China Services PMI Beat Ests, Aussie Recession Risk In Focus

Jun 03 20, 06:10 GMT

General Trend:

Automakers are among the gainers in Japan amid the recent rise in USD/JPY; Nissan rises over 5%
Geely Auto rises over 2% in HK, China auto association (CAAM) said May car sales could rise over 11% y/y
Financials and energy firms trade generally higher in Australia and Hong Kong
Australia expected to have first technical recession since the 1990s amid Q1 GDP contraction
AUD/JPY rose over 1% ahead of GDP data, later pared gain
US dollar index FUTs decline amid strength in commodity currencies
BoJ said to consider doubling the size of its new small company lending facility [vs ~¥30.0T current size]
South Korea to issue bonds to fund previously announced 3rd extra budget
US State Dept. commented on HK travel advisory and national security legislation

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.3%
(AU) AUSTRALIA APR BUILDING APPROVALS M/M: -1.8% V -10.8%E
(AU) AUSTRALIA Q1 GDP Q/Q: -0.3% V -0.4%E; Y/Y: 1.4% V 1.4%E
(AU) Australia Treasurer Frydenberg: Economy is now in a recession (1st time in 29-years); Health measures have impacted the economy hard; Drop in consumption was largest fall in 34 years
(AU) Australia May Final CBA PMI Services: 26.9 v 25.5 prelim (4th consecutive month of contraction); PMI Composite: 28.1 v 26.4 prelim (4th consecutive month of contraction)
(NZ) New Zealand Q4 Dairy Exports NZ$16.2B v NZ$15.8B q/q (1st time higher than travel services since 2015); Total travel service exports NZ$15.9B v NZ$16.2B q/q – Statistics NZ
(AU) Reserve Bank of Australia (RBA) adds A$1.46B to banking system through repos vs A$528M prior
(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$300M v NZ$450M prior in government bonds as part of QE v NZ$300M Sought
(AU) Reserve Bank of Australia (RBA) skips offering to buy bonds for 12th consecutive session
(AU) Reserve Bank of Australia (RBA) Assistant Gov Bullock: Coronavirus has accelerated shift from Cash to electronic payments; Considering lowering benchmarkers that cap on interchange fees

Japan

Nikkei 225 opened +1.4%
(JP) Japan Megabanks reported to start panel about digital currency – Japan Press
(JP) Bank of Japan (BOJ) considering increasing/doubling small company lending facility (currently ¥30T) – Japan press
(JP) Japan May Final PMI Services: 26.5 v 25.3 prelim (4th consecutive month of contraction)
(JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts buying of 3-5 year JGBs
(JP) Japan Foreign Min Motegi: Told South Korea Foreign Min Kang that the WTO move was regrettable

Korea

Kospi opened +1.0%
(KR) South Korea May Foreign Reserves: $407.3B v $403.9B prior (3-month high)
(KR) US Department of Defense accepts South Korea proposal for funding of Korea labor costs through the end of 2020
(KR) South Korea Finance Mnistry confirms seeking 3rd extra budget worth KRW35.3T (total virus stimulus now KRW250T)

China/Hong Kong

Hang Seng opened +1.3%; Shanghai Composite opened +0.3%
(CN) CHINA MAY CAIXIN PMI SERVICES: 55.0 V 47.3E (highest since Oct 2010); PMI Composite: 54.5 v 47.6 prior (highest since Jan 2011)
(CN) China city of Wuhan tests 10M residents (almost the whole population) and finds no new coronavirus cases, found 300 asymptomatic carriers – Xinhua
(HK) Hong Kong May PMI: 43.9 v 36.9 prior (highest since Jan 2020)
(CN) China National Health Commission Coronavirus Update for June 2nd: 1 additional cases (1 imported v 5 prior) v 5 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 4 v 10 prior
(CN) China PBoC Open Market Operation (OMO): Skips reverse repos for the 3rd consecutive session; Net drain CN120B v Net drain CNY10B prior
(CN) China PBOC sets Yuan reference rate: 7.1074 v 7.1167 prior

Other

North America

Europe

(DE) Germany Govt coalition ends talks on stimulus without reaching a deal, will resume talks tomorrow
(UK) PM Johnson: UK may change its immigration rules to allow holders of British National (Overseas) passports in Hong Kong giving them “further immigration rights” if China imposes national security law – Op Ed in Times

Levels as of 1:15ET

Hang Seng +1.4%; Shanghai Composite +0.5%; Kospi +3.2%; Nikkei225 +1.1%; ASX 200 +1.6%
Equity Futures: S&P500 +0.4%; Nasdaq100 +0.3%, Dax +0.7%; FTSE100 +1.1%
EUR 1.1211-1.1166; JPY 108.84-108.42; AUD 0.6983-0.6887; NZD 0.6431-0.6360
Commodity Futures: Gold -0.3% at $1,729/oz; Crude Oil +2.3% at $37.66/brl; Copper -0.4% at $2.49/lb