Japanese Government Appears Unconcerned By Q1 GDP Contraction

May 16 18, 06:47 GMT

General Trend:

Asian equities trade mixed; bond yields in focus
New Zealand NZX-50 index declines over 2%, largest intraday drop since late 2016
Japanese megabank Mitsubishi UFJ declines over 3% after guidance and buyback announcement
Japan Q1 GDP contracts for the first time since 2014, business investment unexpectedly declined; government suggests weakness is temporary
Aussie declines as Q1 wage growth pace holds steady
Asian bond yields generally track rise in US interest rates
Indonesia 10-year bond yield rises over 10bps
Asian currencies under pressure amid equity outflows : Indonesia Rupiah (IDR) trades at weakest level since late 2015
North Korea cancels today’s high-level talks with South Korea, cites US/South Korea military drills
China Delegation arrives to Washington for trade talks (as expected) – Xinhua
China President Xi said China can come out of trade war in better shape – HK Press
Starbucks accelerates China net new store opening plan
Australia April employment data due for release on Thursday’s session

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.1%, closed +0.3%
ASX 200 Energy index +1.8%, Consumer Discretionary +1.1%, Resources +0.9%, Financials +0.7%; Utilities -1.1%, REIT -0.5% Telecom -0.2%
(AU) AUSTRALIA Q1 WAGE PRICE INDEX Q/Q: 0.5% V 0.6%E; Y/Y: 2.1% V 2.1%E
(AU) Australia May Westpac Consumer Confidence M/M: -0.6% v -0.6% prior: Index: 101.8 v 102.4 prior

China/Hong Kong

Shanghai Composite opened -0.4%, Hang Seng -0.4%
Hang Seng Info Tech index -0.3%, Energy -0.3%, Financials -0.1%; Industrial Goods +0.4%
(CN) CHINA APRIL NEW HOME PRICE M/M: 0.6% V 0.4% PRIOR: Y/Y: 4.7% v 4.9% prior
(CN) China PBoC sets yuan reference rate at 6.3745 v 6.3486 prior
(CN) China PBoC Open Market Operation (OMO): Injects CNY260B in 7-day and 14-day reverse repos v CNY180B injected with 7-day and 14-day reverse repos prior; Net: CNY200B injection v CNY180B injection prior
(CN) China Finance Ministry (MOF) sells 1 and 10-year bonds

Japan

Nikkei 225 opened -0.4%; closed -0.4%
Topix Info & Communication index -0.9%, Electric Appliances -0.2%; Securities +1%, Iron & Steel +0.3%
(JP) Japan Economy Min Motegi: No change in view Japan economy is recovering ‘moderately’; Economy is likely to recover, driven by consumption and Capex.
(JP) JAPAN Q1 PRELIM GDP Q/Q -0.2% V % 0.0%E; ANNUALIZED Q/Q: -0.6% V -0.1%E (first contraction in 9 quarters); Business Spending Q/Q: -0.1% v +0.4%e (first drop in 6 quarters) ; Domestic demand contribution to GDP -0.2 pct point.
(JP) Japan Mar Final Industrial Production M/M: 1.4% v 1.2% prelim; Y/Y: 2.4% v 2.2% prelim

Korea

Kospi opened -0.5%
(KR) North Korea cancels Weds high-level talks with South Korea; threatens to cancel Trump-Kim summit over US-South Korea military drills – Korean press
(KR) South Korea Unification Ministry: North Korea decision to cancel high-level meeting with South Korea is ‘regrettable’; military drills with US to proceed as planned
(KR) North Korea: Will never engage in economic trade with US in exchange for giving up its nuclear program; will need to reconsider summit with US if Washington insists on North giving up nuclear program – KCNA
(KR) There is speculation that North Korea may disclose its secret uranium enrichment facilities – South Korean Press
(KR) South Korea April Unemployment Rate: 3.8% v 3.9%e

North America

US equity markets ended mostly lower: Dow -0.8%, S&P500 -0.7%, Nasdaq -0.8%, Russell 2000 flat
S&P 500 Real Estate -1.7%, Health Care -1.3%
(US) Fed’s Williams (moderate, voter): 3 to 4 rate hikes in 2018 is the right direction for policy; recent inflation pickup is ‘very reassuring to me’
(US) Weekly API Oil Inventories: Crude: +4.9M v -1.9M prior

Europe

(UK) BOE’s Broadbent: economy is entering a menopausal phase; BOE will not spoon feed markets with a meeting by meeting rate hike – press interview
Paddy Power Betfair [PPB.UK]: Reportedly nearing deal to acquire FanDuel – Legal Sports Report

Levels as of 02:00ET

Hang Seng +0.1%; Shanghai Composite -0.1%; Kospi +0.1%
Equity Futures: S&P500 +0.1%; Nasdaq100 flat, Dax flat; FTSE100 +0.2%
EUR 1.1815-1.1844 ; JPY 110.19-110.40 ; AUD 0.7447-0.7479 ;NZD 0.6851-0.6880
Jun Gold +0.2% at $1,293/oz; Jun Crude Oil -0.3% at $71.08/brl; Jul Copper +0.1% at $3.061/lb