% at $1,275/oz; Crude Oil +0.4% at $63.45/brl; Copper +0.4% at $2.740/lb
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