EQUITIES: Off Best Levels
Major Asia-Pac equity indices trade higher at typing but are off their respective best levels, with tailwinds from a BBG report on Thursday (re: potential support for the Chinese economy through frontloading of local government bond issuance) waning. Elsewhere, news of ex-Japanese PM Abe being shot dragged Japanese stocks from session highs after the lunch hour with defensive flows evident, seeing e-minis hit session lows, and the yen turning bid on the news.
- The Nikkei 225 trades 0.7% higher at typing, paring gains of as much as 1.5% on news of Abe’s shooting. Focus has turned to the parsing of the event’s impact re: the policy continuity (as fleshed out previously), with some debate re: the government’s stance towards monetary policy easing and PM Kishida’s stance on taxes and share buyback rules observed.
- The Hang Seng Index sits 0.1% better off at writing, operating around session lows after opening ~1.5% higher. The properties sub-gauge (+0.3%) contributed the most to gains, narrowly countering underperformance in the financials sub-index, while tech names have pared opening gains, with the Hang Seng Tech Index dealing 0.4% firmer at typing (down from +2.2% earlier).
- The ASX200 trades 0.6% firmer at typing, putting it on track for a fourth day of gains in five. Commodity-related stocks outperformed, with the energy sub-index sitting 2.6% better off, rebounding from losses in recent sessions as major crude benchmarks have stabilised.
- U.S. e-minis deal 0.3% - 0.4% worse off at typing, a touch above their respective session lows.
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USDJPY TECHS: Continues To Climb
- RES 4: 135.15 High Jan 31 2002 and a congestion area
- RES 3: 134.48 1.236 proj of the Feb 24 - Mar 28 - 31 price swing
- RES 2: 133.84 High Apr 1 2002 and a key short-term resistance
- RES 1: 133.21 Intraday high
- PRICE: 133.15 @ 05:53 BST Jun 8
- SUP 1: 130.43/129.29 Low Jun 6 / 20-day EMA
- SUP 2: 127.09/36 50-day EMA / Low May 24 and key support
- SUP 3: 125.09 Low Apr 14
- SUP 4: 124.01 Low Apr 11
USDJPY continues to climb. The pair has this week resumed its primary uptrend, following the break of 131.35, May 9 high. The extension maintains the broader bullish price sequence of higher highs and higher lows and with moving average studies pointing north, indications are that the USD has further to go. The focus is on 134.48, a Fibonacci projection. Initial firm support is seen at 129.29, the 20-day EMA.
SCHATZ TECHS: (U2) Bearish Outlook
- RES 4: 110.070 High May 12 and a reversal trigger
- RES 3: 109.850 High May 26
- RES 2: 109.460 20-day EMA
- RES 1: 109.180/445 High Jun 3 / Low May 18
- PRICE: 109.025 @ 05:10 BST Jun 8
- SUP 1: 108.950 Low Jun 8
- SUP 2: 108.912 1.50 proj of the May 12 - 18 - 26 price swing
- SUP 3: 108.839 1.618 proj of the May 12 - 18 - 26 price swing
- SUP 4: 108.747 1.764 proj of the May 12 - 18 - 26 price swing
Schatz futures remain soft, and the contract has this week resumed its primary downtrend. Support at 109.330, the May 6 low, has recently been cleared and this signals potential for a continuation lower with the focus on the 108.912 next, a Fibonacci projection. The break lower maintains the broader bearish price sequence of lower lows and lower highs. On the upside, initial resistance is seen at 109.180, the Jun 3 high.
EQUITIES: Chinese Tech Pares Gains; Australian Financials Founder Post-RBA
Major Asia-Pac equity indices are mostly higher at typing, mirroring a lead from Wall St. An initial region-wide equity rally led by Hong Kong and Chinese stocks was later reduced on a reversal in the latter, taking most regional benchmarks off of their session highs in the process.
- The Hang Seng Index sits 1.5% firmer at typing, backing away from session highs as initial strength in China-based tech and financials moderated through Asia-Pac dealing. The Hang Seng Tech Index is 2.7% better off (back from session highs at +4.3%), with well-known tech large-caps catching a bid on as worry re: regulatory crackdowns on the sector have continued to ease. To elaborate, authorities on Tuesday approved a second, larger batch of video games for ‘22, lifting sentiment in the tech sector (keeping in mind the crackdown on the sector that began in ‘21), and adding to positive sentiment after previously-flagged reports that regulators were looking to wrap up investigations in Didi Global and other tech companies.
- The CSI300 is 0.4% worse off at typing, sharply flipping from gains of as much as 1.1% to losses on a broad market-wide retreat, and underperformance in the industrials sub-index (-2.5%), led by weakness in major battery manufacturer CATL (-6.8%).
- Equity trading volumes for Chinese stocks crossed CNY1.0tn on two consecutive days this week (Mon and Tue) - the first time this has happened since mid-March, and before the most recent in-country COVID flare-up.
- The Nikkei 225 sits 0.9% higher at writing with some optimism evident, aided by the release of better-than-expected final Q1 GDP figures earlier in the session. Broader JPY weakness again provided a tailwind to Japanese equities as well, with real estate and export-related names leading gains.
- The ASX200 is 0.4% better off at typing, operating a little above worst levels after paring gains from best levels near the open(~+0.9%) . Gains in energy, materials, and technology names were able to offset steep losses in the “Big 4” Australian banks, which each sit 2.6% to 5.6% lower apiece at writing. A note that the underperformance in the latter four comes after the RBA’s surprise 50bp hike on Tuesday, with the ASX200 Financials sub-index now on track for a third-consecutive day of losses, down ~5.3% for the week so far.
- U.S. e-mini equity index futures trade 0.3% to 0.4% lower at typing, operating a little below their respective best levels made late in Tuesday's NY session.
