Tepid day in Asian equities as CN authorities talk up econ support

Asia Market Update: Tepid day in Asian equities as CN authorities talk up econ support; Attention slowly shifts from trade to earnings as indices regain Apr 1st levels.

General trend

- Japan’s Nikkei reached back to 36K for the first time since April 1st (pre-US tariffs) but failed to hold its highs in a tepid day for Asian stocks.

- In trade developments from late Friday USTR said to have prepared a framework for staggered reciprocal trade negotiations aimed at streamlining talks with 18 partners prior to the US’ 90-day deadline (July 8th) without specifics on what countries are listed. Trump Admin reportedly keen to release some advance trade outlines this week of deals in the works. Separately, some confusion with US Pres Trump saying he had a meeting with China on Friday US time, projecting progress, while China later denied having “any talks” on tariffs and then Monday morning Treas Sec Bessent said he didn’t know if Trump had spoken with Xi. New US SEC Chair also threatened delisting of Chinese companies that don’t follow the law, while Shein reported to have raised US prices on some items by up to 377%.

- However, signs late last week that market attention was pivoting from trade to corporate earnings, with earnings beat by a significant number of companies.

- Today a string of China policy makers spoke of boosting the domestic economy, perhaps belying concerns about the state of the China economy under tariffs. MOFCOM will further improve the second-hand car market, while the NDRC said will improve its policy toolkit and prepare contingency plans as well as ensure stable supply of food and energy even if US imports stop, while the PBOC reiterated it will cut RRR, interest rates at the appropriate time.

- Reportedly China is pushing forward a major consolidation plan to restructure its fragmented semiconductor equipment sector, cutting more than 200 domestic firms down to just 10 core players.

- In geopolitical developments over the weekend Trump and Zelenskiy appeared to come closer together in a meeting at the Vatican, while Trump directly criticized Russia’s Putin for continuing shooting missiles into civilian areas and threatened banking or secondary sanctions against Russia.

- China Industrial profits for the month of March surged 11%, no doubt helped by a last rush of orders prior to Trump tariffs on April 2nd, helping to push the YTD figures up to a positive 0.8%.

- Rumors that China’s Deepseek next R2 AI model is near release, doubling the parameters of R1.

- Concerns from ratings agencies that the election promises being made in Australia may threaten the nation's AAA credit rating.

- Meanwhile Iran/US nuclear talks will continue on May 3rd.

- US equity FUTs -0.5% to -0.6% during Asian trading.

Looking ahead (Asian-weighted news, using Asian time zone)

- Tue Apr 29th (Tue night US Mar JOLTS).

- Wed Apr 30th JP Mar Retail Sales & Industrial Production, NZ Apr Biz Confidence, AU Q1 CPI, CN NBS & Caixin Apr Mfg PMIs, (Wed eve EU Q1 GDP, DE Apr CPI, US Q1 GDP, US Mar Core PCE)

- Thu May 1st KR Apr Exports, AU Mar Trade Balance, JP BOJ Rate Decision, JP Apr Consumer Confidence (Thu night US Apr ISM Mfg PMI).

- Fri May 2nd KR Apr CPI, KR Apr PMI, AU Q1 PPI, AU Mar Retail Sales, (Thu eve EU Apr CPI, US Non-Farm Payrolls).

Holidays in Asia this week

- Tue Apr 29th Japan.

- Wed Apr 30th Vietnam.

- Thu May 1st China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam.

- Fri May 2nd China.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 7,973.

- Australia Treasurer Chalmers: If the ratings agencies are worried about spending, we have to demonstrate we have found the room for our election commitments.

- New Zealand RBNZ: Sold net NZ$259M in Mar.

China/Hong Kong

- Hang Seng opens +0.4% at 22,072; Shanghai Composite opens -0.1% at 3,292.

- China Commerce Ministry (MOFCOM) Vice Min Sheng: China will further improve the second-hand car market - financial press.

- China NDRC Vice Head Zhao: To closely monitor domestic and external changes, improve policy toolkit; to fully prepare contingency plans.

- PBOC Dep Gov Zou: Investor concerns about USD asset risks are 'rising'; USD/CNY has stabilized at about 7.30; Reiterates will cut RRR, interest rates at the appropriate time (inline).

- Reportedly China is pushing forward a major consolidation plan to restructure its fragmented semiconductor equipment sector, cutting more than 200 domestic firms down to just 10 core players - DigiTimes.

- China Mar YTD Industrial Profits Y/Y: +0.8% v -0.3% prior [weekend update].

- DEEPSEEK.IPO Traders circulating unverified social media chatters and Chinese press report that DeepSeek's next R2 AI model is nearing release; R2 set to feature double the parameters of R1 and fully trained on Huawei’s Ascend 910B chip clusters.

- Huawei reportedly develops new AI chip, called the Ascend 910D, seeking to match Nvidia; Huawei has approached some Chinese tech companies about testing the technical feasibility of the new chip with the first batch of samples of the processor as early as late May - WSJ.

- SHEIN.IPO Said to raise US prices on some items by up to 377%; Price increases began appearing Friday - press.

- China Pres Xi: China will use various policies to support development; Urges healthy and orderly development of AI [weekend update].

