CHINA: Central Bank Withdraws CNY0.6bn via OMO

Opinion polls suggested that the incumbent Labor (ALP) government would be returned after Saturday’s election with an average 2-party preferred vote of 52.5% to 47.5% in its favour. In the end, this underestimated their support with the Australian Electoral Commission (AEC) currently saying the split was 54.8% to 45.2%, a swing of 2.6% to the ALP. A majority government reduces uncertainty significantly as there were concerns that there would be a minority which may have increased instability and the influence of the Greens in policy.

• Counting is still underway and 18 seats are still unallocated by the AEC as they are either too close to call or the Two Candidate Preferred count is less than 15%. So the final outcome may take days to be announced.
• Not including these 18, it estimates that the ALP has won 82 seats in the House of Representatives up from 77 in the previous parliament and likely to rise further.
• With an increased majority, the ALP agenda will be furthered with increased spending, including on Medicare and renewables, the extension of the electricity rebate, and likely further industrial relations changes. However, it won’t have a majority in the Senate and will have to continue compromising to get support of cross benchers.
• The Liberal/National (LNP) coalition has 38 down from 58 and only 4 of their existing seats have not been called. LNP leader Dutton lost his Queensland seat and so a vote on the leadership will take place.
• All four of the currently held Green seats haven’t been called yet. The number of independents could rise by 1 to 11. 

The ESM5 had a Friday night range of 5633.50 - 5724.75, Asia is currently trading 5681. The market had another leg higher on the back of a stronger than expected Payrolls print(177k). 

• Asia has given back some of these gains early in our session as Trump says - “NO PLANS TO TALK TO XI THIS WEEK, CHINA AND US OFFICIALS TALKING ABOUT 'DIFFERENT THINGS'”.(per BBG)
• Berkshire Hathaway has been a net seller of stocks for ten consecutive quarters, trimming or exiting positions. At the 2025 annual shareholder meeting, Buffett explained that the firm is waiting for “extraordinarily attractive” opportunities, preferring to hold cash rather than overpay in an overheated market. The company’s cash pile has increased to an unprecedented $348 billion.
• The Stock market has seemed to price in the fruition to a lot of positive scenarios. The reality still feels a little way off with tariffs still high and trade deals not yet finding a resolution. The market will need to start seeing some specifics on these deals this week to build on this bounce.
• ISM Services PMI tonight will be important and will dictate price action tonight. Any move back towards a contraction will get the market worried about growth once more.
• The SPX has had a big bounce from its lows on 4800 handle, but we are approaching some key resistance between 5600-5800, the longer-term sellers should be active around here.
• Data: ISM Services PMI

Fig 1: SPX Weekly Chart

Source: MNI - Market News/Bloomberg

• The US has announced a reciprocal tariff rate of 46 percent on all Vietnamese products, a move that is already showing to significantly impact Vietnam’s trade-dependent economy.
• Whilst Vietnam's PMI has trended lower since the end of last year the pace of the April result looks likely to be a direct impact from tariff threats.   
• Falling to +45.6 from +50.5 in March it is one of the largest one month declines since COVID
• Vietnam had tried to change with tariffs on US goods being reduced and had even pushed through a regulatory change to  allow Elon Musk’s SpaceX to launch its Starlink in the country.
• Today's PMI however shows the real impact on the economy despite suggestions that tariffs may not go ahead and comes at a time when China's leader has been visiting nations such as Vietnam to sure up relations and offer alternatives.  
• SE nations PMIs for April have largely collapsed and how long it lasts will directly impact these export orientated economies.