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Equities Decline After US Losses, Protests Continue To Weigh On The Hang Seng

General Trend:

  • Hang Seng extends underperformance as protests continue, decliners include insurers and property developers
  • Standard Chartered and HSBC also continue to drop
  • Markets in Hong Kong later pare losses, government again delays meeting on extradition bill
  • Hong Kong money market rates continue to rise; some have cited increased cash demand by banks amid protest-related branch closures and focus on quarter end
  • HKD less volatile vs prior session
  • China launched new high-technology stock board, Shanghai IT index outperformed in early trading
  • Chip-related companies in South Korea and Japan decline, tracks US weakness
  • Declines in shares of MUFJ and lower bond yields weigh on financials in Japan
  • Australia’s Wesfarmers declines over 4% on cautious outlook
  • Australia May unemployment rate higher than expected, more people entered the workforce
  • Aussie and AU yields declined following the data as markets expect more easing from the RBA
  • PBoC uses 28-day reverse repo for second straight session
  • PBoC Gov did not comment on monetary policy
  • Some economists believe China could announce policy easing measures in the coming weeks (China Daily)
  • Japan sells 30 yr JGBs at lowest bid to cover since late 2017, yield declines
  • Japan’s Q2 BSI indices declined q/q [BoJ Q2 Tankan survey expected to be released on July 1st]
  • Japan Economy Min Motegi and USTR Lighthizer are expected to meet later today
  • China’s key May data (including industrial production) due for release on Friday

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened flat
  • (AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.3K V +16.0KE; UNEMPLOYMENT RATE: 5.2% V 5.1%E
  • WES.AU KMart Trading update: 2019 YTD Kmart SSS -0.2% y/y; Total Sales +1.3% y/y; YTD Target SSS -0.7% y/y; Total sales -1.3% y/y
  • CAR.AU Examining the sale of 50.1% stake in Stratton Finance; Guides FY19 (excluding Startton) Adj Net A$130-132M; adj EBITDA 209-211M Rev 418-240M
  • (AU) AUSTRALIA JUN CONSUMER INFLATION EXPECTATION: 3.3% V 3.3% PRIOR
  • COL.AU CEO expected to announce a “strategic reset” next week ; said to be planning to layoff 450 employees at head office – SMH

Japan

  • Nikkei 225 opened -0.4%
  • 8306.JP May have impairment of ÂĄ300B on its controlling stake in Indonesia JV, which could put Q1 into a loss, the first since it formed in 2005 – Nikkei
  • (JP) JAPAN Q2 BSI LARGE ALL INDUSTRY Q/Q: -3.7 V -1.7 PRIOR; LARGE MANUFACTURING Q/Q: -10.4 V -7.3 PRIOR
  • (JP) Japan Cabinet Sec Suga: PM Abe expects a frank opinion exchagne with Iran’s Rouhani
  • (JP) Japan MoF sells ÂĄ699.7B v ÂĄ700B indicated in 0.50% (prior 0.70%) coupon 30-year JGBs, avg yield: 0.3190% v 0.621% prior, bid to cover 3.47x v 4.56x prior (lowest BTC since Nov 2017)
  • (JP) Japan Apr Tertiary Industry Index M/M: 0.8% v 0.4%e (highest since Oct 2018, first rise since Jan)

Korea

  • Kospi opened -0.2%
  • (KR) South Korea President Moon is hoping to meet with North Korea Leader Kim before US President Trump travels to South Korea later this month – Yonhap
  • (KR) US State Dept: Ready to continue working level denuclearization talks with North Korea – Yonhap

China/Hong Kong

  • Hang Seng opened -0.3%; Shanghai Composite opened -0.1%
  • (CN) China CBIRC Vice Chairman Zhaoxing: Certain country is trying to curb China’s growth
  • (CN) China FX Regulator SAFE Chief Pan Gongsheng: FX market has been generally stable, fully confident to maintain FX market stability
  • (HK) Hong Kong Legislator will not hold meeting today on China extradition bill (second delay)
  • (CN) China Vice Premier Liu He: Room to expand financial support for quality GDP growth; China to step up counter cyclical measures – speaking at forum in Shanghai
  • (CN) China CSRC Chief: China will ease entry barriers for overseas custodian services; China has approved ownership controls by 3 foreign brokers
  • (CN) China CBIRC cheif Guo Shuqing: Will continue to support Shanghai building a financial center; financial system is operating in a stable manner; China’s economy is overly reliant on bank loans – Lujiazui forum
  • (CN) China PBOC Gov Yi Gang: PBOC to support cross border capital management in Shanghai free trade zone; will support Shanghai ownership limit removal as a trial – speaking at Lujiazui forum
  • (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 28-day reverse repos v CNY35B combined in 7-day and 28-day prior; Net CNY90B injected v CNY25B drain prior
  • (CN) China PBoC sets yuan reference rate: 6.8934 v 6.8932 prior
  • (CN) CHINA MAY AGGREGATE FINANCING (CNY): 1.400T V 1.450TE
  • (CN) CHINA MAY NEW YUAN LOANS (CNY): 1.180T V 1.300TE
  • (CN) CHINA MAY M2 MONEY SUPPLY 8.5% Y/Y V 8.6%E
  • (US) Pres Trump: reiterates expects to meet with Pres Xi at G-20 summit
  • (CN) According to economists, moderate China inflation and the global dovish monetary environment may provide more room for the China authorities to adjust money and credit supplies as a tool to counter downside risks if trade tension escalates – China Daily
  • HUAWEI.CN White House official: Expect to meet 2-yr deadline for Huawei ban for contractors in defense law

North America

  • (US) DOE CRUDE: +2.2M V -0.5ME; GASOLINE: +0.8M V +0.5ME; DISTILLATE: -1.0M V +1ME
  • (CL) Chile CODELCO: Regret workers’ decision at Chuquicamata; strike to begin Friday
  • (MX) Mexico Central Bank (Banxico) Deputy Gov Heath: Current rate of 8.25% is needed, cannot start easing cycle with so much risk

Europe

  • (UK) Parliament rejects Labour-backed bid to block no-deal Brexit in 309-298 vote
  • (UK) MAY RICS HOUSE PRICE BALANCE: -10% V -21%E (highest level since Oct 2018)
  • (PL) White House confirms to deploy 1,000 additional US troops to Poland

Levels as of 1:20 ET

  • Nikkei 225, -0.1%, ASX 200 flat, Hang Seng -0.9%; Shanghai Composite -0.1%; Kospi -0.7%
  • Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.3%
  • EUR 1.1299-1.1286 ; JPY 108.53-108.16 ; AUD 0.6938-0.6910 ;NZD 0.6588-0.6568
  • Gold +0.2% at $1,339/oz; Crude Oil -0.1% at $51.23/brl; Copper -0.3 % at $2.643/lb
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