Asian Mid-session Update: Japan trade deficit more narrow than expected; Greece says the money for IMF repayment does not exist
***Economic Data***
- (JP) JAPAN APR MERCHANDISE TRADE BALANCE: -¥53.4B V -¥351.1BE; ADJ TRADE BALANCE: -¥208.7B V -¥386.8BE
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.7%, S&P/ASX +1.2%, Kospi closed, Shanghai Composite +2.0%, Hang Seng closed, Jun S&P500 flat at 2,125
***Commodities/Fixed Income***
- Jun gold flat at $1,204/oz, Jul crude oil +0.2% at $59.86/brl, Jul copper -0.1% at $2.81/lb
- (IR) Iran Oil Minister: OPEC unlikely to change production ceiling at its upcoming meeting in June - financial press
- USD/CNY: PBoC sets yuan mid point at 6.1165 v 6.1131 prior setting; weakest Yuan setting since May 6th
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥375B in 3-5 yr JGBs, and ¥400B in 5-10yr JGBs
***Market Focal Points/FX***
- In spite of the hotter than expected CPI data out of the US on Friday and a late session-selloff on Wall St, Asian indices are tracking higher despite the implications of a potentially more proactive Federal Reserve. With US markets on holiday this Monday and conditions thinned by holiday closures in Korea and Hong Kong, investors are also looking ahead to Tuesday's forward looking durables data and Friday's release of 2nd estimate of US GDP.
- EUR/USD saw some early session weakness with a 40pip drop below 1.0970, as the standoff between Athens and European creditors appears to have taken a turn for the worse. Greek media report citing Interior Minister indicated Greece will not have the money to repay €1.6B to the IMF next month unless a new deal with creditors is reached. Likewise, PM Tsipras reiterated there is a limit to what Greek govt is prepared to accept from the creditors. And even if the standoff does result in a stalemate, a referendum is not likely to break the ice - according to a weekend poll, 59% of respondents support govt position of not giving in to European creditors, but 71% still want to keep the Euro. German-led creditors are hardly budging also - Fin Min Schaeuble speaking to German press said there is no need to discuss "alternatives" on Greece, as Athens needs to deliver what it promised.
- Economic data out of the far east was limited to Japan's April merchandise trade. Despite returning into deficit, trade balance was much better than expected at -¥208.7B V -¥386.8BE on adjusted basis. Shipments to US were particularly strong, rising by over 20% once again, while shipments to China slowed to 2.4% growth from 3.9% in prior the month. Crude oil imports were higher by 9% after a 15% drop last time, but lower prices kept the imports component bill relatively lower. USD/JPY saw some follow-through bids from Friday's higher US CPI figures, rising another 20pips toward 121.80.
- ECB forum on central banking in Portugal drew the heads of the BOJ, ECB, and Fed vice chair Fischer. ECB's Draghi continued to call for quicker transition to economic and monetary union in the euro zone, citing "strong divergences remaining in terms of unemployment, growth, and productivity" as dangerous. BOJ's Kuroda remarked that a proactive monetary policy could help ease the implementation of structural reform. Fed's Fischer commentary was notably more reserved, indicating that while there is temptation on the FOMC to discuss structural reform, policymakers skirt around the topic.
***Equities***
US equities / ADRs:
- TWC: Charter said to prepare offer large premium for Time Warner Cable - FT
- AMZN: Said to have changed tax practices in Europe; Will pay taxes in individual countries rather than funnel payments to low-rate Luxembourg - financial press
- FCAU: CEO Marchionne had approached GM about a merger in March but was rebuffed - NY Times
- ETSY: Company's sellers have been targeted by an email from Amazon, promoting their handcraft-goods marketplace - financial press
Notable movers by sector:
- Consumer discretionary: Guangdong Qtong Education 300359.CN -10.0% (CSRC to crack down stock manipulation); Skilled Group SKE.AU +11.8% (enters into talks with Programmed)
- Financials: Greattown Holdings Ltd 600094.CN +6.9% (to set up investment firm)
- Industrials: Aerospace Communications Holding 600677.CN +10.0% (to invest in IT companies)
- Materials: Evolution Mining EVN.AU +4.4% (to acquire Cowal gold mine); Sirius Resources SIR.AU +22.5%, Independence Group IGO.AU -9.4% (Independence to acquire Sirius); Fortescue Metals Group FMG.AU +3.6%, BC Iron BCI.AU +1.9% (rumors of foreign interest)
- Healthcare: Healthscope HSO.AU +2.0% (to sell pathology business)
- Utilities: Tokyo Electric Power Co Inc 9501.JP +5.1% (won bid for project in Qatar)