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StreetAccount Summary - Asian Market Recap: Hang Seng +1.48%, Kospi -0.26%, ASX +0.55% as of 04:10 ET

May 03 ,2024

  • Synopsis:

    • Asia equities finished mostly higher Friday in a quiet session with several markets closed for the Golden Week holiday. The Hang Seng was best, advancing for its ninth consecutive session, with IT and internet names again leading. Gains in Australia and Taiwan while South Korea turned early advances into a small loss by the close. Southeast Asia mostly higher, India sharply lower. US futures indicate a higher open, Europe opened with small gains. Dollar slightly down, yen notably stronger as offshore yuan reached six-week highs. Treasuries mixed. Crude oil higher and precious metals flat in thin trade.

    • Asia equites had another quiet day as mainland China and Japan markets stayed closed but Hong Kong gained again to reach its highest since September. Multiple catalysts behind the surge in Hong Kong with this week benefiting from the Politburo saying it was exploring new measures to help its indebted housing sector, and would consider another rate cut. Positive analyst commentary also provided support this week. Forex still firmly on markets' radar despite modest weakening of the US dollar this week, and a intervention-induced strengthening of the yen. Friday, Bank of Korea's governor Rhee again warned over won volatility, joining finmin comments earlier this week that authorities were watching forex markets closely.

    • The macro calendar was light. China Golden Week spending watched carefully for clues on the strength of the consumer. Sharp declines in airfares hinting at subdued spending but the number of train trips taken appeared encouraging. Singapore retail sales growth slowed sharply in March. Thailand CPI rose for the first time in seven months during April.

    • Sony Corp (6758.JP) and Apollo (APO) reported to have offered $26B for Paramount Global (PARA). The RBI's lifted a ban on Bajaj Finance's (500034.IN) e-commerce and card lending projects following remedial actions by the lender. Woori Financial Group (316140.KS) has agreed to the merger of its investment bank unit with Korea Foss Securities.

  • Digest:

    • Yen rebounds on intervention evidence, lower Treasury yields:

      • Yen strengthened to the 152 range vs dollar, eclipsing yesterday's peak level of 153.03 that was widely thought to be a function of FX intervention. Flows skewed toward buying yen against dollar on the back of intervention caution and lower Treasury yields. Nikkei top story noted extrapolation of BOJ money market data pointed to a possible intervention operation of JPY3T ($19B) Thursday. Combined with the ~JPY5T estimated for Monday, cumulative total JPY8T already nearing the JPY9T used in Sep/Oct 2022 over three operations. Article cited LSEG data pointing to 160.35 as the next key level, which would be the weakest in the post-Plaza Accord era, beyond which there is not much standing in the way of a freefall towards 260. Another Nikkei article extended discussions about efficacy, suggesting intervention may keep speculators at bay for only about six months based on observed prices after the 2022 phase. Page-two story pointed to increased pressure for a BOJ policy response with attention on the next policy meetings in June and July. However, suggested the bar is high for a rate hike while BOJ is monitoring the implementation of wage increases.

    • Bank of Korea signals delay to rate cut, says closely watching forex:

      • Bank of Korea Governor Rhee said bank is likely to reconsider timing of rate cuts and that situation has changed since April's meeting. Also said bank "closely watching" forex volatility, adding to warnings from country's finance ministry earlier in week over won weakness. However, Rhee also said BOK and US Treasury agree won weakness likely to be temporary, reiterated bank still expects inflation to continue slowing. Comments follow modest tick lower in April headline and core inflation, published earlier this week, and assurance bank would consult with economic ministries in any financial market volatility. Said currency weakness, and stronger-than-expected economy, likely to be behind any postponement of rate cuts, bank also noted growing anticipation Fed will keep monetary policy tighter for longer. Added inevitable bank will revise higher its FY growth estimates when it meets 23-May (Bloomberg).

