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StreetAccount Summary - Asian Market Recap: Nikkei (0.34%), ASX (1.23%), Hang Seng Closed of 04:10 ET

May 01 ,2024

• Synopsis:

  • Only three markets remained open Wednesday and all three fell. Australia ended more than 1% lower, New Zealand was also weak, and Japan's Nikkei fell a third of one percent. US futures flat, Europe futures ticking lower. US dollar higher although little movement in Asia currencies. Treasury yields flat. Oil futures lower, precious metals mixed, industrial metals largely unchanged. More losses in cryptocurrencies.

  • Those markets that remained open Wednesday all fell to follow through from a weak end to trading on Wall Street overnight. Traders cautious ahead of Fed decision due later Wednesday with no rate change expected and focus firmly on the messaging, specifically, on whether Chair Powell will signal another delay in rate cuts. Tuesday macro data clouding the picture with the Q1 employment cost index rising above forecasts but several sentiment indicators, including consumer confidence, sliding.

  • Few Asia macro catalysts to change the markets' direction today. RBNZ financial stability report warned new or persistent price pressures may mean global rates remain restrictive for longer. South Korea April trade data showed a sharp bounceback in exports boosted by a record high level of auto shipments rose to a record high. Japan's industrial output picture was mixed with government data showing a rise in March's output but April final PMIs revised lower.

  • Hyundai Motor (005380.KS) is to launch its first hybrid car in India by 2026. Qantas (QAN.AU) says it is investigating a report of a data breach at its loyalty ap. Woolworths (WOW.AU) said it is to sell a 5$ stake worth A$468M ($302M) in Endeavour Group (EDV.AU) three years after it spun it off.

• Digest:

  • Markets parse BOJ data for evidence of FX intervention:

    • Nikkei discussed the ongoing search for confirmation of yen intervention Monday after MOF officials declined to confirm action. Cited BOJ current account data as evidence, noting liquidity projection of a JPY7.56T ($48.2B) net drain today due to transactions with government sector with t+2 settlements reflecting developments Monday. Noted this is well above money market estimates of about JPY2T and the ~JPY5.5T gap represents unanticipated transactions that could include FX intervention. Final verification to come from official monthly MOF data due 31-May covering the period 26-Apr to 29-May. Daily intervention tallies are published in a separate quarterly release. Recalled prior data for 2022 showed JPY9.2T deployed in three transactions spanning Sep/Oct. Article noted MOF generally refrains from timely disclosure to keep speculators guessing. While verification would only confirm wide suspicions of intervention Monday, story cited thoughts the size matters for its implications for the pace of drawdown in FX reserves. Recall that press have repeatedly noted skepticism toward the efficacy of unilateral intervention in the face of wide US-Japan rate differentials and commentaries suggested markets remain bearish on yen.

  • China home sales downturn drags on in April as leaders pledge support:

    • Private data from China Real Estate Information Corp. (CRIC) showed value of new home sales from 100 biggest property developers dropped about 45% y/y to CNY312.2B ($43.1B) in April, following 45% decline in March. Transactions fell 13% m/m. Caixin noted April's value was less than one-third same period in 2021 before China's drawn-out property downturn started three years ago. Separate survey by China Index Academy showed average new home prices in 100 cities rose 1.08% y/y and 0.27% m/m; while resale home prices fell 0.75% m/m and logged 24^th monthly drop in a row. Resale prices fell 5.38% y/y. Bloomberg noted weak home sales underscored why authorities are stepping up efforts to revive market. Tuesday's Politburo meeting readout noted policymakers vowed to study measures to tackle excess home inventories. Some economists pointed out that policies remain focused on supply side of housing market instead of demand side. Recall Nomura's economist Richard Koo said China needs to convince people that home prices are on their way up for growth to pick up (CNBC).

