Asia Market Update: Asian tech generally lower post-Micron; JGB FUTS extend declines amid UST move and JP retail sales; JP Tokyo CPI tomorrow.

General trend

– Asian equities were down across the board, with Hang Seng underperforming -2%. In the US shares of Micron fell -8% after-hours post-earnings and guidance (Nvidia also -2% A/H). However, the effect on semi-conductor relateds in Asia was modest; SK Hynix -1.0%,Samsung +0.6%, Tokyo Electron -2.7%, Advantest -0.1%.

– Japan Retail Sales for May came in much better than expected, including Dept and Supermarket sales. The overnight rise in UST yields flowed across to Japan, where JP 30-yr JGB yields rose to their highest since Mar 2011. JP MOF also sold 2-year JGBs; JP 10-yrs back to nearly 1.07%, with US 10-yr vs JP 10-yr holding steady at -325 pips.

– The Yen pared some of its overnight losses, helped somewhat by prior FX language from Apr- May returning after recent Yen weakness:

1) [Kanda: The recent Yen moves are rapid; Believes the majority view Yen weakness as a speculative move];

2) [Suzuki: Reiterates watching FX moves with high sense of urgency; Doesn’t want to see one-way moves in FX].

– New Zealand poor economic data run continued, with both Consumer and Business Confidence for June again falling. Kiwi dollar fell to one-month low at 60.70 against USD. Overall coverage for NZ weekly bonds also low (again).

– US equity FUTs down -0.3% to -0.4% during Asian trading.

Looking ahead (Asian time zone)

– Thu 27th Jun: (Thu night US Durable Goods & US Q1 Final GDP).

– Fri 28th Jun: JP Jun Tokyo Core CPI, JP May prelim Industrial Prod, AU May Housing Credit (Fri night US May Core PCE).

– Weekend: CN Jun National Mnfg PMI.

Holidays in Asia this week

– Fri Jun 28th New Zealand.

Headlines/economic data

Australia/New Zealand

– ASX 200 opens -0.2% at 7,769.

– Australia Q1 Job Vacancies Q/Q: -2.7% v -6.2% prior.

– Australia Jun Consumer Inflation Expectation Survey: 4.4% v 4.1% prior (highest since April’s 4.6%.

– New Zealand Jun ANZ Business Confidence: 6.1 v 11.2 prior (weakest since Sept 2023).

– New Zealand Jun ANZ Consumer Confidence: 83.2 v 84.9 prior.

– Fonterra (FCG.NZ) May New Zealand milk collections -5.6% y/y.

– New Zealand sells total NZ$500M vs. NZ$500M indicated in 2030, 2033 and 2037 bonds (overall coverage again low).

– New Zealand Asst. Min of Agric: To start consultation on reinstating livestock exports by sea by Sept, 2024 – financial press.

China/Hong Kong

– Hang Seng opens -0.8% at 17,946; Shanghai Composite opens -0.3% at 2,962.

– China May YTD Industrial Profits Y/Y: 3.4% v 4.3% prior; Industrial Profits Y/Y: 0.7% v 4.0% prior.

– Hong Kong Exchange (388.HK) (UK) Follow up: London Metals Exchange (LME) said to consider listing HK as LME warehouse location – press.

– S&P: Now we are seeing more long-bonds (tenors of 10 years or greater) from local government financial vehicles (LGFVs).

– China said to conduct final review on duties on EU toluidine – financial press.

– China PBOC to build a “Digital Central Bank” for Fintech – article by PBOC’s technology department PBOC-backed Financial News.

– (HK) Some Chinese property developers may be dropped from Stock Connect market access scheme – SCMP.

– China to raise duty-free shopping limit for visitors to Hong Kong – financial press.

– China Commerce Ministry (MOFCOM): Opposes firms being sanctioned over ties to Russia; It has ‘negative impact’ on China-EU economic and trade relations [overnight update].

– EU SLIGHTLY CUTS TARIFFS ON CHINA EVS; Cut import tariffs on Geely Auto from 20.0% to 19.9%, on SAIC from 38.1% to 37.6%; Provisional duties said to be introduced from July 4th – press [overnight update].

– China’s cabinet: Urges more efforts to attract foreign investments; Study deployment of foreign investment; Strive to solve structural contradictions facing job market [overnight update].

– China Financial Regulator: Will study raising ceiling on concentration ratio of insurance funds investing in venture capital funds [overnight update].

– China’s Beijing reportedly lowers down payment ratio to 20% from 30% prior for first-time home-buyers – press [overnight update].

– China PBOC sets Yuan reference rate: 7.1270 v 7.1248 prior (weaker fix for the seventh straight session, and weakest since Nov 21, 2023).

