Focus on US Apr CPI and Retail Sales tonight
|Asia market update: CN govt may buy unsold homes; US tariffs on CN arrive as expected; AU to double debt issuance next yr; Focus on US Apr CPI & Retail Sales tonight.
General trend
- Unconfirmed reports that the Chinese govt is considering purchasing unsold Chinese homes in an attempt to ease the supply glut; Copper FUTs broke over $5.00/lb and sent the Aussie dollar to a two-month high on the news. China property indices +2.5% (HK-listed mainland property indices closed for holiday).
- The Biden Admin tariffs on China at last arrived in concrete form, although the ~$18B of imports directly affected is only about 4% of the $427B total US imports from China in 2023.
- Taiwan stocks led Asia, +1.3%, with Foxconn +3.8% after yesterday’s earnings and guidance.
- Sony up nearly 10% on share buyback and stock split.
- Australian private sector annual wage growth fell for the first time since September quarter of 2020, overall AU Q1 wage price index was slightly lower than expected.
- Australian debt agency nearly doubles its treasury bond issuance for FY24/25 (to A$90B) after last night’s Australia’s 2024 budget saw larger than expected deficits in FY24/25 and FY25/26 – as opposed to last night’s second consecutive budget surplus for the current year (FY23/24). AU 3yr yields +1bps.
- China 1-year MLF rate was kept at 2.50% by the PBOC, as expected.
- Quiet session for Yen, JGBs and Japan officials, so far.
- US equity FUTs +0.1% during Asian trading.
Looking ahead (Asian time zone)
- Wed May 15th (Wed night US Apr CPI & Retail Sales).
- Thu May 16th JP Q1 prelim GDP, AU Apr Employment.
- Fri May 17th NZ Q1 PPI, CN April ‘data dump’; Industrial Prod, Retail Sales, Fixed Assets, etc., (Fri eve CN Apr FDI YTD.
Holidays in Asia this week
- Wed May 15th Hong Kong, South Korea.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.3% at 7,747.
- Australia Q1 Wage Price Index Q/Q: 0.8% v 0.9%e; Y/Y: 4.1% v 4.2%e.
- Australia sells A$800M vs. A$800M indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.3516% v 4.4818% prior; bid-to-cover: 2.92x v 3.27x prior.
- Anglo-American: Australia Mining and Energy Union: Job security is top priority in Anglo coal sell-off of five coal mines in Australia.
- Australia Fin Min Gallagher: Aiming to put downward pressure on CPI over next 12 months - post-budget TV interview.
- Australia debt management agency (AOFM) sees FY24-25 Treasury bond issuance ~A$90B.
- Australia treasury budget announcement; Sees 2023/2024 budget surplus at A$9.3B (as speculated); Sees FY24/25 budget deficit at A$28.3B v A$13.9Be, FY25/26 budget deficit at A$42.8B v A$25.0Be [overnight update].
China/Hong Kong
- Hang Seng closed for holiday; Shanghai Composite opens -0.1% at 3,141.
- Chinese govt said to consider purchasing unsold homes in attempt to ease the supply glut - press.
- China PBOC conducts CNY IN 1-year medium-term lending facility (MLF) monthly setting at 2.50% VS. 2.50% PRIOR.
- China says it is willing to enhance communications with US on AI - Chinese press.
- Yuan to stay stable on China's economic recovery - China Securities Journal.
- US Trade Rep Tai: Will provide a specific list on timing of tariffs and exclusions next week.
- (US) Pres Biden: China heavily subsidizes products that are dumped on foreign markets; We have seen damage here in America; We want fair competition with China, not conflict.
- (US) White house releases details on tariffs on $18b of Chinese imports ahead of Biden announcement; confirms tariff rate on Chinese EVS to increase from 25% to 100% this year; tariff on semiconductors to increase from 25% to 50% by 2025 [overnight update].
- (RU) Russian govt spokesperson Peskov: Confirms Russia Pres Putin to visit China on May 16-17th; Putin and Xi to sign joint statement and agreements [overnight update].
- BABA Reports Q1 (CNY) 10.14 v 10.71 y/y, Rev 221.9B v 219.8Be; Approves $4.0B dividend for FY24 ($1.00/ADS regular annual dividend and special $0.66/ADS dividend); Prepares for primary listing in Hong Kong by end-Aug 2024 [overnight update].
- Tencent (700.HK) Reports Q1 (CNY) adj Net 50.3B v 43.0Be, Rev 159.5B (+6% y/y) v 158.8Be; On track to repurchase over HK$100B of shares in 2024 [overnight update].
- China PBOC sets Yuan reference rate: 7.1049 v 7.1053 prior.
- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.
Japan
- Nikkei 225 opens +0.5% at 38,533.
- Japan Apr Preliminary Machine Tool Orders Y/Y: -11.6% v -3.8% prior [overnight update].
South Korea
- Kospi closed for holiday.
Other Asia
- Thailand Fin Min: Will meet with Central Bank chief on Thursday (tomorrow) - press.
- Foxconn (2317.TW) Reports Q1 (NT$) Net 22.0B v 29.3Be, Op 36.8B v 35.2Be, Rev 1.32T v 1.37Te; Raises Q2 Rev to rise significantly y/y (prior growth y/y) [overnight update].
North America
- US Fed's Schmid (non-voter; hawk): There are signs that inflation is easing but there is more work to do; Rates could remain high for some time - Prepared remarks at Agricultural Summit, Omaha, Nebraska.
- (US) Treasury Sec Yellen: New China tariffs will not cause meaningful US price hikes - TV interview.
- (AR) Argentina Central Bank cuts benchmark rate from 50% to 40%; Central Bank to intervene at its discretion in secondary bond market.
- (US) Fed's Mester (voter): Fed is in a really good place to study the economy and review a range of risks before setting the rate path; Not eager to consider hikes because of the potential for higher short-term rates to create new instability in the financial system - WSJ interview.
- (US) Apr NFIB Small Business Optimism Index: 89.7 v 88.2e.
- (US) Apr PPI final demand M/M: 0.5% V 0.3%E; Y/Y: 2.2% V 2.2%E (highest annual pace since Sept 2023); PPI (ex-food/energy) M/M: 0.5% v 0.2%e; Y/Y: 2.4% v 2.3%e.
- (US) Fed Chair Powell: US economy has been performing well; Today's PPI reading was quite mixed rather than hot; Repeats do not think the next move will be a hike.
- (US) Pres Biden: China heavily subsidizes products that are dumped on foreign markets; We have seen damage here in America; We want fair competition with China, not conflict.
Europe
- (EU) ECB’s Wunsch (hawk, Netherlands): First 50 bps of rate cuts is a no-brainer - press interview.
- (EU) ECB's Knot (Netherlands): Signs of Eurozone recovery are clearly there and is expected to accelerate in second half of 2024.
- (SE) Sweden Central Bank (Riksbank) Breman: External risk factors for inflation remain; Not overly worried about crown weakness driving inflation.
- (DE) Germany may zew current situation survey: -72.3 V -75.9E; expectations survey: 47.1 V 46.4E.
Levels as of 01:20 ET
- Nikkei 225 +0.2%; ASX 200 +0.4%; Hang Seng closed; Shanghai Composite -0.3%; Kospi closed.
- Equity S&P500 Futures +0.1%; Nasdaq100 flat; Dax flat; FTSE100 +0.2%.
- EUR 1.0813-1.0828; JPY 156.18-156.56; AUD 0.6622-0.6652; NZD 0.6029-0.6065.
- Gold +0.1% at $2,362/oz; Crude Oil +0.7% at $78.57brl; Copper +2.2% at $5.0125/lb.
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