Focus on individual stocks during quiet trading in Asia – JP yields push higher but Yen still weakens

Asia market update: Focus on individual stocks during quiet trading in Asia; JP yields push higher but Yen still weakens; CN state media comments on RRR cut; BABA, Sony & Foxconn results in focus; AU 2024 budget tonight + US PPI & Fed’s Powell.

General trend

- Aozora Bank rose +5% early in Tokyo trading after it was bailed out with more than ¥50B yen in a stock deal with Daiwa Securities announced after the close yesterday. Later Aozora gave back all gains to be down -1.5% on the day. Meanwhile, Daiwa Securities fell more than -8.0% in reaction to the surprise deal with the troubled bank.

- Gasoline retailer ENEOS shares rose 11% after announcing they would increase their previous stock buyback by 5X up to ¥250B, or nearly 23% of company shares.

- Japanese yields pushed even higher, with 10-yrs rising over 2bps to 0.962% and 30-years highest since July 2011. However, it did not help the Yen as USD continued to push higher to 154.5, highest since May 1st.

- China property stocks took a breather after their recent tear upwards, falling more than -3% as developer Agile Group in Hong Kong defaulted for the first time on dollar bonds.

- China state media organs China Securities Journal and People’s Daily both suggest the RRR rate may be cut for banks, even as early as mid-May.

- Japan April PPI figures mainly inline.

- US equity FUTs slightly down during Asian trading.

Looking ahead (Asian time zone)

- Tue May 14th (Tue eve UK Mar Unemployment rate, Tue night US Apr PPI + Fed Powell speech).

- Wed May 15th CN 1-year MLF (Wed night US Apr CPI & Retail Sales).

- Thu May 16th JP Q1 prelim GDP, AU Apr Employment.

- Fri May 17th NZ Q1 PPI, CN April ‘data dump’; Industrial Prod, Retail Sales, Fixed Assets, etc., (Fri eve CN Apr FDI YTD.

Holidays in Asia this week

- Wed May 15th Hong Kong, South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,745.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 80.2 v 80.5 prior.

- Australia sells A$150M v A$150M indicated in 1.25% Aug 2040 indexed bonds: Avg Yield: 1.916% v 1.9633% prior; bid-to-cover: 2.83x v 4.93x prior.

- New Zealand Apr Total Card Spending M/M: 0.9% v 0.1% prior.

- New Zealand Apr REINZ House Sales Y/Y: 25.3% v 8.0% prior.

- New Zealand Mar Net Migration: 4.9K v 7.6K prior.

- Australia said to forecast a budget surplus of A$9.3B for FY ending June 2024 (the first back-to-back surpluses in ~two decades) – press [overnight update].

China/Hong Kong

- Hang Seng opens +0.5% at 19,203; Shanghai Composite opens flat at 3,148.

- China NDRC [State Planner]: Issues revisions for rules on electricity market operations.

- People’s Daily: China interest rates and RRR may see cuts in order to facilitate the upcoming issuance of special treasury bonds; cites experts.

- China may cut RRR when bond issuance picks up in Q2 and peaks in Q3 - China Securities Journal.

- Agile Group Holdings (3383.HK) Expects not to be to fulfill all of its payment obligations; Has not made payment on interest for 2020 Notes.

- US Treasury Sec Yellen: Reiterates we are not looking to disengage economically from China.

- NVDA Reportedly Chinese regulators have told local tech firms to buy fewer chips from Nvidia - The Information.

- China mainland bourses said to have stopped live feed of foreign stock flow data and displaying real-time figures on purchases or sales of local stocks through the Stock Connect scheme with Hong Kong as early as today, May 13th (as expected) [overnight update].

- China PBoC to enhance swap connect with Hong Kong – press [overnight update].

- China PBOC sets Yuan reference rate: 7.1053 v 7.1030 prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

Japan

- Nikkei 225 opens +0.3% at 38,287.

- Japan Apr PPI (Domestic CGPI) M/M: 0.3% v 0.3%e; Y/Y: 0.9% v 0.8%e.

- Japan Fin Min Suzuki: Govt and BOJ have been working to end deflation; watching JGB yield developments closely.

- Japan Econ Min Saito: To begin strategy review on energy as soon as Wed (tomorrow).

- IMF concludes 2024 Article IV consultation with Japan; Japan economy continues to grow, but recovery remains uneven.

- Japan sells ¥2.3T VS. ¥2.3T indicated in 5-year JGB bonds; AVG yield: 0.5720% V 0.4040% prior; bid-to-cover: 3.90X V 3.88X prior.

South Korea

- Kospi opens +0.2% at 2,732.

- South Korea Apr Import Price Index M/M: 3.9% v 0.4% prior; Y/Y: +2.9% v -0.7% prior (Export Price Index M/M: 4.1% v 0.4% prior; Y/Y: 6.2% v 2.6% prior).

Other Asia

- Malaysia Central Bank Dep Chief: BNM will not use interest rates to prop up Ringgit - TV interview.

- Thailand Cabinet approves nationwide minimum wage hike to 400THB daily, effective by Sep or Oct, 2024.

- India Apr CPI Y/Y: 4.8% V 4.8%E.

North America

- Walmart Said to cut hundreds of corporate jobs - WSJ.

- (US) NY Fed 1-year Inflation Expectations: 3.3% v 3.0% prior.

- (US) Redfin: An early look at this year’s data shows that demand for second homes hasn’t picked up in 2024.

- US) Fed's Jefferson (voter): The economy has made a lot of progress and inflation is retreating.

Europe

- (DE) Germany said to consider tax breaks to get people working longer hours - FT.

- (FR) France President Macron: EU needs consolidation among banks.

- EU Economic Commissioner Gentiloni: Acceleration of euro zone activity is taking place; If there is no total deal on Capital Markets Union (CMU), then some member states could move forward together.

Levels as of 01:20 ET

- Nikkei 225 +0.3%; ASX 200 -0.3%; Hang Seng +0.2; Shanghai Composite -0.2%; Kospi +0.1%.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; Dax flat; FTSE100 -0.1%.

- EUR 1.0783-1.0795; JPY 156.15-156.51; AUD 0.6598-0.6613; NZD 0.6010-0.6026.

- Gold +0.3% at $2,349/oz; Crude Oil +0.2% at $79.25brl; Copper +0.5% at $4.7940/lb.