Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +1.14%, Hang Seng (0.83%), Shanghai Composite (0.16%) as of 04:10 ET

May 31 ,2024

  • Synopsis:

    • Asian equities ended mixed Friday. Hong Kong stocks opened brightly but fell steeply especially in the afternoon session to end lower; mainland boards also down. Taiwan's Taiex lower Friday but comfortably the region's best performer in May. Southeast Asia also lower, India markets finding some support as its election draws to a close. US futures mixed, Europe opened mixed. US dollar slightly higher, Asia currencies little changed although yen strengthening notably late on. Treasuries also little changed, JGB yields higher with 10Y at 1.07%. Precious metals, industrial commodities and oil futures all edging lower.

    • Asia equities bounced back from Thursday's losses as bond yields stabilized and currencies steadied post a downward revision to US GDP growth, which revived hopes of an interest rate cut before the end of the year. Investors also cognizant of US PCE price index due later Friday, which may give a clearer indication of the Fed's next move. In Asia Friday, the Hang Seng opened with a 1% gains but pared these and more by the close just as China's official PMIs showed manufacturing unexpectedly contracting for the first time since February. Non-manufacturing activity also weakened. Separately, data showed investors pulled $4.2B from equity ETFs in Shanghai and Shenzhen in May, the most in 15 months.

    • Elsewhere in macro news, Tokyo core inflation accelerated amid an increase in energy bills. Japan industrial production in April unexpectedly shrank, retail sales growth was better than expected but details were mixed. South Korean industrial production rebounded in-line with forecasts. Australia private sector growth unexpectedly rose. India's general election ends on Saturday with exit polls published shortly after and results announced on Monday.

    • Dalton Investments has outlined plans to Fuji Media (4676.JP) for it to go private with Dalton left holding a 20% stake. Nippon Steel's (5401.JP) proposed takeover of US Steel (X) has received approval from all non-US regulatory bodies. Meridian Energy (MEL.NZ) and Contact Energy (CEN.NZ) and Mercury NZ (MCY.NZ) signed 20-year electricity supply agreements with Rio Tinto's New Zealand Aluminum Smelters; stocks sharply higher.

  • Digest:

    • China official manufacturing PMI unexpectedly slips into contraction:

      • Official manufacturing PMI was 49.5 in May, notably below expectations of 50.5, following 50.4 in the previous month. Current level marks the first contraction since February. Production growth slowed, while new orders and exports swung to contraction. Inflation metrics strengthened with input price gains accelerating to the strongest since September, while output prices turned to a marginal increase. Employment and finished goods inventories extended declines. By industry size, improvement in large firms was overshadowed by weaker medium and small firms which slipped into contraction. Non-manufacturing PMI also disappointed at 51.1 vs consensus 51.5, following 51.2 in April. Softening driven by slower growth in construction, largely offset by a mild pickup in services. Composite PMI declined to 51.0 from 51.7, also the lowest since February. Reuters preview highlighted the dispersion of forecasts for the headline manufacturing PMI, reflecting uncertainties and fragility of growth momentum. Still, consensus 2024 GDP growth forecasts have been converging towards the government growth target of around 5%, as IMF was the latest to announce upward revisions after the spate of property measures were unveiled earlier this month.

    • Japan industrial production unexpectedly stalls, retail sales beat, jobless rate steady:

      • Industrial production fell 0.1% m/m in April, notably below expectations of a 1.5% rise, following 4.4% growth in the previous month. Carry-over from March strength still places Q2 on a positive trajectory after a sharp 5.2% q/q drop in Q1 reflecting temporary auto suspensions. Going forward, METI survey projections point to a sharp gain of 6.9% in May and a 5.6% drop in June, implying a 5.3% q/q bounce. Adjusted May forecast of 2.3% would still leave Q2 on track for growth. Cyclical momentum becoming more important against backdrop of extended sluggish domestic demand holding back GDP growth. Retail sales rose 1.2% m/m, above consensus 0.6%, reversing a 1.2% decline in the prior month. But details were mixed with growth confined to machinery & equipment and apparel, outweighing weakness in autos. Unemployment rate was steady at 2.6%, matching expectations, though job offers to applicants ratio fell to 1.26 from 1.28 vs consensus 1.28 amid relatively sharp sequential decline in job offers. Tokyo core CPI inflation was also in line at 1.9% y/y in May, following prior 1.6%, as electricity prices turned positive.

    • PBOC says it pays close attention to bond market, will sell government bonds when necessary :

      • PBOC-backed newspaper Financial News said in front-page report that the central bank would sell government bonds when necessary if large amounts of bank deposits flow into debt market and further drive demand for risk-free assets. Reuters added PBOC said it is paying close attention to current bond market changes and potential risks. Both 10Y and 30Y government bond yields rose in morning trade on Friday. Market watchers said its comment signaled concerns over recent drop in treasury bond yields despite start of issuance of CNY1T ($138B) in ultra-long special bonds in May. Recall PBOC's holdings of government bonds around CNY1.52T or 3.5% of total assets have been little changed in recent years and it hasn't made significant purchases since 2007. Drawing guidance from Oct-2023 speech by President Xi, PBOC pledged recently to add treasury bond trading to its policy toolkit to help manage liquidity and interest rate risks, while analysts expect central bank may have to take gradual steps to limit impact on debt market.