  • South Korea exports boosted by chip surge, autos rise to record high:

    • Customs exports rose 13.8% y/y in April, close to consensus 13.7%, accelerating markedly from 3.1% in the previous month. Extends growth streak to seven months. Early takeaways positive as business day adjusted measure also increased 11.3% (Bloomberg). Key categories contributed positively, led by a 56.1% surge in chips consistent with solid corporate earnings, 16.3% growth in display products, while autos rose 10.3% to a record $6.79B (Yonhap). Regional demand underpinned by 24.3% expansion to US and 9.9% growth to China. Imports rose 5.4% y/y, below consensus 6.2%, though rebounding from a 12.3% drop in March. Reuters preview cited higher oil prices. Positive start to Q2 follows stronger than expected Q1 GDP, underpinned by growth in private consumption and exports that played into potential upside risks to BOK's 2024 GDP growth forecast of 2.1%. Weakness in March activity data were mostly shrugged off despite industrial production falling at the fastest pace in 15 months. Won depreciation concerns remain elevated, though headlines have been quiet since the trilateral finance meeting with US/Japan counterparts and South Korea Finance Minister Choi Sang-mok declared scenario-based responses are in place.

  • New Zealand labor market softer than expected, RNBZ financial stability report focuses on debt risks:

    • Unemployment rate was 4.3% in Q1, slightly above consensus 4.2%. Follows 4.0% in the previous quarter and marks the highest since 1Q21. Employment fell 0.2% q/q, contrasting with expectations of 0.3% growth, following 0.4% rise in Q4. Negated by lower labor force participation. Ordinary time hourly wages rose 5.2% y/y vs 6.9% in Q4, while LCI rose 4.1% y/y after prior 4.3%. NZ Stats noted wage cost inflation and hourly earnings growth began to slow though remains elevated. RNBZ financial stability report reaffirmed confidence in capacity to absorb external shocks and downturn in the domestic economy, though noted above-target inflation and restrictive monetary policy mean that pockets of vulnerability remain. While global inflation is declining, stronger than expected inflation could prompt a tightening in global financial conditions. Observed private sector adaptation to higher rates including lower household discretionary spending. Noted gradual increase in NPLs across all sectors from a low base. Housing market remains weak with recent uptick in house prices remaining within estimated sustainable range.

  • Notable Gainers:

    • +14.9% 6920.JP (Lasertec): reports 9M net income attributable ¥41.52B, +100% vs year-ago ¥20.72B

    • +9.7% 1911.JP (Sumitomo Forestry): reports Q1 net income attributable ¥22.23B vs FactSet ¥15.53B

    • +8.6% 9021.JP (West Japan Railway): to launch up-to-¥50.0B buyback

  • Notable Decliners:

    • -7.9% 9504.JP (The Chugoku Electric Power): restart of Shimane nuclear plant postponed due to delayed completion of safety measures

• Data:

  • Economic:

    • Japan

      • April final manufacturing PMI 49.6 vs preliminary 49.9 and 48.2 in prior month

    • South Korea

      • April trade balance $1.53B vs consensus $2.41B and $4.29B in prior month

        • Exports +13.8% y/y vs consensus +13.7% and +3.1% in prior month

        • Imports +5.4% y/y vs consensus +6.2% and (12.3%) in prior month

    • New Zealand

      • Q1 employment (0.2%) q/q vs consensus +0.3% and +0.4% in prior quarter

        • Unemployment rate 4.3% vs consensus 4.2% and 4.0% in prior quarter

  • Markets:

    • Nikkei: (131.61) or (0.34%) to 38274.05

    • Hang Seng: Closed

    • Shanghai Composite: Closed

    • Shenzhen Composite: Closed

    • ASX200: (94.20) or (1.23%) to 7569.90

    • KOSPI: Closed

    • SENSEX: Closed

  • Currencies:

    • $-¥: +0.14 or +0.09% to 157.9340

    • $-KRW: (0.63) or (0.05%) to 1385.2900

    • A$-$: +0.00 or +0.05% to 0.6476

    • $-INR: +0.01 or +0.01% to 83.4991

    • $-CNY: (0.00) or (0.02%) to 7.2396