Equities trade generally higher, Shanghai extends rebound

Asia Market Update: Equities trade generally higher, Shanghai extends rebound; Toyota guided profits lower y/y; CN inflation data was above ests; UST yields trade slightly lower ahead of upcoming US CPI data.

General trend

- China reported drop in daily COVID cases.

- (US) President Biden: Confirmed we're discussing whether to drop some Trump tariffs on China; No decision has been made yet; We are looking at what would have the most positive impact.

- Crude Oil FUTs rise after prior drop.

- USD index trades slightly lower ahead of the inflation figures.

- Australia May Westpac Consumer Confidence: Lowest since Aug 2020.

- Shanghai Composite extended gains during the morning session.

- Hang Seng has also continued to improve.

- Nikkei 225 has moved higher after the lower open.

- Japanese cos. due to report earnings include Panasonic, Bridgestone, Takeda, Sharp, Suzuki Motor, Fujifilm, Shionogi, Inpex, Kobe Steel, SofBank Corp.

- US equity FUTs reversed declines.

- S&P ASX 200 has pared decline; Commonwealth Bank (CBA) to issue quarterly trading update on Thurs..

- BOJ to release the Summary of Opinions from Apr policy meeting on Thurs. (May 12th).

- NZ Q2 Inflation Expectation Survey due on Thurs.

- Companies due to report during the NY morning include Krispy Kreme, Perrigo, Sierra Wireless, Wendy’s, Wolverine World Wide.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened -0.0%.

- (AU) Australia May Westpac Consumer Confidence: 90.4 v 95.8 prior; M/M -5.6% v -0.9% prior (Lowest since Aug 2020).

- (NZ) New Zealand said to be planning to bring forward full border reopening to July 31st - NZ press.

- (NZ) New Zealand said to be planning to bring forward full border reopening from October to July 31st - NZ press.

- (AU) Australia sells A$400M v A$400M indicated in 1.75% Jun 2051 bonds; Avg Yield: 3.8326%; bid-to-cover 2.08x.

Japan

- Nikkei 225 opened -0.5%.

- 7203.JP Reports FY21/22 Net ¥2.85T v ¥2.25T y/y, Op ¥3.00T v ¥2.20T y/y, Rev ¥31.38T v ¥27.21T y/y; Announces ¥200B share buyback.

- (JP) Japan Apr FX Reserves $1.32T v $1.36T prior.

- (JP) NYT comments on the weak Yen; says the decline in the currency has unnerved certain businesses in Japan.

- 8309.JP Said to increase avg wages by ~4.5% - Press.

- (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 population falls by a record 664K in 2021 - Japan press.

- (JP) Japan Chief Cabinet Sec Matsuno: Will support Japanese companies in regards to China zero covid policies.

- 9984.JP Vision Fund may have lost $25B in its holdings of public shares in FY21/22 - press.

- 7211.JP Reports FY21/22 Net +¥74.0B v -¥312.3B y/y, Op +¥87.3B v -¥95.3B y/y, Rev ¥2.04T v ¥1.46T y/y (after the close yesterday).

- 7974.JP Reports FY21/22 Net ¥477.6B v ¥480.4B y/y, Op ¥592.7B v ¥640.6B y/y, Rev ¥1.7T v ¥1.8T y/y; To conduct 10:1 stock split on Oct 1st; Announces ¥56.4B share buyback (after the close yesterday).

Korea

- Kospi opened -0.4%.

- (KR) South Korea Fin Min Choo: To submit extra budget plan to Parliament on Friday (May 13th).

- (KR) South Korea confirms KRW33T extra budget without bond issuance.

- (KR) South Korea Apr Unemployment Rate: 2.7% v 2.8%e.

- (KR) South Korea May 1-10 Exports Y/Y: 28.7% v 3.0% prior; Imports Y/Y: 34.7% v 12.8% prior.

- (KR) South Korea President Yoon: Domestic prices are the biggest concern; Need to think of ways to contain inflation – Yonhap.

- (KR) South Korea new defense Min Lee calls for immediate stern response if North Korea provokes - Yonhap.

China/Hong Kong

- Hang Seng opened -0.6%; Shanghai Composite opened 0.0%.

- (CN) China APR CPI M/M: 0.4% V 0.2%E; Y/Y: 2.1% V 1.8%E (Highest since Nov 2021); PPI Y/Y: 8.0% v 7.8%e.

- (CN) Shanghai Sec News: China may cut its RRR and interest rates during Q2 - Article from former SAFE official.

- 002594.CN Reportedly curbed production at one of its biggest plants in Changsha after authorities opened an investigation into claims that pollution from the factory is harming local residents – FT.

- (CN) China PBOC sets Yuan reference rate: 6.7290 v 6.7134 prior.

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

- (CN) China Foreign Min Wang to arrive in Solomon Islands to sign security agreement – press.

- (CN) Shanghai Local Govt: In 8 districts in the city, there is basically no coronavirus spread.

- (CN) Economic Daily: China relevant departments must promptly make differentiated financial regulation rules to satisfy the financing needs of various industries during the pandemic, as traditional risk control standards and regulatory requirements can hardly keep up.

- (CN) China Apr Passenger Vehicle sales 1.06M units, -35.7% y/y, -34.0% m/m (biggest drop in 2 years); Tesla exported 0 (zero) China-made car during April – PCA (yesterday after the close).

Other

- (TW) US Cruiser has conducted a transit through the Taiwan Straight on May 10th (Tuesday).

- (TW) According to US intelligence, China wants to take Taiwan economically but is preparing militarily - press.

North America

- (US) Fed's Bostic (non-voter, hawk): Reiterates expects 2.6% GDP Growth this year, there is strength in the economy, demand is strong; Policy must be robust observant and adaptable.

Europe

- (US) President Biden Meeting with Italy PM Draghi: Discussed steps on food security and the energy markets - White House issues readout.

Levels as of 00:15ET

- Hang Seng +1.6%; Shanghai Composite +1.8%; Kospi -0.1%; Nikkei225 +0.3%; ASX 200 -0.1%.

- Equity Futures: S&P500 +0.4%; Nasdaq100 +0.8%, Dax +0.5%; FTSE100 +0.5%.

- EUR 1.0544-1.0526; JPY 130.49-130.24; AUD 0.6965-0.6929; NZD 0.6312-0.6283.

- Commodity Futures: Gold -0.2% at $1,837/oz; Crude Oil +2.1% at $101.81/brl; Copper +1.2% at $4.21/lb.