SOUTH KOREA: Lee Holds First Call w/US' Trump Since Inauguration

Equity slippage picks up in the past few minutes - stemming from a spell of weakness going through in Alphabet shares - down over 3% in a quick move on the back of Apple's Cue, who talks up that they're exploring adding an AI search function to their native browser - and may select Perplexity or Anthropic as options for the product.

• E-mini S&P slides to new daily lows of 5626.25 before stabilising slightly. The NASDAQ mini future is among the hardest hit on the headline, closing the gap with yesterday's close and thereby erasing the move triggered by reports that US-China trade talks would begin by the end of the week.
• A further spell of weakness for the e-mini S&P here would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low. First support to watch is 5536.59, the 20-day EMA.

Although the intraday bid in gilts has extended further, with equities and oil edging lower in recent trade, we note that the uptrend in 10-Year gilt yields drawn of the Dec ’21 lows remains intact (4.417% today). The benchmark last trades ~6bp lower at 4.457%.

• Meanwhile, futures hold comfortably below next resistance at the May 2 high (93.93), peaking at 93.42 today.
• Cross-market cues and correlations continue to outweigh domestic fundamentals at this stage.
• Although local factors are set to continue to provide sporadic influence when the UK’s delicate fiscal situation comes under scrutiny.
• A reminder that official bodies, namely the DMO and BoE, have become more activist when it comes to skewing supply away from the long end of the curve in recent weeks, which has provided some background support for long end UK paper, allowing major curves to pull back from cycle highs.

Fig. 1: UK 10-Year Gilt Yield (%)

Source: MNI - Market News/Bloomberg

In the wake of the landslide victory for PM Anthony Albanese and his centre-left Australian Labor Party (ALP) in the 3 May federal election, Guardian Australia reports that internal battles are emerging within various factions of the party ahead of the swearing in of a new ministry as Albanese gets his second term underway. The article claims there is speculation that Minister for Industry and Science Ed Husic, hailing from the New South Wales right faction of the ALP, could be demoted to make way for a figure from the Victorian right faction amid the increased parliamentary intake for the ALP. 

• Guardian Australia: "MPs from Victoria and other states believe the NSW right faction is overrepresented, with six places in the ministry. The left is expected to add an extra position, due to its growing presence in the party’s caucus.[...] Labor’s rules dictate that the factions choose members for 20 cabinet positions, with the leader assigning portfolios. Another 10 outer ministry roles and other appointments are also chosen by the leader."
• A caucus meeting of ALP lawmakers is scheduled for Friday, 9 May, while Albanese has confirmed that his new ministry will be sworn in on Tuesday, 13 May.
• The factional battles are unlikely to cause any significant issues for stability within the gov't in the short term, with the resounding win for the ALP meaning Albanese is at the peak of his political powers. Nevertheless, shifts in ministry representation between various state's lawmakers could foster resentment that could lead to personnel problems in the future.