General Trend:
- US and China continue to debate why trade talks broke down
- Possible antitrust probe into big US tech companies weighs on tech shares: Tencent -1.7%, Softbank -2.8%, Samsung Electronics -1%
- Australian markets outperform, utilities and REITs gain after rate cut
- Consumer Discretionary, Industrial, Materials and Health Care firms are among the decliners in Shanghai
- Fast Retailing is expected to report monthly sales after the Nikkei close
- New Zealand’s A2 Milk declines, China is seeking to increase domestic production of baby formula; NZD declines
- RBA Gov Lowe is expected to speak during the NY morning (5:30 AM est)
- Australia Q1 current account deficit was the smallest since 1996, iron ore exports rose
- Australian April retail sales unexpectedly decline, Q1 GDP data due on Wednesday
- Korean Won (KRW) weakens as Q1 GDP contraction and exports were worse than feared
- US T-note Futures decline in Asia after gains on Monday
- Various Canadian lumber companies announce production cuts, market conditions cited
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.1%
- (AU) RESERVE BANK OF AUSTRALIA (RBA) CUTS CASH RATE TARGET BY 25BPS TO 1.25%; AS EXPECTED (1st rate move since Aug 2016, resuming the easing cycle)
- (AU) AUSTRALIA APR RETAIL SALES M/M: -0.1% V +0.2%E
- (AU) AUSTRALIA Q1 CURRENT ACCOUNT (A$): -2.9B V -2.9BE (smallest deficit since 1996)
- (NZ) NEW ZEALAND Q1 TERMS OF TRADE Q/Q: 1.0% V 0.5%E
- (AU) Australia Treasurer Frydenberg has told the big 4 banks to pass on in full any interest rate cut to stimulate the economy – AFR
- (AU) Australia government: Q1 gov’t investment will not contribute to GDP, gov’t consumption to add 0.2 pct point to GDP
- CLQ.AU Confirms that it has commenced a partnering process for its wholly-owned Sunrise nickel, cobalt and scandium project located in central New South Wales [+20%]
Japan
- Nikkei 225 opened +0.1%
- (JP) Japan Fin Min Aso: No change in stance on sales tax, economy is gradually recovering
- (JP) Japan Econ Min Motegi: Japan and US to hold working level trade talks in the US from June 10-11th
- (JP) Japan May Monetary Base ¥511.8T v ¥514.6T prior; Y/Y: 3.6% v 3.1% prior
- (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% 10-year JGBs: avg yield: -0.1060% v -0.060% prior, bid to cover 3.99x v 4.44x prior
- 6501.JP Releases mid term plan: Planning growth investment of ¥2.0-2.5T; Capex ¥1.8T
Korea
- Kospi opened -0.1%
- (KR) SOUTH KOREA MAY CPI M/M: 0.2% V 0.4%E; Y/Y: 0.7% V 0.8%E; Core CPI y/y: 0.8% v 0.8%e (lowest rate since Dec 1999)
- (KR) SOUTH KOREA Q1 FINAL GDP Q/Q: -0.4% V -0.3%E; Y/Y: 1.7% V 1.8%E
- 207940.KR Prosecutors find evidence was destroyed on CEO’s computer – Yonhap
- (KR) South Korea sells KRW1.85T v 1.85T indicated in 30-yr bonds; avg yield 1.725% v 1.90% prior
China/Hong Kong
- Hang Seng opened +0.4%; Shanghai Composite opened -0.1%
- (CN) CICC said to have downgraded various banks in China to hold on deleveraging concerns after gov’t takeover of Baoshang Bank – US financial press
- (CN) China PBoC is more likely to use reverse repo and MLF to ease credit – China Securities Journal
- (CN) China NDRC issues notice on infant formula sector; to set higher standards for baby formula, targeting to boost domestic production beyond 60% and improve quality – Chinese press
- (CN) China firmly opposes US Sec of State Pompeo’s statement on human rights in China, his statement interfered in its internal affairs
- (CN) China PBoC sets yuan reference rate: 6.8822 v 6.8896 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v CNY80B prior; Net: drain CNY90B v CNY0B prior
- HUAWEI.CN Chairman: We currently are not in communication with the US government; remains confident in business continuity management
North America
- (CN) USTR and US Treasury Dept. issue response to China ‘White Paper’ on trade: Disappointed China is ‘misrepresenting’ trade talks; China ‘misrepresenting’ why talks broke down
- (US) FED’S BULLARD (DOVE, VOTER): INTEREST RATE CUT MAY BE WARRANTED SOON ON TRADE AND INFLATION RISKS
- (MX) Mexico Agriculture Sec Villalobos: Tariffs announced by Trump would cause total economic damage in the US and Mexico of $117M/month
- (MX) Mexico Econ Min Márquez: Mexico could take several paths if the US goes ahead with the tariffs; could ask for help from WTO, but that is a slow route or implement its own tariffs on US goods – US financial press
- (US) SEMI: Q1 Worldwide Semiconductor Manufacturing Equipment Billings: $13.8B v $17.0B y/y; -8% y/y; -19% q/q
- Thirteen large global banks are preparing to launch digital versions of major global currencies in 2020 – Press
- (US) There is said to be some Republican opposition to the tariffs that Trump proposed for Mexico – US press
Europe
- (UK) May BRC Sales LFL y/y: -3.0% v 0.8%e
- (IE) Ireland May Manufacturing PMI: 50.4 v 52.5 prior (lowest level since July 2016)
- (UK) Pres Trump tweets: “Also, big Trade Deal is possible once U.K.gets rid of the shackles. Already starting to talk!”
- (UK) France Pres Macron: Oct 31 is now the final Brexit deadline
Levels as of 1:20 ET
- Nikkei 225, -0.1%, ASX 200 +0.3%, Hang Seng -0.5%; Shanghai Composite -0.8%; Kospi -0.1%
- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.1%, Dax -0.3%; FTSE100 -0.3%
- EUR 1.1258-1.1240 ; JPY 108.09-107.85 ; AUD 0.6994-0.6959 ;NZD 0.6602-0.6580
- Gold flat at $1,327/oz; Crude Oil -0.2% at $53.14/brl; Copper -0.3% at $2.650 /lb
