General Trend:

  • WTI Crude FUTs rise over 4%, June contract to expire on Tuesday (May 19th); Gold trades at highest level since 2012 after comments from Powell
  • Gold miners are among the gainers in Australia, Financials decline; Ex-dividend weighs on shares of Macquarie Group
  • Shanghai Property index rises over 1% as China released new home price data
  • CanSino Biologics [6185.HK] rises over 14% in HK, received approval to conduct coronavirus vaccine trial in Canada
  • Sector performance in Japan has been mixed; Iron & Steel and Electric Appliances firms decline, gainers include Securities and Real Estate companies.
  • Jack Ma to resign from the board of Softbank Group [Reminder from March 24th: Softbank said to be planning to sell its $14.0B stake in Alibaba (Japanese press)]
  • Softbank Group is expected to report final FY results after the Japan close
  • Japan Post Bank drops over 13% amid concerns about recent earnings and guidance
  • Press reports comment on the exposures of French and Japanese banks to structured products
  • Bank of China said to reach settlements with clients related to losses on crude-oil linked investment product (HK Press)
  • Japan confirmed economy entered recession in Q1, gov’t expects the economy to decline significantly for some time.
  • Singapore’s April pharmaceutical exports up over 174% y/y, exports to the US +124% y/y
  • RBA skipped offering to buy bonds for 5th consecutive session
  • RBA to release May policy meeting minutes on Tuesday

Headlines/Economic Data

Australia/New Zealand

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  • ASX 200 opened +0.4%
  • VAH.AU Bain Capital, BGH Capital, Indigo Partners and Cyrus Capital Partner move into second cound of bidding, final bids due by June 12th – AFR
  • (NZ) New Zealand Apr Performance Services Index (PSI): 25.9 v 52.1 prior (record low)
  • (AU) Reserve Bank of Australia (RBA) adds A$199M to banking system through repos vs A$475M prior
  • (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$450M v NZ$450M prior in government bonds as part of QE (NZ$450M sought)
  • (AU) Australia sells A$1.0B v A$1.0B indicated in 2.25% May 2028 bonds, avg yield 0.7711%, bid to cover 3.96x
  • (AU) Reserve Bank of Australia (RBA) skips offering to buy bonds for 5th consecutive session
  • (AU) China Commerce Min Zhog Shan: Have been in communication with Australia

Japan

  • Nikkei 225 opened +0.3%
  • 9984.JP Will buy up to 6.7% of shares spending ¥500B from May 18 until March 31st 2021; Jack Ma to resign from board, June 25th
  • (JP) JAPAN Q1 PRELIM GDP Q/Q: -0.9% V -1.1%E (2nd consecutive contraction); GDP ANNUALIZED Q/Q: -3.4% V -4.5%E
  • (JP) Japan Econ Min Nishimura: Economy likely to significantly decline for some time, April and May have been severe; looking into additional policy measures, calls for swift enactment of 2nd extra budget
  • (JP) Japan Cabinet approval rating -8ppt to 33% – Asahi poll (falling to 2 year low)
  • (JP) Japan MoF sells ¥1.9T v ¥1.9T indicated in 0.10% 5-yr JGB: avg yield: -0.122% v -0.095% prior, bid to cover: 4.49x v 4.98x prior

Korea

  • Kospi opened +0.4%
  • (KR) North Korea official paper, Rodong Sinmun, calls for strong conviction in building socialism in the face of challenges, there is no challenge that cannot be overcome if one has a strong belief in one’s own power
  • 003620.KR Auditor refuses to deliver an opinion on ability to run normally as a company; Process of delisting a company begins when an accounting firm delivers no opinion on the company’s annual earnings results
  • (KR) South Korea reports Jan-Apr Unemployment 2.08M (record high) – Yonhap
  • 005930.KR Reports Q1 semiconductor production 277.4B units, +57.4% y/y – Yonhap citing report
  • (KR) South Korea health authorities to suspend tight quarantine measures for coronavirus patients who re-tested for COVID-19 as they did not find any evidence that such patients pose the risk of infecting others