- Pershing Square CEO Bill Ackman says US could choose to unilaterally pause China tariffs to better facilitate US companies transitioning supply chains out of China; Believes China and the US are incentivized to take the tariffs down to more reasonable levels of 10-20% as quickly as possible - 'X' post [weekend update].

- US Pres Trump: Reiterates won't drop China tariffs unless they give us something; Opening up China would be a big win; Reiterates that another tariff pause is unlikely - comments to media en route to Rome.

-US SEC Chair Atkins: Regarding potential delisting of Chinese companies: Agency will take action if companies don't abide by laws [weekend update].

- China PBOC 1-year Medium-Term Lending facility (MLF) setting: Leaves rate unchanged at 2.00%; conducts CNY600B; Net injects CNY500B [weekend update].

- China PBOC sets Yuan reference rate: 7.2043 v 7.2066 prior (strongest since Apr 8th).

- China PBOC Open Market Operation (OMO): Injects CNY279B in 7-day reverse repos; Net injects CNY103B v drains CNY91B prior.

Japan

- Nikkei 225 opens +0.7% at 35,946

- Japan Top FX Diplomat Mimura: Reiterates US side did Not say "strong Yen, weak Dollar" is desirable; Reports of US Treas Sec Bessent calling for strong Yen 'completely untrue' - financial press.

- US to propose dual-use shipbuilding to Japan, to propose to Japan to employ dual-use shipbuilding [building commercial ships with military applications] - Nikkei [update].

- (US) Japan considering importing additional US corn in tariff discussions – Nikkei [late Friday update].

Korea

- Kospi opens +0.2% at 2,551.

- South Korea Presidential candidate Lee Jae-Myung [opposition party]: Pledges production tax credit of up to 10% for chips manufactured and sold domestically - financial press.

- South Korea Fin Min Choi: To be 'flexible' in extra budget discussion in the National Assembly.

- North Korea confirms for first time its troops have deployed to Russia; Will continue to 'fully support' Russia - financial press.

- USTR Greer: Had productive meeting with South Korean counterpart; Both sides agreed to engage in technical talks next week [Confirms Treasury Sec Bessent statement from April 24th] [late Friday update].

Other Asia

- Singapore Mar Unemployment Rate: 2.1% v 1.9% prior.

- Thailand MOF: New Thai funds may cost ~THB40B of tax incentives; Releases YTD revenues and expenditures - financial press.

North America

- Mexico Agriculture Sec Berdegue: Mexico refuses to 'subordinate' to US cattle import threats (over concerns about the screwworm pest)- financial press.

- Pres Trump: This is a crucial week to work on “THE ONE, BIG, BEAUTIFUL BILL,” which will contain Massive Tax Cuts, Strong Border Security Measures, Major Military Advancements, Dramatic Deregulation, Powerful Spending Reforms, and more.

- US Pres Trump: When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated.

- US Treasury Sec Bessent: I don't know if Pres Trump has spoken with China Pres Xi; Asked if talks are happening, Bessent said "we have a process in place"; The actual papering of a trade deal can take months, but an agreement in principle, and the good behavior can keep the tariffs from ratcheting back to the maximum level - ABC News interview.

- Fox's Gasparino: Trump Administration would like to roll out trade deals this week, at least the outlines that have been agreed upon, per sources close to the matter.

- (US) USTR's office has prepared a framework for staggered reciprocal trade negotiations aimed at streamlining talks with 18 partners on a rolling basis over the next 2 months until the US' July 8th deadline – WSJ [weekend update].

- (US) Pres Trump: we'll be reasonable on tariffs; Think markets adjusting to tariff policy; Situation with Iran is going well, mulls potential for interim deal with Iran - comments to media en route to Rome.

- (US) Fed Financial Stability Report: Funding markets were resilient through early April (conditions through 4/11) [weekend update].

- *(US) Apr final university of Michigan confidence: 52.2 V 50.5E [late Friday update].

Europe

- Vestas Wind Systems (VWS.DK) Chair: 'Big discrepancy' between wind industry's "ambitious climate targets" and reality on the ground - FT.

- (RU) US Pres Trump: Wants Putin to stop shooting and reach a deal; Zelenskiy seems calmer now and wants to make a deal - financial press gaggle with reporters.

- (IR) Foreign Minister Araqchi: Next round of nuclear talks with US could occur next Saturday (5/3), the venue will be decided by Oman; Both sides are showing seriousness and determination [weekend update].

- (UR) Trump and Zelenskiy met one on one for 15 minutes at the Vatican [weekend update].

- (RU) Trump: there was no reason for Putin to be shooting missiles into civilian areas, cities and towns, over the last few days. It makes me think that maybe he doesn’t want to stop the war, he’s just tapping me along, and has to be dealt with differently, through “Banking” or “Secondary Sanctions?” Too many people are dying!!! [weekend update].

- (EU) ECB governors reportedly see an increasing likelihood of a rate cut in June – press [weekend update].

Levels as of 01:20 ET

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

- Equity S&P500 Futures -0.5%; Nasdaq100 -0.6%; DAX +0.2%; FTSE100 -0.4%.

- EUR 113.40-1.1379; JPY 143.30-143.88; AUD 0.6373-0.6407; NZD 0.59343-0.5968.

- Gold +0.3% at $3,308/oz; Crude Oil +0.5% $63.34/bbl; Copper -0.5% at $4.8698/lb.