Asia market update: Equities cautious as Trump yet to break major news out of CN; Cisco >19% on raised outlook; SK anxious on Samsung’s labor dispute; US Apr Retail Sales tonight.
General trend and developments
-Amid a series of meetings at various venues, both Trump and Xi gave optimistic-sounding platitudes on the prospects of US-China relations, with several of the high-level US execs in attendance also appearing optimistic for business.
-Trade has, of course, been speculated as a possible topic of discussion between both sides. But recent reports suggest only incremental progress. For example, during the NY session, sourced press reports speculated Xi and Trump could look at cutting tariffs on as much as $30B of imports. [In April alone, China had a trade surplus of ~$85.0B].
-In terms of concrete outcomes thus far, press reports China has renewed export licenses on >400 US beef plants. [Unclear if amid talks or from prior plans]. Xi promised US business leaders that China’s doors ‘will open further’ for them.
-Subdued and mixed day for Asia equities, with Shanghai underperforming -1% on the day of Trump’s visit to Beijing.
-Following on from yesterday’s emergency South Korea cabinet meeting, Samsung’s labor talks are now expected to present weekend risks for traders. The domestic labor union has now proposed to resume the stalled negotiations on May 16th [Sat]. At the same time, South Korean government officials are being more anxious about the matter, as any Samsung strike could have major implications for the global economy, chip industry and markets. Traders sniff the opportunity for blood in the water, with Samsung and SK Hynix such integral components of the Kospi’s tripling in value over the past year.
-JGB yields continued to move higher, with 10-year JGB hitting 2.6% for first time since 1997 and 30-years at contract life highs; 30-year JBG auction was mixed, with good coverage but a wide tail of 22bps.
– Rumors, quickly denied by officials, that Japan said to be considering drafting up an extra budget [follows multiple denials of such plans earlier in the year by the Japan Fin Min and other officials].
– BOJ board member Masu rolled out more hawkish comments today, saying “Need to raise rate at earliest stage possible”.
– Honda today reported its first loss for a full financial year since the 1950’s.
-Eneos-linked crude tanker confirmed to have crossed the Strait of Hormuz yesterday; The vessel is expected to arrive in Japan on Jun 3rd.
– India Central Bank (RBI) likely again selling US dollars to protect Rupee amid fresh record lows of 95.85.
–US Apr Retail Sales will be closely watched tonight for any signs of consumer weakness amid higher inflation.
– US equity FUTs +0.1% to +0.3% during Asia trading.
Looking ahead (Asian-weighted focus, using Asian time zone)
-Thu May 14th: (Thu night, US Apr Retail Sales).
-Fri May 15th: NZ Apr Business PMI, JP Apr PPI, (Fri night, US Apr Industrial Production).
Holidays in Asia this week
-Thu May 14th: Indonesia.
-Fri May 15th: Indonesia.
Headlines/economic data
Australia/New Zealand
-(AU) ASX 200 opens +0.2% at 8,615.
-(AU) Australian Government: Secured about 90,000 tonnes of agricultural-grade urea.
-(AU) Australia to invest up to A$850M to make some missiles (locally) – US financial press.
-(NZ) New Zealand Mar Net Migration: 3.4K v 3.7K prior.
China/Hong Kong
-(CN) Shanghai Composite opens +0.3% at 4,256; (HK) Hang Seng opens +1.7% at 26,837.
-(CN) Trump-Xi Summit at the Great Hall of the People (Beijing); Greeting, Bilateral Meeting.
-(CN) China has renewed export licenses on >400 US beef plants amid Trump-Xi summit – US financial press.
-(CN) China PBOC sets the yuan mid-point at 6.8401 v 6.8431 prior (strongest level since March 24th, 2023).
-(CN) China PBOC Open Market Operation (OMO): Sells CNY500M in 7-day Reverse Repos; Net drains CNY27B v drains CNY26B prior.
Japan
-(JP) Nikkei 225 opens flat at 63,263 (rises to record high).
-(JP) Japan sells ¥600B vs. ¥600B indicated in 30-year JGB bonds; Avg yield: 3.8420% v 3.6970% prior; Bid-to-cover: 3.49x v 3.12x prior.
-(JP) Japan considers drafting up extra budget – Kyodo.
-(JP) Japan to raise requirements for calling an Extraordinary General Meeting (EGM) – Nikkei.
-(JP) BOJ Board Member Masu: Need to raise rate at earliest stage possible – speaks in Kagoshima.
-(JP) Japan Apr M3 Money Supply Y/Y: 1.6% v 1.4% prior.
-(JP) Japan Chief Cab Sec Kihara: No immediate need for a supplementary budget.
-(JP) Japan releases weekly flows data [period ended May 8th]: Foreign buying of Japan equities: ¥1.44T v ¥807.9B prior; Japan buying of foreign bonds: ¥1.64T v -¥887.7B prior.
Korea
-(KR) Kospi opens +1.0% at 7,924.
-(KR) South Korea Fin Min: FX volatility expands excessively on speculative trades; Samsung strike could become significant risk in economy [no comment on FX swap].
-(KR) South Korea Pres Lee: Mentions need for currency swap to Bessent – South Korea press.
-(KR) South Korea National Pension’s stock holdings exceed target; cites the appreciation of domestic equities – Maeil.
