China Said To Halt Imports From US Poultry Plant On Virus Concerns

General Trend:

• Financial and Resource firms gain in Australia, Consumer Discretionary lags
• James Hardie (Aussie building materials co.) rises over 5% on raised guidance for North American unit
• Metcash rises over 3% in Australia, reported FY20 results and early FY21 sales
• Sectors moving higher in Japan include Iron/Steel, transports decline
• Toshiba rises over 6%, considering options related to Kioxia (formerly Toshiba Memory)
• Brokerage and IT firms are among the gainers in China, there has been renewed talk that the Shanghai Benchmark index will be revised [in line with speculation from late May]; Energy firms decline
• Hang Seng lags in early trading, decliners include gaming and property firms; Drug firms also trade generally lower
• WH Group drops over 2% in HK amid news related to China and Tyson Foods
• China Securities Regulator suggested that there could be more cooperation with the US in the area of corporate audits (Chinese press) [Reminder: President Trump signed memo ordering reports on US investors and China companies due to China not allowing audits of US Listed China companies (June 4th)]
• Indian drug companies (Glenmark, Cipla) rise on COVID-19 related news

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• (AU) Reserve Bank of Australia (RBA) Gov Lowe: Reiterates RBA still has measures to use; Not at a point where AUD is a problem; Would like to see AUD lower at some point; Now not the time to change monetary policy framework; Does not favor having unemployment target like for inflation; Australia fall in hours worked likely closer to 10%
• (AU) Reserve Bank of Australia (RBA) adds A$4.75B to banking system through repos vs A$2.76B prior
• (AU) Reserve Bank of Australia (RBA) skips offering to buy bonds; Has not purchased bonds since May 3rd
• (NZ) New Zealand Shadow Board: Reiterates favors further QE over negative official cash rate (OCR) [Reminder: RBNZ is due to hold its next official cash rate (OCR) decision on June 24th (Wed)]
• (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$410M v NZ$305M prior in government bonds as part of QE v NZ$410M sought
• (NZ) New Zealand May Credit Card Spending M/M: +54.3% v -41.3% prior; Y/Y: -21.1% v -49.4% prior

China/Hong Kong

• Hang Seng opened -0.5%, Shanghai Composite opened flat
• (CN) CHINA PBOC LEAVES 1-YEAR AND 5-YEAR LOAN PRIME RATES (LPRs) UNCHANGED (AS EXPECTED)
• (CN) Follow Up: China Securities Regulator (CSRC) said to propose closer cooperation with the US related to dealing with securities fraud, suggests areas of cooperation could include joint inspections and checking of financial paperwork – Chinese press
• (CN) China Finance Ministry (MOF) announced that it would cut local government bond issuance in June and July, noted plan to make room for additional issuance of coronavirus-related bonds
• (CN) China PBoC Open Market Operation (OMO): Injects combined CNY120B in 7-day and 14-day repos v Injects combined CNY180B in 7-day and 14-day reverse repos prior; Net inject CNY120B v Net injection CNY80B prior
• (CN) China PBOC sets Yuan reference rate: 7.0865 v 7.0913 prior
• (CN) China National Health Commission Coronavirus Update for June 21st: 18 additional cases v 26 prior; Additional deaths: 0 v 0 prior; New cases in Beijing: 9
• (HK) Hong Kong Chief Exec Lam: HK Security law is a significant initiative “at a critical moment” to ensure the long-term prosperity and stability of the city of 7.5M people – speaking Saturday
• (HK) China releases draft Hong Kong Security Law: China will set up a national security office in Hong Kong that would collect and analyze intelligence and deal with criminal cases related to national security – Xinhua (from June 21st)

Japan

• Nikkei 225 opened -0.6%
• (JP) Japan Securities Dealers Association (JSDA): Regional banks in Japan purchased record amount of ultra-long JGBs in May

Korea

• Kospi opened -0.7%
• (KR) South Korea Jun 1-20 Exports Y/Y: -7.5% v -20.3% prior; Imports -12.0% v -16.9% prior; Chip exports y/y: +2.6% v +13.4% prior
• (KR) South Korea sells 20-year treasury bonds: Avg yield 1.56% v 1.55% prior

Other Asia

• Cipla [CIPLA.IN]: Launches Cipremi (remdesivir)
• Glenmark Pharmaceuticals [GNP.IN]: Has launched COVID-19 treatment (FAVIPIRAVIR)
• (ID) Indonesia: Proposes 5-year bond yield assumption of 5.9-7.9% in 2021 budget, 5-year yield to reflect short-term risks [current 5-year yield is ~6.74%]
• (PH) Philippines Central Bank (BSP) Gov Diokno: Philippine economy will fare much better in Q3, there is too much liquidity in the system; Monetary policy works with a lagging effect
• (PH) Philippine banks under pressure amid comments from Germany’s Wirecard

North America

• Tyson Foods [TSN]: Spokesperson: Looking into reports that China’s Customs Agency has suspended poultry imports from Springdale, Arkansas facility after coronavirus cases were confirmed among its employees [reminder: China halts imports from poultry plant where a recent cluster of coronavirus infections have come up – press]
• American Airlines [AAL]: To offer $750M in common stock, $750M in convertible senior notes due 2025; To offer $1.5B in secured senior notes due 2025, announces $500M term loan B facility due 2024 [total stock and debt offerings equal ~$3.5B, ~52% of market cap]
• (US) On Sunday, World Health Organization (WHO) said globally new coronavirus cases rose by 183K vs the prior day (largest single day rise on record) – press; The rise was driven by the US and South America.
• (US) WHO’s Tedros: coronavirus pandemic is accelerating (comments from June 19th)
• Apple [AAPL]: To re-close certain US stores in Florida, Arizona, North Carolina, and South Carolina due to spike in COVID-19 cases – press (from June 19th)
• (US) WTI Crude Oil Futs rolled over to the Aug 20 contract

Europe

• (UK) UK PM Johnson expected to announce review of 2 meter rule on Tuesday, cites the PM’s office – financial press
• (UK) Chancellor of the Exchequer (Fin Min) Sunak expected to announce an emergency cut to VAT – UK press
• Wirecard [WDI.DE]: Announced that the €1.9B missing likely “doesn’t exist”; Withdraws Q1 2020 prelim results report, also withdraws prelim results for 2019; continues talks with lending banks on various areas (including the continuation of the current drawing coming due at the end of June)
• Lufthansa [LHA.DE]: CEO Spohr: €9.0B bailout in danger of not passing shareholder vote (must have 2/3 majority); so far only 38% of shareholders registered to vote at EGM – press

Levels as of 1:20 ET

• Nikkei 225, -0.1%, ASX 200 flat, Hang Seng -0.5%; Shanghai Composite +0.3%; Kospi -0.4%
• Equity Futures: S&P500 +0.4%; Nasdaq100 +0.4%, Dax -0.1%; FTSE100 +0.2%
• EUR 1.1204-1.1168 ; JPY 106.94-106.77 ; AUD 0.6876-0.6810 ;NZD 0.6438-0.6383
• Gold +0.8% at $1.767/oz; Crude Oil -0.2% at $39.75/brl; Copper +0.6% at $2.628/lb