ASIA STOCKS: A Mixed Day as Tariff Threats Echo Around the Region
Asia stocks were mixed today as the markets await the next raft of US data. As President Trumps latest headlines focus on tariff threats for Japan the tariff deadline looms for most countries. The threat towards Japan was a reminder for Korean investors who drove the KOSPI lower today as Nvidia's supplier SK Hynix slumped. Hong Kong got a bump from Casino stocks as June numbers came in ahead expectations.
- The Hang Seng stood out with gains today of +0.62% whilst CSI 300 rose just +0.07%. The Shanghai Comp did very little, down -0.04% whilst Shenzhen was the worst performer, down -0.45%
- The TAIEX in Taiwan was down modestly by -0.12%
- The KOSPI had two strong days of gains, only to fall on tariff fears today by -0.82%
- The FTSE Malay KLCI gained +0.44% capping off five successive days of gains.
- The Jakarta Composite is down -0.91% for a second successive day of falls.
- The FTSE Straits Times rose by +0.48% whilst the PSEi in the Philippines is down -0.39%.
- The NIFT 50 is down modestly by -0.10% offsetting yesterday's gains.
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AUSSIE BONDS: Subdued Session, RBA Minutes & RBA Hunter Speech Tomorrow
ACGBs (YM flat & XM -0.5) sit little changed after a subdued session with limited newsflow. Today’s domestic data drop was second tier in nature (Home Values, S&P Global PMI Mfg, Melbourne Institute Inflation and ANZ-Indeed Job Advertisements) and so provided limited directional guidance for the local market.
- Cash US tsys have bear-steepened, with yields 1-3bps higher, in today's Asia-Pac session. Monday's US calendar sees ISM Manufacturing data and an appearance by Fed Chair Powell, with the June employment report looming at the end of next week.
- Cash ACGBs are little changed with the AU-US 10-year yield differential at -14bps.
- RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in July is given a 72% probability, with a cumulative 77bps of easing priced by year-end.
- Tomorrow, the local calendar will see Q1 Company Operating Profits, Inventories, Current Account Balance alongside RBA Minutes of May Policy Meeting and a speech by the RBA's Sarah Hunter, Assistant Governor (Economic), titled ‘Joining the Dots: Exploring Australia’s Links with the World Economy’.
- This week, the AOFM plans to sell A$1200mn of the 3.75% 21 April 2037 bond tomorrow and A$800mn of the 1.50% 21 June 2031 bond on Friday.
EURUSD TECHS: Bull Cycle Remains In Play
- RES 4: 1.1608 High Nov 9 2021
- RES 3: 1.1573 High Apr 21 and the bull trigger
- RES 2: 1.1453 76.4% retracement of the Apr 21 - May 12 bear leg
- RES 1: 1.1419 High May 26 and a bull trigger
- PRICE: 1.1368 @ 06:08 BST Jun 2
- SUP 1: 1.1210 Low May 29
- SUP 2: 1.1172/1.1065 50-day EMA and a pivot level / Low May 12
- SUP 3: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 4: 1.0943 Low Apr 10
A bullish theme in EURUSD remains intact and the pair is trading closer to its recent highs. Support to watch lies at 1.1172, the 50-day EMA. A clear break of this average would undermine the bull theme and signal scope for a deeper retracement. This would open 1.1065, the May 12 low. On the upside, a break of 1.1419, the May 26 high, would be bullish and open 1.1573, the Apr 21 high and bull trigger.
BUND TECHS: (M5) Bullish Outlook
- RES 4: 132.56 High Feb 28 and a key resistance
- RES 3: 132.03 High Apr 7 and the bull trigger
- RES 2: 131.72 High May 7
- RES 1: 131.44 High May 30
- PRICE: 131.20 @ 05:46 BST Jun 2
- SUP 1: 130.39 May 29 low
- SUP 2: 129.49/13 Low May 22 / 15 and key short-term support
- SUP 3: 129.02 Low Apr 10
- SUP 4: 128.60 Low Apr 9 and a key support
A bullish theme in Bund futures remains intact and the contract is holding on to its latest gains. The recent recovery suggests the move down between Apr 22 - May 15, has been a correction. A continuation higher would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Key short-term support to watch is 129.13, the May 15 low. First support lies at 130.39, the May 29 low.
