Asian Indices Rise After US Gains, China And US Confirmed Trade-Related Phone Call

May 08 20, 07:01 GMT

General Trend:

Early gainers in Shanghai include Telecom Services and Consumer Discretionary companies
Sectors moving higher in Japan include Iron/Steel, Marine Transportation and Real Estate
Japan brokerage earnings in focus (Nomura and Daiwa)
Singapore Airlines expects losses related to fuel hedges
Gainers in Australia include Consumer Discretionary, Resources and Energy companies
Australia PM Morrison: Agrees to 3 step reopening plan by July
RBA Quarterly Statement in line with May cash rate decision

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.3%
(AU) Australia PM Morrison: Today we will move ahead with reopening the economy; Agrees to 3 step reopening plan by July; Treasury estimates 850K jobs restored under plan; Can’t see international travel restarting soon.
(AU) RESERVE BANK OF AUSTRALIA (RBA) STATEMENT ON MONETARY POLICY (SOMP): NEAR-TERM GROWTH FORECAST TO REFLECT DROUGHT, BUSHFIRES, AND CORONAVIRUS
(AU) Australia to sell A$2.0B in government bonds in one tender next week; to issue new Dec 21 2030 bond through syndication next week (starting on May 11th)
(AU) Australia sells A$1.5B v A$1.5B indicated in 5.50% April 2023 bonds, avg yield 0.2348% v 0.2603% prior, bid to cover 6.8x v 7.3x prior
(AU) Australia Mar Port Hedland Iron Ore Exports: 45.3Mt v 46.7Mt prior; iron ore shipments to China: 38.7Mt v 40.4Mt prior
(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$450M v NZ$450M prior in government bonds as part of QE
(NZ) New Zealand Fin Min Robertson: Does not see need for RBNZ to directly buy Govt bonds

China/Hong Kong

Shanghai Composite opened +0.5%, Hang Seng +0.9%
(CN) China and US trade ambassadors have spoken over the phone; Agree to keep communications, strengthen economic cooperation – Xinhua
(US) US Treasury confirms conference call between Ambassador Lighthizer, Treasury Sec Mnuchin, and China Vice Premier Liu He
(CN) China Vice Commerce Min Wang: Sales of durable consumer goods such as autos and home appliances rebounded significantly during May day holiday
(CN) China PBOC sets Yuan reference rate: 7.0788 v 7.0931 prior
(CN) China PBOC to sell total of CNY30B in 3-month and 1-year bills in Hong Kong on May 14th
(CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 24th consecutive session; Net CNY0B v CNY0B prior
(CN) China PBOC may conduct targeted RRR cut and lower the MLF rates or reverse repo rates by as early as May – China Securities Journal commentary
(CN) China National Health Commission Coronavirus Update for May 7th: 1 additional case v 2 prior; Additional deaths: 0 v 0 prior
(CN) Shanghai and Guangdong (China) reported to lower health response to 3rd highest level – Press

Japan

Nikkei 225 opened +1.5%
(JP) Japan Apr Final PMI Services: 21.5 v 22.8 prelim (confirms 3rd month of contraction and record low)
(JP) Japan Mar Household Spending Y/Y: -6.0% v -6.5%e (5th largest since comparable data available in 2001, 6th straight decline)
(JP) Japan Mar Labor Cash Earnings y/y: +0.1% v 0.1%e; Real Cash Earnings y/y: -0.3% v 0.0%e
(JP) Japan PM Abe to speak with US President Trump May 8th in the morning
(JP) Japan ruling LDP party may discuss a second extra budget to deal with coronavirus next week, the second extra budget might be focused on small and medium-sized companies – Japan press
(JP) Japan Ruling Party reported to introduce Small Business Rent Subsidy with ¥500K cap for small-mid size companies, ¥250K for mom and pop companies – Nikkei
(JP) Japan MoF sells ¥200B v ¥200B indicated in 10-yr 0.1% inflation-indexed bonds; highest yield 0.117%; bid to cover 3.8x

Korea

Kospi opened +0.8%
(KR) US said to have asked South Korea to pay $1.3B in shared defense costs – South Korean press [vs $1.1-1.2B previously speculated]
(KR) South Korea confirms high chance of additional virus cases due to club exposure

Other Asia

(ID) Indonesia Considers full reopening of economy in 5 phases; To ease lockdown in early June, targets full reopening end of July
(ID) Indonesia Apr Foreign Reserves: $127.9B v $120.9B prior

North America

(US) Fed Total Balance Sheet Size as of May 7th: $6.77T (record) v $6.70T w/w
(US) US Dept of Justice began probe into meat industry prior to coronavirus pandemic
(US) US Attorney General Barr reported to seek Obamacare repeal in October – CBS
(US) White House is considering measures it could take to stimulate the economy without the need for legislation in Congress – NBC

Levels as of 1:20 ET

Nikkei 225, +2.3%, ASX 200 +0.7%, Hang Seng +1%; Shanghai Composite +1%; Kospi +1.2%
Equity Futures: S&P500 +1.2%; Nasdaq100 +1.1%, Dax +1.2%; FTSE100 closed
EUR 1.0854-1.0823 ; JPY 106.45-106.22 ; AUD 0.6549-0.6491 ;NZD 0.6134-0.6084
Gold +0.1% at $1,726/oz; Crude Oil +1.4% at $23.88/brl; Copper +1.2% at $2.408/lb