General Trend:
- US session on Thursday: Financials moved lower after Fed projections; Travel-sensitive stocks dropped amid some focus on uptick in US virus cases, energy sector also declined
- Financials and Energy companies generally track the earlier weakness seen in the US; Airlines also drop.
- Asian automakers drop after US declines, recent Yen strength also a headwind for Japanese car companies
- Kospi underperforms amid extended social distancing measures related to Seoul, automakers and semis are among the decliners
- Leading decliners in Shanghai include Telecom Services and IT companies
- PBOC is expected to roll over medium-term lending facility (MLF) funds around June 15 (Monday) [size to be determined by market demand]
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.7%
- (AU) Multiple companies added to S&P ASX 200 index: effective at the open on June 22
- (AU) Australia Finance Minister Cormann said 2nd wave of coronavirus could cost the Aussie economy A$80B over the next 2 years; PM Morrison gov’t said to be concerned that recent protests could cause the virus to spread – local press
- (AU) Australia PM Morrison: More Australia coronavirus outbreaks are anticipated; To allow sports to have crowds up to 10K people in July; reiterates expects all of country to be in stage 3 of reopening in July
- (CN) China said to have increased customs checks related to coal imports, using import quotas and quality restrictions to curb coal imports – financial press (update)
- (AU) Reserve Bank of Australia (RBA) adds A$2.0B to banking system through repos vs A$2.79B prior
- (NZ) New Zealand May Manufacturing PMI: 39.7 v 26.1 prior
- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$335M v NZ$295M prior in government bonds as part of QE
China/Hong Kong
- Hang Seng opened -2.3%, Shanghai -1.5%
- Cathay Pacific [293.HK]: May passengers -99.4% y/y; To operate 3.5% of capacity in June, 9.4% in July [vs 3% of capacity in May]
- (CN) China People Liberation Army (PLA) Major Xin Wang was arrested by US officials due to allegations related to visa fraud – SCMP
- (HK) US Treasury Sec Mnuchin said to have suggested that the US may restrict capital flows through Hong Kong; last week Trump gave the Treasury-led working group 60 days to recommend actions to protect US investors from certain Chinese companies- SCMP
- (CN) China PBOC sets Yuan reference rate: 7.0865 v 7.0608 prior
- (CN) China PBoC: changes time for Open Market Operation (OMO) to 09:00-09:20 am (local time); effective Fri, Jun 12th; results of the OMOs will be released at 9:20 am, statement related to the OMO will be released at 9 am
- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v CNY80B prior; Net drain CNY50B v injects CNY10B prior
- (CN) China National Health Commission: Now requiring all fever clinic visitors take a Nucleic Acid coronavirus test to rule out coronavirus
- (CN) China National Health Commission Coronavirus Update for June 11th: 7 additional cases (6 imported v 11 prior) v 11 prior; Additional deaths: 0 v 0 prior
- (CN China Vice Fin Min Xu: Confirms China will set up special transfer payments on CNY2.0T in funds from special Treasury bonds and increased budget deficit
Japan
- Nikkei 225 opened -1.7%
- (JP) Japan Fin Min Aso: Too early to talk about 3rd extra budget, must assess current stimulus steps effect on economy
- (JP) Japan reported to extend visa restrictions by 1-month, Japan’s entry ban was expected to be removed at the end of June – Nikkei
- (JP) Japan Econ Min Nishimura: Positive outlook on the economy with reopening
- (JP) Japan Apr Final Industrial Production M/M: -9.8% v -9.1% prelim; Y/Y: -15.0% v -14.4% prelim
Korea
- Kospi opened -4.1%
- (KR) Bank of Korea (BOK) Gov Lee: Monetary policy needs to stay loose until recovery is on the horizon; Will use non rate policy as needed; BOK Must prepare for policy normalization
- (KR) North Korea state media: North Korea aims to build up the ability to ‘deal with the US threat’
- (KR) South Korea: Bond issuance stable due to foreign investor demand; Forecasts favorable conditions for bond issues in H2 2020
- (KR) South Korea sells 50-year bonds: avg yield 1.57% v 1.55% prior
- (KR) South Korea confirms 56 additional coronavirus cases, 1 additional death
- (KR) South Korea reported to extend distancing measures around Seoul – Korea Times
- (KR) South Korea May Export Price Index M/M: 0.6% v -1.6% prior; Y/Y: -8.2% v -5.9% prior
Other Asia
- (ID) Indonesia Central bank: Planning intervention in Spot FX market, DNDF, and bond markets; purpose of the interventions is to slow excessive weakening in the Rupiah currency (IDR)
- (MY) Malaysia Ex Interim PM Mahathir plans on starting new Malaysia political party
- (MY) Malaysia sells MYR3.0B in 30-year bonds: avg yield 4.065%, bid to cover 2.2x
North America
- (US) Republicans and White House pushing back formal negotiations on additional coronavirus relief until late July – CNBC
- (US) White House econ adviser Hassett: July is probably the right time frame for a 4th coronavirus relief package
- (US) Fed Funds Futures (FFRs) on certain 2021 contracts closed with Negative implied rate (first time in 1 week) – financial press
Europe
- (UK) UK govt reportedly to formally rule out extending Brexit deadline in meeting on Friday; plans to implement a temporary ‘light-touch’ customs checks program with the EU beginning in 2021 – press
Levels as of 1:20 ET
- Nikkei 225, -1%, ASX 200 -2.2%, Hang Seng -1.4%; Shanghai Composite -0.4%; Kospi -2.4%
- Equity Futures: S&P500 +1.1%; Nasdaq100 +1%, Dax +0.8%
- EUR 1.1302-1.1276 ; JPY 107.27-106.58 ; AUD 0.6859-0.6799 ;NZD 0.6436-0.6394
- Gold -0.5% at $1,732/oz; Crude Oil -1.5% at $35.78/brl; Copper +0.6% at $2.591/lb
