When will the Fed pause monetary tightening?

Asia Market Update: USD extends decline amid US holiday; China reopening plans give a pop to the region; When will the Fed pause monetary tightening?; Equities track Friday’s rally on Wall St.; CN official PMI data due tomorrow, German CPI in focus

General trend

- Shanghai unveils policies to support domestic economy: Unreasonable curbs on businesses to be removed from Jun 1st (Wed).

- Beijing reopened parts of its public transportation, along with certain malls.

- NZ yields continue to rise; Reserve Bank of New Zealand (RBNZ) Chief Economist Conway said RBNZ did signal 50bps rate hikes to come; Did not seriously consider a 75bps rate hike.

- Reserve Bank of New Zealand (RBNZ) Dep Gov Hawkesby to issue presentation on monetary policy on May 31st (Tues).

- Bank of Japan (BOJ) Gov Kuroda: FX market is regaining stability.

- Month end flows in focus.

- Equity markets have generally extended gains.

- Nikkei 225 rose by 2% during the morning session.

- Shanghai Composite has traded modestly higher.

- HK TECH index extends rise amid recent earnings, Nasdaq gains.

- Resources and Consumer indices outperform in Australia.

- US equity FUTs extend rise.

- (US) President Biden to meet with Fed Chair Powell on May 31 (Tues).

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened +0.3%.

- AGL.AU Withdraws demerger proposal (confirms do not think it will get enough support in shareholder vote); Managing Dir/CEO to resign; Chairman Peter Botten to also resign from board; to conduct strategic review.

- (NZ) Reserve Bank of New Zealand (RBNZ) Chief Economist Conway: Confident can engineer a soft landing, strong labor market will help to weather the storm, concerning that inflation expectations have risen so much, RBNZ did signal 50bps rate hikes to come.

- BUB.AU To provide at least 1.25M cans of its infant formula under FDA's current efforts to increase supply in the US.

Japan

- Nikkei 225 opened +1.2%.

- 9202.JP CEO: Demand for domestic flights is recovering, positive expectations for weaker yen boosting tourism; Current oil prices aren't impacting sustainable fuel.

- (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates will continue with powerful monetary easing to help economy recover from covid - speaking to parliament.

- (JP) Japan PM Kishida: Price increases cause by global crude oil, raw materials price increase stemming from Russia's invasion of Ukraine.

Korea

- Kospi opened +0.9%.

- (KR) South Korea National Assembly passed KRW62.0T extra budget bill to support small merchants affected by the pandemic today.

- (KR) South Korea Transport Ministry to provide more subsidies to cargo truck drivers and others using diesel vehicles as part of efforts to ease their burden from rising fuel costs.

- (KR) Bank of Korea (BOK) sells KRW1.0T v KRW1.0T indicated in 3-month Monetary Stabilization Bonds (MSBs) at 1.730%.

- (KR) South Korea President Yoon: Reiterates price stabilization is the most important task.

China/Hong Kong

- Hang Seng opened +1.1%; Shanghai Composite opened +0.4%.

- (CN) Shanghai unveils policies to support domestic economy; More tax cuts and reducing rents; To boost financial support to foreign trade firms; Vows measures to last till end-2022.

- (CN) Mortgage rate cuts to stabilize economic growth - Economic Daily.

- (CN) Speculation that there is some quiet unhappiness with China President Xi among leadership, but little evidence that he will face any challenge to winning his 3rd term later this year - press.

- (CN) China PBOC sets Yuan reference rate: 6.7048 v 6.7387 prior.

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

- (CN) China Foreign Minister Wang Yi to meet with officials from Pacific Island nations today.

- (CN) Beijing reopened parts of its public transportation, along with certain malls - financial press.

- (CN) China President Xi: China willing to work with Pacific Island nations to build a community with a shared future.

North America

- TSLA Reportedly production of Tesla’s Shanghai gigafactory has now recovered to the pre-lockdown level; Expected to be back to normal levels in June 2022 - press.

Europe

- (DE) Germany Econ Min Habeck: The unity of EU countries regarding sanctions against Russia is beginning to crumble.

- (RU) Russia advances in three directions in Eastern Ukraine and could encircle up to 10,000 Ukrainian troops, more than in Mariupol, but the defeat of Ukraine in the Donbas is not predetermined.

- (RU) Russia to pay debt 'similarly' to Rubles for gas - Russia press.

- TIT.IT CDP Equity, KKR, Macquarie, Open Fiber and TIM sign MOU for integration project between TIM and Open Fiber networks.

Levels as of 01:00ET

- Hang Seng +2.1%; Shanghai Composite +0.3%; Kospi +1.2%; Nikkei225 +2.2%; ASX 200 +1.2%.

- Equity Futures: S&P500 +0.5%; Nasdaq100 +1.0%, Dax +0.2%; FTSE100 +0.3%.

- EUR 1.0760-1.0726; JPY 127.35-126.86 ;AUD 0.7189-0.7151; NZD 0.6558-0.6524.

- Commodity Futures: Gold +0.4% at $1,859/oz; Crude Oil +0.9% at $116.08/brl; Copper +0.3% at $4.34/lb.