ASIA STOCKS: Hang Seng Drags Others Lower
The Hang Seng was one of the worst regional performers today, weighing heavy on other major bourses. As escalating Middle East tensions dominate this week's Federal Reserve meeting has markets sidelined to see if the FED will alter the direction for US interest rates.
The Middle East tensions are driving oil prices higher raising concerns as to the return of inflation as a catalyst for interest rates in the region.
- China's Hang Seng is down -1.15% and is down -2.75% over the last five days of trading. This dragged the CSI 300 with it, albeit marginally, down -0.07%, the Shanghai Comp was softer by -0.20% and the Shenzhen Comp down -0.36%
- The KOSPI's good run continued and is up +0.45% today and approaching a +2.00% gain over the last week.
- The FTSE Malay KLCI barely moved today and is where it started the trading day despite the BNM governor's positive comments about the economy.
- The Jakarta Composite fell -0.54%, taking back yesterday's gains.
- The FTSE Straits Times in Singapore fell -0.33% and the PSEi in the Philippines fell -0.10%
- The NIFTY 50 is up +0.20% so far today, looking to recover yesterday's losses of -0.37%
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BUND TECHS: (M5) Trading Above Lat Week’s Low
- RES 4: 132.56 High Feb 28 and a key resistance
- RES 3: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger
- RES 2: 130.86 High May 9 Round number resistance
- RES 1: 130.65 High May 16
- PRICE: 130.18 @ 05:37 BST May 19
- SUP 1: 129.13 Low May 15 and key short-term support
- SUP 2: 129.02 Low Apr 10
- SUP 3: 128.60 Low Apr 9 and a key support
- SUP 4: 128.19 Low Mar 27
Bund futures have recovered from their recent low. The move higher undermines the recent bearish theme and suggests the move down between Apr 22 - May 15, has been a correction. A continuation higher would strengthen the reversal and open 130.86 next, the May 9 high. Further out, scope would be seen for an extension towards 132.03, the Apr 7 high. Key short-term support has been defined at 129.13, the May 15 low.
BONDS: NZGBS: Closed At Cheaps With A Bear-Steepener, US Downgrade In Focus
NZGBs closed at session cheaps, showing a bear-steepener, with yields 5-8bps higher.
- Producer output prices rose 2.1% q/q in Q1, the largest quarterly increase since mid-2022.
- “New Zealand will change its thin capitalisation rules to remove a roadblock to foreign investment”, Finance Minister Nicola Willis says.
- “New Zealand's monthly prices suggest inflation is gaining momentum, pointing to upside risks to the Reserve Bank of New Zealand's 2Q25 outlook.” (per BBG)
- Swap rates closed 4-6bps higher, with implied swap spreads tighter.
- Nevertheless, the market’s attention was focused abroad with cash US tsys twist-steepening in today's Asia-Pac session. US yields are 1bp lower to 5bps higher with the market continuing to digest late Friday news that Moody's Ratings downgraded the US credit score.
- RBNZ dated OIS pricing closed flat to 3bps firmer across meetings, late 2025 / early 2026 leading. 25bps of easing is priced for May, with a cumulative 63bps by November 2025.
- Tomorrow, the local calendar will be empty ahead of trade balance data on Wednesday and the Budget on Thursday.
- On Friday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$150mn of the 3.50% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.
FOREX: FX Wrap - USD Stuggles On Downgrade
The BBDXY has had a range of 1228.00 - 1230.27 in the Asia-Pac session, it is currently trading around 1230. “The ECB’s Christine Lagarde told La Tribune Dimanche the euro’s strength against the dollar is “counterintuitive, but justified” amid Trump’s erratic policies and presents an opportunity for Europe. She said she’s “not at all pessimistic” about the bloc’s economy.”(BBG)
- EUR/USD - Asian range 1.1173 - 1.1199, Asia is currently trading 1.1185. EUR/USD has had a quiet session considering the backdrop. The market is still expected to use dips as a buying opportunity and dips back towards 1.09/1.10 should see buyers remerge.
- GBP/USD - Asian range 1.3267 - 1.3314, Asia is currently dealing around 1.3300. Decent demand for GBP sub 1.3200 has seen it bounce back to the middle of its recent range 1.3150 - 1.3450. Like the EUR the market prefers to buy on dips, building for the next leg higher.
- USD/CNH - Asian range 7.2042 - 7.2180, the USD/CNY fix printed 7.1916. Asia is currently dealing around 7.2160. Sellers should be found on a bounce back towards 7.24/25 again.
- Cross asset : SPX -1.01%, Gold $3215, US 10-Year 4.51%, BBDXY 1229, Crude oil $62.23
Data/Events : ECB Muller & SNB Schlegel to speak, Spain Trade Balance, EZ CPI
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