    • China stocks pull back as ETFs experience first outflow since early 2023:

      • Recent China equity market pullback has corresponded with renewed outflows as Bloomberg-compiled data showed ETFs in Shanghai and Shenzhen experienced $4.2B withdrawal in month through Monday, first such outflow since Feb-2023 and more than twice inflows of two preceding months. Funds favored by 'National Team' earlier in the year such as CSI 500 saw biggest outflows. Reuters cited separate data by Institute of International Finance that showed foreigners withdrew $600M from China stocks in April (albeit this was outpaced by larger outflows from other EM Asian stocks). Underwhelming China earnings season and related scrutiny on tech profitability amid recent price cuts, doubts about effectiveness of latest property rescue measures, US tariff hike and elevated trade tensions among factors blamed for recent underperformance. Contrasts with strength in sovereign bonds as households continue to plow funds in safe haven assets. Foreigners also favoring bonds, which saw $900M of inflows in April, a seventh consecutive monthly inflow.

    • US reportedly slowing AI chip exports to Middle East, prompts Nvidia selloff:

      • Bloomberg, citing people familiar with the matter, reported US officials have slowed issuance of licenses to chipmakers such as Nvidia (NVDA) and Advanced Micro Devices (AMD) for large-scale AI accelerator shipments to the Middle East alongside a national security review of AI development in the region. Officials said to be particularly focused on high-volume sales as countries including the UAE and Saudi Arabia look to import massive quantities of the chips used in AI data centers. Article noted it is unclear how long the review will take. In a statement, Commerce Department said its highest priority was "protecting national security" while reaffirming commitment to work with other countries including in the Middle East to safeguard their technological ecosystem. Concerns partly stem from China's ability to access advanced chips through data centers in the region, circumventing the Biden administration's campaign to keep advanced semiconductors and manufacturing equipment out of China's hands, for fear that the technology will be used to bolster its military.

    • Notable Gainers:

      • +37.7% 9926.HK (Akeso Inc): Summit Therapeutics' Phase 3 trial, HARMONi-2 or AK112-303, meets primary endpoint of progression-free survival (PFS)

      • +13.8% 4613.JP (Kansai Paint): launches buyback of up to 40M shares for up to ¥80B from 31-May-24 to 30-May-25

      • +8.4% 4676.JP (Fuji Media Holdings): Dalton Investments reportedly suggests Fuji Media Holdings be taken private via management buyout

      • +1.4% 6005.JP (Miura Co.): allots 5.4M shares to Daikin Industries at ¥2,754/share through third party allotment

      • +0.3% 9991.HK (Baozun): Alibaba sells 26.5M Class A share stake in Baozun to Champion Kerry; companies will maintain their mutually beneficial business relationship,

    • Notable Decliners:

      • -9.9% 9048.JP (Nagoya Railroad): to issue EUR/JPY convertible bonds for total of ¥50.0B due 2033 and 2034, sets conversion prices at ¥2,098 and ¥2,058

      • -2.0% 352820.KS (HYBE Co.): court approves ADOR CEO's injunction against HYBE

  • Data:

    • Economic:

      • China

        • May official manufacturing PMI 49.5 vs consensus 50.5 and 50.4 in prior month

          • Non-manufacturing PMI 51.1 vs consensus 51.5 and 51.2 in prior month

          • Composite PMI 51.0 vs 51.7 in prior month

      • Japan

        • April unemployment rate 2.6% vs consensus 2.6% and 2.6% in prior month

          • Job offers to applicants ratio 1.26 vs consensus 1.28 vs 1.28 in prior month

        • May Tokyo core CPI +1.9% y/y vs consensus +1.9% and +1.6% in prior month

          • CPI excl. fresh food & energy +1.7% y/y vs +1.8% in prior month

          • Overall CPI +2.2% y/y vs consensus +2.2% and +1.8% in prior month

        • April industrial production (0.1%) m/m vs consensus +1.5% and +4.4% in prior month

          • METI survey projections +6.9% in May, (5.6%) in June

        • April retail sales +1.2% m/m vs consensus +0.6% and (1.2%) in prior month

          • Retail sales +2.4% y/y vs consensus +1.7% and revised +1.1% in prior month

        • April housing starts +13.9% y/y vs consensus (0.1%) and (12.8%) in prior month

          • Annualized starts 880K sa vs 760K in prior month

      • Australia April

        • Private sector credit +0.5% m/m vs consensus +0.4% and revised +0.4% in March

      • South Korea April

        • Industrial production +2.2% m/m vs FactSet consensus +2.2% and revised (3.0%) in prior month

          • Industrial production +6.1% y/y vs FactSet consensus +5.9% and revised +1.0% in prior month

    • Markets:

      • Nikkei: 433.77 or +1.14% to 38487.90

      • Hang Seng: (150.58) or (0.83%) to 18079.61

      • Shanghai Composite: (4.86) or (0.16%) to 3086.81

      • Shenzhen Composite: 3.53 or +0.20% to 1729.65

      • ASX200: 73.50 or +0.96% to 7701.70

      • KOSPI: 1.08 or +0.04% to 2636.52

      • SENSEX: 177.61 or +0.24% to 74063.21

    • Currencies:

      • $-¥: +0.25 or +0.16% to 157.0730

      • $-KRW: +6.83 or +0.50% to 1383.0900

      • A$-$: +0.00 or +0.06% to 0.6637

      • $-INR: +0.04 or +0.05% to 83.3623

      • $-CNY: (0.00) or (0.01%) to 7.2032

This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
Please refer to "Terms Of Use".

DEPOSITARY RECEIPTS:
NOT FDIC, STATE OR FEDERAL AGENCY INSURED
MAY LOSE VALUE
NO BANK, STATE OR FEDERAL AGENCY GUARANTEE