General Trend:
- Markets generally weaker after Friday’s stronger US payrolls, make the case harder for the Fed to cut rates in the near term; USD stronger across the region
- Deutsche bank announced massive restructuring, including 18,000 layoffs from now to 2022; Moody’s affirms rating and outlook
- China FX reserve highest level since April of last year, gold reserve rise for the 8th consecutive month in June, remainder of China’s June data expected this week
- China, US trade talks to resume this week
- South Korea again calls on Japan to cancel export curbs impacting semiconductor industry and announces plans to support companies impacted by the curbs
- Shares of Samsung weaker after reporting weaker prelim Q2 results Friday, exec over the weekend traveled to Japan to discuss new export curbs
- Hong Kong protestors came out in force again in popular Chinese tourist neighborhood to “explain their side of protests”; Hong Kong vowed to crack down, many arrests made
- BoJ Gov Kuroda reiterated to keep rates at very low levels until at least Spring of 2020 after Machine orders fell to an 8-month low
- Greece elections saw the center right party take control, saying they will lower taxes and mare more investments
- Iran said it will start t phase out its nuclear pledge made in 2015 to world leaders until US sanctions are diminished
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.2%
- VLW.AU To be acquired by AVID for A$2.345/shr
- (AU) Australia sells A$600M v A$600M indicated in 2029 bonds; avg yield 1.3334%; bid to cover 3.51x
- (AU) Australia Jun ANZ Job Advertisements m/m: +4.6% v -8.2% prior
Japan
- Nikkei 225 opened -0.4%
- (JP) BOJ Gov Kuroda: Reiterates will keep rates at current very low levels until at least Spring 2020 – speech in Tokyo
- 6758.JP “Spider-Man: Far From Home” top movie in N. American box office over 6 day holiday weekend with $185.1M in sales
- (JP) Polls show that the younger voters in Japan are more likely to support PM Abe’s govt than their parents (reminder elections on July 21)
- (JP) JAPAN MAY PRELIMINARY ADJUSTED CURRENT ACCOUNT: ¥1.31T V ¥1.23TE; CURRENT ACCOUNT BALANCE: ¥1.59T V ¥1.38TE
- (JP) JAPAN MAY CORE MACHINE ORDERS M/M: -7.8% V -3.7%E; Y/Y: -3.7% V -3.6%E (1st decline in 3 months, 8 month low)
- (JP) JAPAN MAY PRELIMINARY TRADE BALANCE (BOP BASIS): -¥650.9B V -¥758.9BE
- (JP) Bank of Japan (BOJ) Regional Economic Report: Maintains view for all 9 regions
Korea
- Kospi opened -0.9%
- (KR) South Korea Financial Services Commission (FSC) Chairman Choi Jong-ku: South Korea can cope with loan withdrawals and other retaliatory measures Japan may take in the financial sector in a row surrounding wartime forced labor – Yonhap
- 005930.KR Vice president traveled to Japan over the weekend to meet with local business leaders and discuss Korea’s response to Tokyo’s retaliatory limits on exports of high tech materials – Yonhap
- (KR) South Korea Fin Min Hong: Will help to minimize damage against local companies related to Japan export curbs
China/Hong Kong
- Hang Seng opened -0.9%; Shanghai Composite opened -0.4%
- (CN) CHINA JUN FOREIGN RESERVES: $3.12T V $3.110TE ( highest level since April 2018); gold reserves have their 8th consecutive rise
- (CN) China FX Regulator SAFE: Expect FX reserves to keep basically stable, rise due to USD decline and global trade
- (CN) China expected to use its plan to name foreign companies that are a risk to national security as a bargaining chip in trade talks with the US, which will resume this week – SCMP
- (CN) China PBOC sets yuan reference rate: 6.8881 v 6.8697 prior
- (CN) China PBoC Open Market Operation (OMO): Skips for the 11th consecutive; Net drains CNY0B v drain CNY30B prior
- (CN) China Think Tank Director: The economic decoupling of China and the US could be seen as ‘strategic blackmail’ for the US to attempt to prevent China from growing stronger; sees decoupling as ‘completely possible’ – SCMP
- 2020.HK Muddy Waters Research releases critical report
- (CN) China PBOC: Requires Ping An Bank and China Merchants bank to strengthen risk control and internal management after abnormal interbank trades; suspends traders’ qualifications for some businesses at the two banks
Other Asia
- (TW) Taiwan considering raising minimum wage by 3-5% – local press
North America
- SYMC Broadcom said to be making progress for an all cash offer for Symantec; has financing, identified $1.5B cost savings; deal could value Symantec at $22B including debt – financial press
- BA Saudi Arabia low cost airline, Flyadeal, cancels order for up to 50 737 Max planes, worth ~$5.9B – press
Europe
- DBK.DE Announces significant strategic transformation and restructuring plans: To exit Global Equities and a significant reduction in Corporate and Investment Banking risk weighted assets; to layoff 18,000 positions by 2022; Reports prelim Q2 Net loss €2.8M, Pretax loss €500M; Ex-items Net profit €120M; Pretax profit €400M; Rev €6.2B; no dividend for 2019 and 2020
- LUPE.SE Equinor to divest a 16% holding in Lundin Petroleum for a direct interest of 2.6% in the Johan Sverdrup field and a cash consideration of ~$650M
- DBK.DE Changed the leadership structure, effective August 1; Investment Banking Chief Garth Ritchie to step down by mutual agreement; effective end of July
- (IR) Iran official confirms it will scale back commitment to the 2015 nuclear deal with world powers, will keep reducing its commitments every 60 days, unless signatories of the pact moved to protect it from US sanctions; signaled room for diplomacy
- (GR) Greece election results: Center right opposition party New Democracy secures power, PM Tsipras (Leftist Syriza party) to be replaced by Kyriakos Mitsotakis
- (FR) ECB’s Villeroy (France): We look at the markets but we are not market dependent, we are data dependent
- (UK) Ambassador to US Darroch calls Trump administration “dysfunctional”, “clumsy”, “inept” and “did not serve the UK well” – UK press citing internal memos
- (UK) Lawmakers from ruling Conservatives and opposition Labour both indicated they are looking for ways to prevent the next PM from doing a no deal Brexit – UK press
- (TR) Turkey Central Bank Gov Cetinkaya has been removed from office; Deputy Gov Murat Uysal has been appointed as the new Governor
Levels as of 01:20ET
- Hang Seng -1.9%; Shanghai Composite -2.5%; Kospi -1.8%; Nikkei225 -1.2%; ASX 200 -1.0%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.4%, Dax -0.4%; FTSE100 -0.2%
- EUR 1.1220-1.1233; JPY 108.31-108.58 ; AUD 0.6976-0.6990; NZD 0.6623-0.6643
- Commodity Futures: Gold +0.2% at $1,403/oz; Crude Oil +0.0% at $57.52/brl; Copper -0.2% at $2.66/lb
