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Analysis

AU yields extend declines ahead of Tuesday’s RBA decision

Asia Market Update: Equities trade mixed amid US holiday; AU yields extend declines ahead of Tuesday’s RBA decision.

General trend

- Chinese equities traded mixed during morning trading.

- Nikkei 225 pared gain.

- Fast Retailing to report monthly sales after the market close.

- AU REITS outperform on lower bond yields.

- US equity FUTs decline.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened +0.1%.

- (AU) Australia May building approvals M/M: +9.9% V -2.0%E.

- (AU) Australia Jun Melbourne Institute Inflation M/M: 0.3% v +1.1% prior; Y/Y: 4.7% v 4.8% prior.

- (AU) Australia May HOME loans M/M: +1.7% V -2.5%E; investment lending M/M: +0.9% V -4.5% prior.

- (AU) Australia Jun ANZ Job Advertisements M/M: 1.4% v 1.0% prior.

Japan

- Nikkei 225 opened +0.6%.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Japan Jun Monetary Base Y/Y: 3.9% v 4.6% prior [matches the slowest pace since May 2020].

- (JP) Expected that Japan Financial Regulator FSA will require Limited Liability Companies (LLC) to register in the country - Nikkei.

- (JP) Expected that Japan ruling parties will retain a majority after July elections - Nikkei (in line).

Korea

- Kospi opened +0.2%.

- (KR) Bank of Korea sells KRW970B v KRW900B in 3-month Monetary Stabilization Bonds (MSB); Avg yield 1.970% v 1.720% prior.

- (KR) Bank of Korea (BOK): Shared understanding with Finance Ministry that adverse risks from rising interest rates on households and financial markets need to be closely monitored.

China/Hong Kong

- Hang Seng opened opened -0.8%; Shanghai Composite opened -0.2%.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY3B in 7-day reverse repos v CNY10B prior; Net drain CNY97B v Net drain CNY50B prior.

- (HK) Hong Kong Monetary Authority (HKMA): China and Hong Kong to expand currency swap agreement to CNY800B (prior CNY500B) [the agreement is a standing swap agreement].

- (HK) Hong Kong Securities Regulator and ChinaPBOC announce Swap Connect, launch date to be announced in due course.

- (CN) China PBOC sets Yuan reference rate: 6.7071 v 6.6863 prior.

- (CN) China PBOC to improve legal systems to deal with bond defaults - Chinese press.

- (CN) Anhui reports 287 local COVID cases for Sun (Jul 3rd).

- (HK) Macau adds 68 COVID cases to recent outbreak [total at 852 cases].

- (HK) Macau Jun Casino Rev (MOP) 2.48B v 3.34B prior; Y/Y -62.1% v -68.0% prior [Jul 1st].

- (HK) Global fund managers to be able to buy into 83 ETFs on the Shanghai and Shenzhen Exchanges [under the Stock Connect program], effective from Mon (Jul 4th).

North America

- (US) Health and Human Services Secretary Xavier Becerra: Will pursue options for Women's rights to abortion and will protect access to medications and will even pursue providing Women with transportation to states where abortion continues to be legal - NBC Interview.

Europe

- (RU) JP Morgan predicts oil could reach up to $380/bbl if Russia imposes maximum crude oil production cut of 5Mbbs/day.

- (EU) ECB to discuss blocking banks from multibillion-euro windfall amid higher rates [refers to the central bank's subsidized loan scheme] - FT.

Levels as of 01:20 ET

- Nikkei 225, +0.6%, ASX 200 +1.1% , Hang Seng -0.4%; Shanghai Composite +0.1% ; Kospi -1%.

- Equity S&P500 Futures: -0.7%; Nasdaq100 -0.8%, Dax -0.4%; FTSE100 -0.4%.

- EUR 1.0444-1.0418 ; JPY 135.33-134.78 ; AUD 0.6828-0.6792 ;NZD 0.6218-0.6193.

- Gold +0.7% at $1,814/oz; Crude Oil -0.1% at $108.32/brl; Copper -0.3% at $3.5985/lb.

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