Asian equity markets were positive but with gains mostly modest amid a holiday-quietened start for the region and ahead of the key risk events this week
In FX markets, most major currencies consolidated heading into month-end and amid this week’s market closures
Looking ahead, highlights include German regional and national CPI, US PCE Price Index, Personal Consumption
ASIA
Asian equity markets were positive but with gains mostly modest amid a holiday-quietened start for the region and ahead of the key risk events this weekincluding the FOMC meeting and US NFP jobs data. ASX 200 (+0.5%) and KOSPI (+0.7%) were higher although weakness across Australia’s commodity sectors restricted upside, while South Korea continued to benefit from improving ties following Friday’s summit and after North Korea vowed to close its nuclear test site. Hang Seng (+1.7%) was the outperformer of the region with the index propped up by China’s largest banks following improved earnings reports and with sentiment also underpinned by better than expected Chinese Manufacturing and Non-Manufacturing PMI data. As a reminder, both Japan and mainland China were closed for holidays with Japan to only open Tuesday and Wednesday amid Golden Week, while China is shut today and tomorrow due to Labour Day.
Chinese Manufacturing PMI (Apr) 51.4 vs. Exp. 51.3 (Prev. 51.5). (Newswires)
Chinese Non-Manufacturing PMI (Apr) 54.8 vs. Exp. 54.5 (Prev. 54.6)
Chinese Composite PMI (Apr) 54.1 (Prev. 54.0)
China is said to be planning trade offers for the US delegation including US Treasury Secretary Mnuchin when they visit this week. Reports stated that Beijing is likely to offer to import more goods from US to reduce and offer to negotiate a free trade agreement as well as other measures. (WSJ)
UK/EU
UK PM May accepted the resignation of Home Secretary Amber Rudd amid claims that Rudd misled parliament regarding targets for increasing immigrant deportations, which she had denied at a House of Commons committee. (Sky News)
Britain is set to make an offer to the EU on future immigration which would see arrangements “very similar” to current free movement rules put in place post- Brexit. (Independent)
UK Brexit Secretary Davis has downplayed reports that he might resign unless Theresa May sidelines Whitehall’s top civil servant working on Britain’s exit from the EU. (Guardian)
S&P affirmed UK at AA; Outlook Negative and affirmed Germany at AAA; Outlook Stable. Fitch affirmed UK at AA; Outlook Negative and affirmed Netherlands at AAA; Outlook Stable. (Newswires)
German Economic Affairs and Energy Minister Altmaier said that the EU should offer trade talks with US. (Newswires)
UK Lloyds Business Barometer (Apr) M/M 32 (Prev. 32). (Newswires)
FX
In FX markets, most major currencies consolidated heading into month-end and amid this week’s market closures. As such, the DXY was flat around 91.50 and EUR/USD remained firm following Friday’s rebound, while GBP/USD languished at a sub-1.3800 level after last week’s poor GDP numbers saw money markets price in only just a 20% chance of a hike next week vs. 50% prior to the release. Elsewhere, commodity-linked currencies pulled-back amid lacklustre trade in the underlying complex, and USD/JPY found support at 109.00 although lacked the usual gotobi demand gusto with participants absent in Tokyo, while CNH was supported on the back of the encouraging PMI data.
New Zealand ANZ Business Confidence (Apr) -23.4% (Prev. -20.0%). (Newswires)
New Zealand ANZ Activity Outlook (Apr) 17.8% (Prev. 21.8%)
COMMODITIES
Commodities were lacklustre overnight amid holiday-quietened conditions and as the USD held steady, which saw WTI crude futures marginally retreat below the USD 68/bbl level. Elsewhere, gold pulled back from prior resistance around USD 1325.00/oz amid a positive risk-tone, while copper in turn benefited from the sentiment but with only marginal amid the absence of its largest consumer China.
US Baker Hughes Total Rig Count (27 Apr) 1021 (Prev. 1013). (Newswires)
Rusal’s Deripaska has reportedly agreed to cut his stake in EN+ (which holds a controlling interest in Rusal) to below 50% and resign. (Newswires)
GEOPOLITICAL
South Korea and North Korea signed the Panmunjeom Declaration on Friday which was said to minimize economic cooperation but provided room for future possibility. In addition, there were also reports over the weekend that North Korea pledged to shut its nuclear test site in May. (Newswires)
US President Trump welcomed progress between North and South Korea, while he is said to meet with Kim in the coming weeks. (Newswires)
French President Macron and Iranian President Rouhani agreed to cooperate on preserving the Iranian nuclear agreement. (Newswires)
US
The Treasury curve bull-flattened on Friday, with short-dated yields narrowing by around 1bps, while the longer-end of the curve saw yields drop by around 5bps at settlement. The buying resulted in further narrowing of major curve spreads – on the week, 2s30s narrows by around 3bps, 5s30s narrowed by around 2bps, while 2s10s flattened by around 2bps in the week. There was some selling action after better than expected US GDP on Friday, though the selling was reversed shortly afterwards, as the sell-off in tech shares prompted buying in the long-end of the curve.
GOP-led House panel ended its Russia investigation and stated that there was no evidence Trump colluded with Russia during the presidential election. (Guardian)
US Commerce Secretary Ross said the US plans to extend steel and aluminium tariff relief for some countries but not all, when they expire on May 1st. (Newswires)
Source: RANsquawk
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