CHINA PRESS: China Must Retain Manufacturing Proportion In GDP

Early asset sentiment is risk off in the equity space in terms of US futures, which are down around 0.50-0.55% at this stage. Regional equity markets are mixed. Gold is also down, off nearly 1% though, continuing recent volatility. The USD index is slightly higher, albeit with the safe havens outperforming. US yields are up a touch. 

• The negative US equity market futures backdrop follows four straight sessions of gains to end last week for the SPX. Also over the weekend we didn't see any further positive trade developments, at least at face value. Trump stated:  "Won't Drop China Tariffs Unless They Give Us Something", followed by "People Are Starting To Understand How Good Tariffs Are". Market sensitivity to trade/tariff headlines is likely to remain strong.
• BBG also reported earlier online retailer Shein will raise some prices as much as 377% before tariffs take effect.
• There are hopes of peace progress in Ukraine following weekend meetings, but firm details are yet to emerge following earlier Trump remarks.
• The dip in gold, back sub $3300 is in line with higher USD BBDXY levels, although the move in this index is less than 0.10% at this stage. As we noted earlier lower positioning in gold may indicate some profit taking after the recent surge higher.
• In the FX space, JPY and CHF are little changed versus the dollar, USD/JPY last near 143.60/65. AUD/USD and NZD/USD are down close to 0.20%, but tracking within recent ranges. AUD/USD last close to 0.6380/85, NZD near 0.5950.
• The data calendar is largely empty today, but an upcoming press briefing from the China authorities, including the PBoC and NDRC, on efforts to support growth will be in focus. No big bang stimulus announcements are expected though.
• USD/CNH has been supported on dips sub 7.2900, while HK and China equities are down modestly in early trade. 

The People’s Bank of China is expected to improve its re-lending tools focused on technology innovation and inclusive pension, by extending the loan period, expanding the quota, lowering interest rates, and optimising the issuance conditions, said Securities Times in a commentary. The Politburo meeting last Friday also proposed to create new structural monetary policy tools to support expanding consumption, and stabilising foreign trade, as well as to increase the countercyclical role of policy-based financial instruments to better coordinate fiscal and monetary policies, the newspaper said.

Profits of China's industrial enterprises rose 0.8% y/y to CNY1.5 trillion in Q1, reversing a 0.3% decline in the first two months, Yicai.com reported citing data by the National Bureau of Statistics. The Q1 profit gain followed a 3.3% fall in 2024, reversing the trend of enterprises’ continuous declines in cumulative profits since Q3 last year, the newspaper said. Thanks to a consumer goods trade-in campaign, profits in the wearable smart device manufacturing sector soared by 78.8%, while those for household kitchen appliance makers rose 21.7%, the newspaper added.