– China PBOC Open Market Operation (OMO): Sells CNY100B in 7-day reverse repos; Net injects CNY80B v net drains CNY28B prior.

Japan

– Nikkei 225 opens -0.6% at 39,434.

– JAPAN MAY RETAIL SALES M/M: 1.7% V 0.8%E; Y/Y: 3.0% V 2.0%E.

– JAPAN SELLS ¥2.6T VS. ¥2.6T INDICATED IN 2-YEAR JGB BONDS; AVG YIELD: 0.3780% V 0.4180% PRIOR; BID-TO-COVER: 3.83X V 3.78X PRIOR.

– Japan releases weekly flows data [period ended Jun 21st]: Foreign buying of Japan equities: -¥85.5B v +¥81.6B prior; Japan buying of foreign bonds: -¥1.1T v +¥655.1B prior.

– Mizuho chief desk strategist Omori: Japan needs ‘big surprise’ to curb weak yen – financial press.

– Japan Fin Min Suzuki: Will not comment on FX levels; Deeply concerned about FX impact on economy – financial press.

– Japan Chief Cabinet Sec Hayashi: Reiterates to refrain from commenting about FX intervention.

– Toyota (7203.JP) May Parent-only global output 812K units, -4.1% y/y (fourth straight month of declines).

– Japan said to consider easing rules related to corporate debt restructurings – Nikkei.

– US, Japan and South Korea agree on closer ties on key tech, such as resilient chip supplies; To cooperate on export controls and supply chains – press.

– Japan top FX diplomat Kanda: Concerned about weakness in Yen; Always prepared to respond to disorderly moves but do not have specific levels in mind [overnight update].

– BOJ Gov Ueda said to visit Switzerland on June 27-July 2nd for BIS – press [overnight update].

– USD/JPY Tests 160.00 level against US dollar amid potential new FX intervention fears [overnight update].

South Korea

– Kospi opens -0.9% at 2,767.

– South Korea July Business Manufacturing Survey: 75 v 76 prior (update).

– Samsung Electronics (005930.KR) Reportedly plans to raise server DRAM and enterprise NAND prices by 15-20% in Q3 2024 – press [overnight update].

Other Asia

– Thailand Dep Fin MIn: Sees 1% inflation as too low, not suitable as lower-end of target – press.

– Reportedly Japan plans to help Philippines build out its 5G network to counter Chinese tech – Nikkei [overnight update].

North America

– SPACEX.IPO Insider tender offer at $112/shr to value Co at record $210B (higher than previous EV of $180B) – financial press.

– JPM Comments on the Federal Reserve’s 2024 Stress Test Results; Stress losses could be modestly higher than the Fed’s Stress Test predictions – financial press.

– Micron -8% A/H; (MU) Reports Q3 $0.62 v $0.50e, Rev $6.81B v $6.70Be; Gaining market share in HBM.

– (US) Fed’s Bowman (voter, hawk): Reiterates not yet appropriate to cut rates – London.

– (US) MBA Mortgage Applications w/e Jun 21st: 0.8% v 0.9% prior.

– (US) MAY NEW HOME SALES: 619K V 633KE; Homes for sale at end of period: 481K v 480K prior.

– (US) DOE CRUDE: +3.6M V -2.5ME; GASOLINE: +2.7M V -1ME; DISTILLATE: -0.37M V -0.5ME.

– (US) TREASURY $70B 5-YEAR NOTE AUCTION DRAWS 4.331% V 4.553% PRIOR, BTC 2.35 V 2.30 PRIOR AND 2.44 OVER THE LAST 12 (TAILED WI BY ~1BPS).

Europe

– (IL) US aid of $6.5B since Oct 7th reportedly discussed during visit by Israel Defense Min Gallant – WAPO, citing senior US Admin official.

– (EU) ECB’s Panetta (Italy): At a turning point in European monetary policy cycle; Stickiness of service inflation ‘not abnormal’.

– (EU) ECB’s Lane (Ireland, chief economist): Overall transmission of monetary policy has been robust.

– (EU) ECB’s Kazaks (Latvia): No need to rush with monetary easing; Will do rate cuts step by step.

Levels as of 01:20 ET

– Nikkei 225, -1.0%, ASX 200 -0.8% , Hang Seng -2.2%; Shanghai Composite -0.6%; Kospi -0.5%.

– Equity S&P500 Futures: -0.3%; Nasdaq100 -0.4%, Dax -0.2%; FTSE100 -0.2%.

– EUR 1.0677-1.0695; JPY 160.30-160.81; AUD 0.6640-0.6666 ;NZD 0.6069-0.6091.

– Gold -0.1% at $2,309/oz; Crude Oil -0.3% at $80.69/brl; Copper -0.3% at $4.3575/lb.