China/Hong Kong

  • Hang Seng opened %; Shanghai Composite opened %
  • (CN) China Apr Excavator Sales 45.4K v 49.4K prior, +59.9% y/y
  • (CN) China PBOC Gov Yi Gang: Will implement “a more flexible and powerful” monetary policy to counter economic downturn pressure and mitigate the impact of the COVID-19 shocks, while maintaining financial stability – speaking at third plenary session of the 13th National People’s Congress over the weekend
  • (CN) China PBOC adviser Ma Jun: PBOC should avoid buying special treasury bonds as such a move could fuel inflation risks and asset bubbles and lead to depreciation of the yuan currency; PBOC could cut RRR or provide liquidity via some mechanism to support their purchase of new treasury bonds – China press
  • (CN) China National Health Commission (NHC) official Liu Dengfeng confirmed that China had ordered labs to destroy coronavirus samples in early January for pandemic prevention and control, which also played an important role in preventing biosafety risks” but denies it was part of a cover up as US officials have suggested – press
  • (CN) China Commerce Ministry (MOFCOM): China will take all necessary measures to safeguard Chinese firms rights and interests; firmly opposed to latest US rules against Huawei; Calls on US to immediately to stop its wrong action (update)
  • (CN) On May 16th China Wuhan conducted 222.7K coronavirus tests v 113.6K prior
  • (CN) China Fin Min Liu Kun: Govt will raise the fiscal deficit ratio, issue special treasury bonds to counter the COVID-19 pandemic’s impact, increase local government special bonds and continually implement tax and fee cuts – speaking at third plenary session of the 13th National People’s Congress over the weekend
  • (CN) China Government Work Report draft stresses rolling out stronger macro policies to stabilize enterprises’ development and ensure employment, and reforms should be relied on to stimulate market entities’ vitality and foster new growth
  • (CN) China National Health Commission Coronavirus Update for May 17th: 7 additional cases (4 imported) v 5 prior; Additional deaths: 0 v 1 prior; Additional Asymptomatic cases: 18 v 12 prior
  • (CN) China PBOC sets Yuan reference rate: 7.1030 v 7.0936 prior
  • (CN) China PBoC Open Market Operation (OMO): Skips Reserve Repo Operations for the 30th consecutive session; Net CNY0B v CNY0B prior

Other

  • (SG) SINGAPORE APR NON-OIL DOMESTIC EXPORTS M/M: -5.8% V -19.8%E; Y/Y: +9.7% V -5.0%E

North America

  • (US) President Trump: 2021 will be a great year from the economy’s standpoint, the country is ready to start moving forward, US needs spots back to boost country’s psyche; COVID destruction could have been stopped by China – NBC
  • (US) Fed Chair Powell reiterated economy will recover, but the recovery may take a while; recovery could stretch through end of 2021 – CBS 60 Minutes
  • (US) Fed Chair Powell : Reiterates US will not have negative interest rates, post coronavirus recovery could last through 2021; Projections of 20-25% unemployment peak sounds about right – 60 Minutes interview follow up
  • GRUB Said to reject Uber equity takeover offer of 1.9 Uber shares for ever 1 Grubhub share, there is speculation that Uber could raise its offer to 1.925 shares – US financial press

Europe

  • (UK) Bank of England (BOE) Haldane (Chief Economist): We are looking at negative interest rates and buying riskier assets- UK press

Levels as of 1:15ET

  • Hang Seng +0.3%; Shanghai Composite +0.6%; Kospi +0.8%; Nikkei225 +0.5%; ASX 200 +1.3%
  • Equity Futures: S&P500 +1.2%; Nasdaq100 +1.1%, Dax +1.5%; FTSE100 +1.3%
  • EUR 1.0827-1.0806; JPY 107.28-107.08; AUD 0.6452-0.6412; NZD 0.5962-0.5926
  • Commodity Futures: Gold +0.7% at $1,769/oz; Crude Oil +4.1% at $30.73/brl; Copper +1.2% at $2.36/lb
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