***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.1%
- S&P/ASX +0.6%
- Kospi flat
- Taiex -0.1%
- Shanghai Composite +0.6%
- Hang Seng -0.1%
- Straits Times Index closed
- S&P Futures -0.1 at 1,325
- Spot Gold +0.3% at $1,493/oz
- July Crude -0.3% at $97.11
- July Copper -0.2% at $3.98
***FX USD Majors Session Range***
- EUR/USD: 1.4115-1.4050
- GBP/USD: 1.6191-1.6163
- USD/CHF: 0.8939-0.8913
- USD/CAD: 0.97160.9680
- AUD/USD: 1.0572-1.0527
- NZD/USD: 0.7855-0.7828
- USD/JPY: 81.06-80.67
***Overview/Top Headlines***
- Markets were mixed, becoming more positive towards the European open. Another day with no resolution for Greece, no major economic events and a weaker day on Wall St added to the smaller ranges. Japanese equities were especially hit early in the session on the news that Morgan Stanley Capital International will delete 20 Japanese stocks from its MSCI Global Standard Indices on May 31st. Spot gold stayed in a tight range but stayed to the upside, silver lost over 1% and crude tested below the $97 level.
- China April FDI rose 15.2% y/y to $8.46B however it was much lower than expected and down from March $12.52B, +32.9% y/y. China Ministry of Commerce gave no reason for the fall in FDI m/m, but it is typically a volatile economic release.
- Honda Motors executive expects to return to normal production levels by the end of the year in the worst case scenario; Prioritizing the US and China for supplying parts. Says USD/JPY rate of ¥80 does not reflect economic fundamentals in Japan. Honda is also planning to announce annual forecast ahead of shareholder meeting.
- Australia RBA May meeting minutes stated that higher interest rates are likely at some point to contain inflation. On Policy: Mildly restrictive policy stance was appropriate at the meeting. On inflation: Core inflation to be at the to of the bans over next couple of years. Domestic: Highly likely that GDP declines in Q1 due to lingering impact from flooding and a stronger A$ has tightening conditions for parts of the economy. AUD erased initial post-RBA minutes gains, fall about 20 pips toward session lows below $1.0560.
- Japan Econ Min Yosano responded to a Nikkei news article saying that Japan was delaying its decision on joining the Trans-Pacific Partnership (TPP) in light of the earthquake and tsunami. Yosano said that the earthquake has not changed PM Kan's basic intent to join the TPP. BoJ Gov Shirakawa confirmed that Japan's economy is in its most severe state since the earthquake, note Japan will report their prelim Q1 GDP later this week.
***Speakers/Geopolitical/In the press***
- (PH) Moody's comments on Philippines: Does not have to wait until 2012 for ratings upgrade; case to upgrade stronger, though risks remain
- (KS) South Korea Fin Min Yoon: G-20 should take steps to fend off protectionism
- (CH) Central China drought conditions are impacting 1.35 hectares of crops - Chinese Press
- (UA) Dubai Govt will take full control of Dubai Bank in order to keep the bank open and protect deposits; No terms disclosed - US Financial Press
***Equities***
- MGR.AU: On track to report FY11 Net profit +12-14% y/y (implies A$308-314M v A$369Me); May conduct a share buyback using funds from A$52M asset sale
- JHX.AU: Will distribute 20-30% of net profit; To buyback 5% of outstanding shares over 12-months
- FCG.NZ: On track for record production in FY10/11, Production is 4% ahead y/y; Supplied remain tight
- HPQ: To Accelerate Q2 Earnings Announcement to Tuesday, May 17, 2011 at 7:30amET; -4.5% after hours
***FX/Fixed Income/Commodities***
- JGB: Japan MoF sold ¥T in 2.2% (2.2% prior) 40-yr bonds (2.2% prior), bid to cover 3.13x v 2.06X on Feb 7th
- (CH) PBoC sells 1-yr bills at 3.3058% v 3.3058% prior (unchanged for 6th consecutive week)
- USD/CNY: (CH) PBoC sets yuan mid point at 6.5108 v 6.5074 prior close (Lowest yuan setting since April 25th)
- (AU) Australia Newcastle coal exports +7% for week ending May 16th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,482 tons from 10,534 tons prior (lowest since 10,253 on May 8th)
- (CH) Central China drought conditions are impacting 1.35 hectares of crops - Chinese Press
