Asia opened generally lower after declines in US equities

Asia Market Update: Asia opened generally lower after declines in US equities, modest losses have been seen (ex-Japan); 10-yr UST yield pares some of rise; Musk drops Bitcoin.

General trend

- US equity FUTs have modest rise in Asia after lower open, tracking global concerns over recent inflation spikes.

- Nikkei extended declines after lower open, the index is down for the 3rd straight session [Softbank Group drops after reporting earnings].

- Japan companies due to report earnings include Rakuten, Nikon, Suzuki Motor, Isuzu Motor, McDonald’s Japan, Mitsubishi Estate, Orix, Asics, INPEX, Square Enix, Aozora Bank, Trend Micro.

- S&P ASX 200 declined after the flat open [Financials index drops amid ex-dividends; Consumer Staples supported by figures from GrainCorp and Treasury Wine].

- Hang Seng opened lower by ~1%, currently trades near the opening level; HK TECH index drops over 2% ahead of upcoming earnings [companies due to report include Alibaba, SMIC and Bilibili].

- US Colonial Pipeline starts process to come back online (expected to take a couple of days) as locations in the Southern east coast report gas stations with no fuel; Gasoline FUTs drop on the news.

- Shanghai Composite declined by less than 1% during morning session.

- Taiwan equities consolidate after volatility seen on Wed.

- Asian 10 yr gov’t bond yields move modestly higher after US CPI.

- China Iron Ore FUTS drop over 6%.

- Musk’s Bitcoin comments weigh on cryptocurrencies and drive BTC below $50K.

- China PBOC generally conducts MLF operations around the 15th of the month.

- Companies due to report during the NY morning include Alibaba, Casper, Canada Goose, XPeng, Yeti.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened 0.0%.

- GNC.AU Reports H1 (A$) underlying Net 50.5M v 55.0M y/y; underlying EBITDA 140M v 110M y/y; Rev 2.6B v 2.0B y/y; Raises FY21.

- (AU) Fitch comments on Australia budget: Robust fiscal performance reduces sovereign rating risk.

Japan

- Nikkei 225 opened -0.8%.

- (JP) Bank of Japan (BPJ) Gov Kuroda: Important to maintain steps to respond to pandemic impact on economy; Unfortunate it is taking time to hit 2% CPI.

- (JP) Japan Mar Current Account: ¥2.650T v ¥2.765Te; Adj Current Account: ¥1.696T v ¥1.868Te.

- (JP) Japan Investors Net Buying of Foreign Bonds: -¥73.6B v +¥132.8B prior; Foreign Net Buying of Japan Stocks: ¥144.8B v ¥492.2B prior.

- (JP) Bank of Japan (BOJ) Senior Official: Scetors particularly hit hard by pandemic are facing funding strains; BOJ will purchase ETs as needed under guidance of conducting huge purchases when market has large fluctuations.

- (JP) Japan MoF sells ¥900B v ¥900B indicated in 0.7% 30-year JGBs, avg yield 0.6450% v 0.6880% prior, bid to cover: 3.12x v 3.11x prior.

- 9984.JP Reports FY20/21 Net ¥4.99T v -¥961.6B y/y; Pretax ¥5.67T v ¥50.0B y/y; Rev ¥5.63T v ¥5.24T y/y (yesterday after the close).

Korea

- Kospi opened -0.5%.

- (KR) South Korea Think Tank, KDI: Loose monetary policy should continue for now; raises 2021 GDP outlook to 3.8% (prior 3.1%).

- (KR) South Korea President Moon and US President Biden summit on May 21st to focus on COVID vaccine cooperation, North Korea, economic cooperation and bilateral alliance issues - Yonhap.

China/Hong Kong

- Hang Seng opened -1.1%; Shanghai Composite opened -0.9%.

- (CN) China PBOC sets Yuan reference rate: 6.4612 v 6.4258 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net inject CNY0B v Net inject CNY10B prior.

- (CN) China Govt and Ministry of Education expected to announce tighter rules on private tutoring companies by the end of June – press.

- (CN) China said to be considering whether to replace Vice Premier Liu He as its top economic envoy with Washington - press.

Yesterday after the close:

- (CN) CHINA APR NEW YUAN LOANS (CNY): 1.47T V 1.600TE.

- (CN) CHINA APR M2 MONEY SUPPLY Y/Y: 8.1% V 9.2%E.

- (CN) CHINA APR AGGREGATE FINANCIAL (CNY): 1.85T V 2.290TE.

Other

- (TW) Taiwan FSC: Will stabilize market if stocks drop 'irrationally'.

- (TW) Taiwan now sees smaller chance of raising COVID alert - local press.

North America

- (US) ENERGY SEC GRANHOLM: COLONIAL TO RESTART PIPELINE TODAY AT 17:00ET (reminder will take several days to come fully online).

- TSLA CEO: Suspending purchases using bitcoin, concerned about Bitcoin's environmental impact.

- (US) APR CPI M/M: 0.8% V 0.2%E; Y/Y: 4.2% V 3.6%E (highest increase since 2008).

Europe

- (UK) BOE's Haldane (chief economist): By the end of 2021 CPI is likely to be above 2% target, expect double digit growth a year from now - UK press.

- (UK) Apr RICS House Price Balance: 75% v 62%e (highest level since the 1970s).

Levels as of 01:15ET

- Hang Seng -1.1%; Shanghai Composite -0.9%; Kospi -1.0%; Nikkei225 -2.0%; ASX 200 -0.7%.

- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.1%; FTSE100 -0.5%.

- EUR 1.2089-1.2070; JPY 109.78-109.48; AUD 0.7746-0.7717; NZD 0.7179-0.7155.

- Commodity Futures: Gold -0.3% at $1,818/oz; Crude Oil -1.1% at $65.38/brl; Copper +0.3% at $4.73/lb.