ASIA STOCKS: Regional Gains Amid Trade War Hope

ACGBs (YM -6.0 & XM -6.5) are sharply cheaper and near Sydney session lows.

• This move aligns with weaker US tsys, which are trading 2-4bps cheaper in today's Asia-Pac session, as risk bounces on US-China officials citing 'substantial progress' made from weekend trade talks.
• US Treasury Secretary Bessent said there had been 'substantial progress' in the two days of talks with China and that further details would be shared today.
• The US data calendar is light today, ahead of US CPI on Tuesday and Retail Sales on Thursday.
• (Bloomberg) -- “Hedge funds aggressively added to net short positioning in 10-year note futures, while asset managers boosted longs in the sector in the week up to May 6, CFTC data shows.”
• Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at -6bps.
• The bills strip is cheaper with pricing -2 to -5 (late whites leading).
• RBA-dated OIS pricing is flat to 5bps firmer today, leaving meetings 2-24bps firmer than levels before the release of Q1 CPI data on April 30.
• Tomorrow, the local calendar will see Westpac Consumer and NAB Business Confidence measures.
• AOFM plans to sell A$1200mn of the 3.50% 21 December 2034 bond on Wednesday and A$800mn of the 2.50% 21 May 2030 bond on Friday.

• RES 4: 133.90 1.236 proj of the Mar 25 - Apr 7- 9 price swing                 
• RES 3: 133.00 round number resistance      
• RES 2: 132.56 High Feb 28 and a key resistance
• RES 1: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger                    
• PRICE: 130.33 @ 05:40 BST May 12
• SUP 1: 130.30/129.92 Intraday low / Low Apr 11          
• SUP 2: 129.02 Low Apr 10            
• SUP 3: 128.60 Low Apr 9 and a key support   
• SUP 4: 128.47 Low Mar 28  

A bull cycle in Bund futures remains intact and short-term weakness is considered corrective. However, the contract maintains a softer tone and has traded through support at the 50-day EMA, at 130.61. This signals scope for a deeper retracement and opens 129.92, the Apr 11 low. A reversal higher would highlight the end of the corrective phase. Attention would turn to key resistance and the bull trigger, at 132.03, the Apr 7 high.

Asia stocks have been in a positive mood today with gains across all major markets following positive noises coming out of the US China discussions.  Chinese tech names have performed strongly whilst Pharma companies have struggled given President Trump's plans to reduce prescription costs on pharmaceuticals.  

Overall markets were strong with gains of over 2% by some key bourses.  

• China's key indexes were up strongly with the Hang Seng up +0.95%, the CSI 300 +0.60%, Shanghai +0.35% and Shenzhen up +1.05%
• The TAIEX in Taiwan is up +0.92% having enjoyed strong inflows over the last week.  
• The KOSPI shrugged off poor economic data to rise +0.68%, following last week's gains.
• With Jakarta, Singapore and Malaysia closed, it was left to the PSEi in the Philippines to rally adding +1.08%
• Having fallen last week on concerns as to the escalating conflict with Pakistan, India's NIFTY 50 is up strongly in morning trade rising by +2.90%