Equities Cautious Despite N. Korea Stopping Nuclear Program

Apr 23 18, 07:18 GMT

General Trend:

Asian equity markets trade cautiously after pledge by North Korea, rise in interest rates
US equity futures pare opening gains
Banks rise with increase in 10-yr yields
China Unicom rises over 3% after reporting Q1 results
Display companies decline after Apple dropped over 4% on Friday
Chinese tech companies Lenovo and BoE Technology decline amid US sanction concerns
Asia 10-yr bond yields track rise in US interest rates
Japan Chief Cabinet Sec commented on declining poll numbers
Australia Q1 CPI data due on Tuesday’s session, trimmed mean (CPI) expected to remain below RBA’s 2-3% target
North Korea/South Korea summit expected to begin on Friday
Bank of Japan (BoJ) to hold policy meeting on April 26-27th (Thursday-Friday)

Headlines/Economic Data

Japan

Nikkei 225 opened flat; closed -0.3%
TOPIX Electric Appliances index -0.4%; Iron & Steel index +1.1%, Securities +0.7%
Megabanks rise over 1%
(JP) Japan PM Abe cabinet approval rating falls 3pts to 39% – Yomiuri; Mainichi poll falls 3pts to 30%; ANN poll falls to 29% (lowest level since 2012)
(JP) Japan Chief Cabinet Sec Suga: Approval ratings show Abe government is under scrutiny from people
(JP) Thus far in April, the BoJ has purchased equity ETFs only 1 time when the Topix declined more than 0.2% during morning trading – Japanese Press
(JP) Japan Apr Prelim PMI Manufacturing: 53.3 v 53.1 prior
(JP) BOJ Gov Kuroda: Japan needs strong accommodative monetary policy for some time; reiterates long way to 2% inflation target
Toshiba, 6502.JP Denies reports it will cancel sale of chip unit if China doesn’t approve it

Korea

Kospi opened -0.1%
(KR) North Korea announces it will stop nuclear and ICBM testing effective April 21st, and will begin to dismantle a nuclear testing site in the northern part of the country – press (over the weekend)
(KR) Korean press looks at North Korea’s decision to end nuclear testing; noting Kim needed to make the announcement in order to justify talks with the US to the North Korean people
(KR) North Korea leader Kim has accepted US inspection of nuclear test site – Korean press
(KR) According to KITA, South Korean washer exports to the United States -45.4% y/y after US implemented restrictions – Korean press
(KR) South Korea Fin Min Kim and US Mnuchin agreed on side lines of G20 to strengthen their policy coordination – Korean press
(KR) Bank of Korea (BoK) Gov Lee conducting research on adding employment to mandate – US financial press
(KR) South Korea Apr 1-20 Exports y/y: +8.3% v 9.3% prior; Imports y/y: +20.8% v 5.8% prior
(KR) Bank of Korea (BOK) sells 1-yr monetary stabilization bonds (MSB), avg yield 1.89%
(KR) South Korea sells KRW800B in 20-yr bonds, avg yield 2.74%
(KR) South Korea Central Bank sells KRW1.0T v KRW 1.0T indicated in 3-month Monetary Stabilization; Yield: 1.57% v 1.58% prior Bonds (MSB)

China/Hong Kong

Hang Seng opened -0.3%, Shanghai Composite -0.3%
Hang Seng Industrial Goods index -1.4%, Info Tech -1.3%, Energy -1.1%, Utilities -0.7%, Consumer Goods -0.9%, Property/Construction -0.8%; Financials +0.2%
(CN) PBOC Gov Yi Gang: China’s financial sector has remained sound with risks “broadly contained” – Xinhua
(CN) China MOFCOM: China has received information that the US Treasury Sec Mnuchin wishes to make a trip to China to negotiate economic and trade issues – Xinhua
(CN) US Treasury Sec Mnuchin: continuing dialogue with China on trade; cautiously optimistic we can reach an agreement; Considering a trip to China
(CN) China PBoC sets yuan reference rate at 6.3034 v 6.2897 prior
(CN) China PBoC Open Market Operation (OMO): Injects CNY80B in 7-day reverse repos v skips prior; Net: injects CNY0B
HK$ rises to 7.8433 (1-month high)
(CN) Analysts discuss PBOC RRR targeted rate cut last week, noting it is a move to target shadow banking – press
(CN) There is CNY520B expected to mature this week related to PBoC monetary policy tools – US financial press
(CN) China Foreign Ministry: Notes ‘major’ transportation accident in North Korea involving Chinese tourists, sees ‘large’ number of casualties
(HK) Hong Kong 1-month HK$ HIBOR 1.04714% (highest level since Jan 4th)

Australia/New Zealand

ASX 200 opened flat
ASX 200 Financials index +0.8%, Resources +0.6%; Energy -0.6%, Utilities -0.7%
Macquarie Infrastructure , MIG.AU Group of US based shareholders calling for the board to be sacked and company liquidated – AFR
iSelect [-52%], ISU.AU Cuts FY18 (A$) Underlying EBIT 8.0-12.0M (guided 26-29M prior); Names Brodie Arnhold as acting-CEO, replacing Scott Wilson
(AU) Australia buys back A$500M v A$500M indicated in Oct 2019 and April 2020 bonds
(AU) Australia sells A$500M v A$500M indicated in 3.25% April 2029 bonds, avg yield 2.8843% v 2.6337% prior, bid to cover 5.88x v 3.47x prior

North America

(US) US 10 year Treasury yield hits 2.968%, highest since Jan 2014
Tencent, 700.HK There is renewed speculation that Music Entertainment unit is planning a US IPO in H2 2018 – US financial press

Other Asia

(ID) Bank of Indonesia Dep Gov Waluyo: Reiterates central bank will be in market to maintain stability of Rupiah currency (IDR)
(PH) Philippines Central Bank (BSP) Gov Espenilla: Premature to sat there is a trade war

Europe

(MX) Mexico sign free trade agreement (FTA) with EU over the weekend, expanding prior agreement to cover finance, e-commerce and agriculture (prior was only basic goods and machinery)
(EU) ECB said to have no plans to slow normalization plans despite recently slower data – financial press
Deutsche Bank, DBK.DE HNA Group cuts stake to 7.9% (prior 8.8%)
EU said to be considering a deeper cartel investigation into Daimler, BMW and VW – German press

Levels as of 02:00ET

Hang Seng -0.4%; Shanghai Composite -0.4%; Kospi -0.2%; ASX 200 +0.4%
Equity Futures: S&P500 +0.3%; Nasdaq100 +0.3%, Dax +0.3%; FTSE100 +0.1%
EUR 1.2288-1.2265; JPY 107.89-107.61; AUD 0.7682-0.7658;NZD 0.7218-0.7199
Jun Gold -0.1% at $1,336/oz; Jun Crude Oil -0.1% at $68.36/brl; May Copper +0.5% at $3.15/lb

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