    • Regional Golden Week consumption headlines subdued:

      • Reuters discussed latest travel indicators in mainland China, which showed a surge in travel traffic numbers on Wednesday to start Golden Week. However, domestic airfares were falling in the run-up to the holidays, suggesting more people were opting to drive rather than fly or booked early to save money. Subdued propensity to spend has been a notable theme since China lifted Covid restrictions at the end of 2022, limiting the boost to the economy. Similarly, Hong Kong dining lobby group flagged bad weather apt to deter mainland tourists, projecting a 10% y/y drop in in business (SCMP). Japan travel agency HIS data showed average unit price for overseas trips fell 1.5% vs last year's Golden Week while average trip duration also shortened by 1 day to 6 days (Kyodo). Cost-efficient holidays to neighboring Asian destinations have proven popular while Honolulu dropped to third place. Yen weakness cited as a notable deterrent against overseas spending for Japan residents, according to an earlier Kyodo report. Yet airlines last month reported international flight bookings over Golden Week were up about 20% y/y while domestic flights were largely steady. Railway ticket reservations were up 16%.

    • RBA predicted to stay on hold next week, only one rate cut expected by year-end:

      • Reuters consensus poll found all but one of 37 economists expect RBA to keep the cash rate unchanged next week at 4.35%, with the remainder looking for a 25 bp hike. Rate cut forecasts for this year were reduced to one 25 bp move from two as of last month following a milder than expected slowdown in inflation and ongoing labor market tightness. Story highlighted all major Australian banks predicted no rate change until at least September-end and all four saw just one 25 bp cut in November. AFR flagged growing concerns among economists over inflation implications from the upcoming federal budget to be presented by Treasurer Chalmers this month. Warned that RBA might not achieve its inflation target for at least two years without additional rate hikes unless fiscal policy is tightened. Analysts also see RBA being forced to revise up their near-term inflation forecasts on the back of the latest higher-than-expected CPI data. Cited a couple of former RBA officials suggesting the cash rate should probably be higher, and as such, will remain higher for longer.

    • Notable Gainers:

      • +3.1% 035420.KS (NAVER): reports Q1 operating profit KRW439.3B vs StreetAccount KRW392.48B, revenue KRW2.526T vs StreetAccount KRW2.507T

      • +1.8% 500034.IN (Bajaj Finance): RBI lifts ban on Bajaj Finance's eCOM and Insta EMI Card lending projects after remedial actions

      • +1.1% 316140.KS (Woori Financial Group): agrees to have Woori Investment Bank merge with Korea Foss Securities

      • +0.2% 302440.KS (SK bioscience Co.): reports Q1 operating profit (KRW28.10B) vs year-ago (KRW29.19B), revenue KRW22.27B vs year-ago KRW20.60B

    • Notable Decliners:

      • -9.4% 532541.IN (Coforge): reports Q4 consolidated basic EPS INR36.21 vs StreetAccount INR44.14; plans to buy up to 54% stake in Cigniti Technologies at INR1,415/share in cash through share purchase agreements, mandatory open offer

      • -5.1% 8454.TT (momo.com): reports Q1 revenue NT$26.88B vs FactSet NT$27.22B

      • -4.8% 000270.KS (Kia): reports April domestic 47,505 units vs year-ago 49,086 units

      • -3.2% 005380.KS (Hyundai Motor): reports April domestic 63,733 units vs year-ago 66,660 units

      • -1.7% 532648.IN (YES BANK): Carlyle Group reportedly preparing to sell 2% stake via block deal

  • Data:

    • Economic:

      • Australia March

        • Housing Finance m/m +3.1% versus +1.9% in prior month

      • Singapore March

        • Retail sales y/y +2.7% versus +8.6% in prior month

    • Markets:

      • Nikkei: Closed

      • Hang Seng: 268.79 or +1.48% to 18475.92

      • Shanghai Composite: Closed

      • Shenzhen Composite: Closed

      • ASX200: 42.00 or +0.55% to 7629.00

      • KOSPI: (7.02) or (0.26%) to 2676.63

      • SENSEX: (947.76) or (1.27%) to 73663.35

    • Currencies:

      • $-¥: (0.39) or (0.25%) to 153.2650

      • $-KRW: (7.39) or (0.54%) to 1360.3600

      • A$-$: +0.00 or +0.22% to 0.6578

      • $-INR: (0.01) or (0.01%) to 83.3977

      • $-CNY: (0.00) or (0.04%) to 7.2368

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