Asia Market Update: NZ yields rise on higher RBNZ rate path, NZD gains; Equities trade generally higher; US FOMC Minutes due later today.
General trend
– Shanghai Composite trades modestly higher after prior drop.
– Hang Seng rises after the flat open.
– Japanese equities rebound.
– S&P ASX 200 extended rise.
– US equity FUTs remain modestly higher during Asia.
– Bank of Korea (BOK) rate decision is due on Thurs (May 26th).
– (US) Sec of State Blinken to outline US policy toward China on Thurs at 14:00 GMT (10:00ET).
– Companies due to report during the NY morning include Bank of Montreal, Bank of Nova Scotia, Dick’s Sporting Goods, Express.
Headlines/Economic data
Australia/New Zealand
– ASX 200 opened +0.1%.
– (AU) Australia incoming Treasurer Chalmers is expected to meet RBA Gov Lowe later today; Chalmers said he has had some discussions about the review into the Reserve Bank and how monetary policy is conducted – Australian press.
– (AU) Australia Q1 construction work done Q/Q: -0.9% V +1.0%E.
– (NZ) Reserve Bank of New Zealand Gov Orr: Estimates for neutral rates 2.5-3.0%, need rates above 3.0%; Labor shortages largest constraint on production – post rate decision press conference.
– (NZ) Reserve Bank of New Zealand (RBNZ) raises official cash rate (OCR) by 50BPS to 2.00%; As expected; raises the rate path outlook.
– (NZ) ASB Bank: Expects RBNZ to hike OCR by 50bps in July and Aug; Peak rate at 3.5%.
– (AU) Reserve Bank of Australia (RBA) Assist Gov Ellis (chief economist): Suggestions rents could be on rise after being subdued; All signs residential construction at full capacity.
– (AU) Australia sells A$300M v A$300M indicated in 1.75% Jun 2051 bonds; Avg Yield: 3.5857%; bid-to-cover: 2.77x.
– (NZ) Reserve Bank of New Zealand (RBNZ) Chief Economist Conway: Economy capable of coping with interest rate increase.
Japan
– Nikkei 225 opened -0.1%.
– (JP) Japan Cabinet Office (Govt) May Economic Report: Maintains overall economic assessment; Raises assessment on Employment and housing.
– Toshiba [6502.JP] Said that JIC [Japan fund] is exploring an offer for company – press.
– (JP) Japan Chief Cabinet Sec Matsuno: North Korea may conduct additional provocations including nuclear testing; We have serious concerns on the situation in Xinjiang.
– (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) Bank of Japan (BOJ) announcement related to daily bond buying operation: Unchanged.
Korea
– Kospi opened +0.6%.
– (KR) South Korea military: North Korea has fired (second) another missile.
China/Hong Kong
– Hang Seng opened flat; Shanghai Composite opened %.
– (CN) Shanghai Sec News: Small and Medium sized banks have been told to limit the scale of their asset management businesses during 2022.
– (CN) Top state newspapers in China said to comment on President Xi’s priority on economic growth.
– (CN) Shanghai reports 387 new COVID cases on May 24th, finds 1 new virus case outside of quarantine; Beijing reports 47 new COVID cases.
– (CN) China PBOC sets Yuan reference rate: 6.6550 v 6.6566 prior.
– (CN) China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos v CNY10B prior; Net CNY0B v Net CNY0B prior.
Other
– (SG) Singapore Q1 FINAL GDP Q/Q: 0.7% V 0.8%E; Y/Y: 3.7% V 3.7%E.
– (SG) Monetary Authority of Singapore (MAS): Prior monetary policy moves to slow inflation, current policy stance remains appropriate.
North America
– (US) US President Biden approval rating declines to 36% (record low) – press poll.
– (US) Senator Manchin (D-WV): Would do anything I can to move forward common sense gun legislation, will not eliminate the filibuster.
– (MX) Mexico Central Bank (BANXICO) Deputy Gov Heath: Early May inflation is ‘marginally’ good news; Not clear if downward CPI trend has started as of yet.
Europe
– (EU) ECB’s Kazaks (Latvia, hawk): ECB should not rule out half point rate increases.
– (EU) EU Commission President Von der Leyen: Confirms do not expect to see a Russia oil ban decision reached at the EU summit on May 30-31st.
– (EU) EU’s Dombrovskis: Reiterates that growth in region is resilient but will be slower.
Levels as of 01:20 ET
– Nikkei 225, flat, ASX 200 +0.7% , Hang Seng +0.4%; Shanghai Composite +0.9% ; Kospi +0.8%.
– Equity S&P500 Futures: +0.6%; Nasdaq100 +0.9%, Dax +1%; FTSE100 +0.9%.
– EUR 1.0739-1.0703 ; JPY 127.22-126.65 ; AUD 0.7120-0.7081 ;NZD 0.6515-0.6419.
– Gold -0.3% at $1,860/oz; Crude Oil +1.2% at $111.11/brl; Copper -0.4% at $4.2960/lb.