Other Asia
-(IN) India Central Bank (RBI) likely again selling US dollars to protect Rupee.
-(IN) India bans sugar exports until 30th September, 2026 – Government notice.
-(MY) Malaysia Econ Min Akmal: Final Q1 GDP data may be stronger than advance estimate.
-(TH) Thailand plans up to THB25B bond switch in May.
-(PH) Philippines Pres. Marcos to hold televised address this morning ET – PTV.
North America
-(US) Pres Trump and China Pres Xi reportedly weighing tariff cuts on $30B of imports – press citing four people familiar [US Market Close].
-(US) April PPI Final Demand M/M: 1.4% v 0.5%e; Y/Y: 6.0% v 4.8%e; PPI (ex-food/energy) M/M: 1.0% v 0.3%e; Y/Y: 5.2% v 4.3%e; March numbers revised higher [US Market Close].
-(US) Treasury $25B 30-year bond reopening draws 5.046% v 4.750% prior; Bid-to-cover 2.30 v 2.66 prior and 2.42 over last 8 reopenings [US Market Close].
-(US) MBA Mortgage Applications w/e May 8th: +1.7% v -4.4% prior [US Market Close].
-(US) DOE Crude: -4.3M v -2.0Me; Gasoline: -4.1M v -3.0Me; Distillate: +0.2M v -3.0Me [US Market Close].
-(US) Fed’s Collins (non-voter): It’s possible the Fed would need to hike policy rates to cool inflation; Inflation will not abate this year, but could cool in 2027; Services inflation ex-housing is not consistent with 2% goal [US Market Close].
-(US) US Sec of State Rubio: US will push China to take active role in Iran – Fox News Interview.
-(US) US Pentagon cancels armored brigade deployment to Europe – WSJ.
-(US) US Treasury Sec Bessent: Noted South Korea’s strong economic performance [no comment on FX swap].
-(US) CBRS Prices IPO of 30M shares at $185.00/share [significantly above the raised expected pricing range]; Shares expected to begin trading on May 14th, 2026.
-(US) House passes legislation on year-round nationwide E15 sales – US financial press.
-(BR) Brazil will reportedly announce new measures on fuel later today, including gasoline subsidies – press [US Market Close].
-(BR) Brazil is planning to send the EU information on beef in 10 days – US financial press.
-(CU) Cuba Energy and Mines Minister: Cuba has ‘run out’ of diesel and fuel oil amid US oil blockade.
-(CO) Colombian President Petro: Colombia to draft regulation to protect workers savings – Cabinet Meeting.
Europe
-(EU) ECB’s Kocher (Austria): Hard to hold rates without seeing improvement in the war; June decision will between hike and hold [US Market Close].
-(DE) WCH.DE Raising prices by up to 15% due to raw material costs for resins, dispersions, and dispersible polymer powders, effective June 1st, 2026 [US Market Close].
-(UK) UK PM Starmer reportedly made clear to allies that he will stand and fight if Wes Streeting succeeds in triggering a leadership contest – UK Times [US Market Close].
-(UK) BOE’s Mann: Monetary policy cannot offset cost-push shocks from energy prices; Implications of new sources of finance for UK current account deficit are not simple [US Market Close].
-(UK) Kings Speech: Govt will seek to improve relations with European partners to improve security – King Charles III annual comments from House of Lords [US Market Close].
-(UK) Rule change for gas-fueled data centers said to be to help tech industry – FT.
-(UK) UK BOE Official Breeden: BOE set to ‘water down’ stablecoin rules – FT.
-(UK) Apr RICS House Price Balance: -34% v -25%e (lowest since November 2023).
-(PT) Portugal Apr Final CPI M/M: 1.3% v 1.4% prelim; Y/Y: 3.3% v 3.4% prelim [US Market Close].
-(PT) Portugal Q1 Labour Costs Y/Y: 4.9% v 7.6% prior [US Market Close].
-(RU) Russian President Putin: Russia will continue to develop its strategic nuclear forces, and will develop missile systems capable of overcoming all current and future missile defense systems [US Market Close].
-(DE) German Chancellor Merz’s coalition sets out roadmap for “big” reforms by July – German press [US Market Close].
-(UR) Kyiv Mayor Vitali Klitshko: Ukrainian Capital Kyiv under Russian attack.
Middle East
-(SA) OPEC Monthly Oil Report (MOMR): Production was lowest in >35 years; Cuts 2026 Global Oil Demand Growth from 1.38M to 1.17Mbpd [US Market Close].
-(LY) NOC Chairman expects Ras Lanuf refinery ops to restart in 6-12 months (220K bpd capacity) [US Market Close].
Levels as of 01:20 ET
Nikkei 225 -0.6%; ASX 200 -0.1%; Hang Seng +0.5%; Shanghai Composite -0.7%; Kospi +0.4%.
Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; DAX +0.4%; FTSE100 +0.3%.
EUR 1.1719-1.1709; JPY 157.99-157.56; AUD 0.7264-0.7244; NZD 0.5940-0.5927.
Gold +0.2% at $4,698/oz; BTC -1.9% at $79,426, Crude Oil +0.6% at $101.58/bbl; Copper -0.7% at $6.5750/lbs.
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