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Asian stock market, economy and companies update (May 06, 2010)

Contributed by Trade The News

By Trade the News

- Asian equity markets remain in the red across the board, as violent protests of further austerity steps in Greece continued to cloud the future of the Eurozone, shrugging the first positive ADP jobs print since mid-2008 in the US. Nikkei225, reopening for the first time since Friday, was in for a rude awakening. Entering the final hour of Tokyo trading, the index is down over 3.3% below 10,700 - near 2-month low. Elsewhere, Sydney, Shanghai, and Korea markets are down about 2.2%, while the Taiex - the bigger loser in prior session - is off by 1.5%. With just one session ahead of the pivotal US non-farm payrolls report, front-month S&Ps attempted a rally to 1,167, but have since retreated to unchanged levels around 1,164.

- In notable economic data, New Zealand Q1 unemployment rate declined sharply to 6.0% from 7.3%, matching the low seen in Q2 of 2009, while q/q employment change registered its first increase since Q4 of 2008. In Australia, March q/q retail sales were a disappointment at 0.3% v 0.7%e. Aussie trade deficit also rose to its biggest level in 2 years as imports outpaced exports, but did see a multi-month high in shipments of coal and iron ore.

SPEAKERS/PRESS
- New Zealand: Also helping the Kiwi, RBNZ Gov Bollard said economic recovery has entered a less fragile stage, justifying return to more conventional monetary policy. Moreover, Bollard said the timing of rate moves is still dependent on economic conditions, but expectations of small tightening steps by the market are in line with central bank outlook. Specifically, RBNZ head noted the central bank's "foot is strongly on accelerator" of stimulus, but some reduction of speed is needed "before economy turns the corner". Hawkish commentary, coupled with strong employment data, solidified market expectations for a tightening at the next policy decision in June.

- China: Further policy steps from Chinese cabinet continue to target the property bubble, with several notable developments announced today. China Securities Journal said the govt would attempt to limit the transfer of downpayments to developers for unfinished projects, with funds placed in special accounts managed by the govt rather than disbursed fur further investment. A separate report from CSJ said China's city of Shenzhen would limit home purchases by foreigners and citizens of Hong Kong, Macau, and Taiwan to one dwelling. China Daily, citing Dep Director of policy research center of Ministry of Housing and Urban Development Wang Juelin, noted that despite the govt steps, housing prices may still not fall this year. China Vanke reported Apr property sales rose 48% y/y to CNY7.8B. Outside housing, China's FX regulator SAFE said Europe's sovereign debt crisis could become contagious, also suggesting the risk of a double-dip in US economy has not gone away.

- Stateside, Boston Fed President Rosengren turned more dovish than in prior March comments, noting disinflation over the near-term is likely. Rosengren also said current Fed stance is appropriate, justified by only a modest recovery and absence of inflationary pressures. Regarding employment, Rosengren said very strong economic growth is needed for jobless rate to return to 5%, warning that an exit from stimulus would delay the economy from reaching employment capacity. As part of Q/A, Rosengren commented on the European crisis, stating the Fed would consider swap line with EU if needed, but was hopeful EU can resolve its own challenges.

EQUITIES
- In individual names, NAB reported H1 Net A$2.1B v A$2.2Be, declaring Interim dividend A$0.74 v A$0.73 prior. Tier 1 ratio fell to 9.09% v 9.3% prior, while Bad debt charge of A$1.2B also fell 32.1% y/y. Additionally, NAB said company is still pursuing additional options for approval for AXA Asia Pacific purchase. Also in Sydney, Brambles reported 9-month Rev -1% y/y, also warning its FY10 rev would be in line with FY09, implying A$4.0B v A$4.2Be. Telstra was bid slightly higher after Australia government report recommended an agreement be reached with the company to cut the cost of the proposed national broadband network. In the resources space, Rio Tinto denied press report it would cancel investment projects in Australia due to resource tax. Outside Sydney, Samsung Electronics was still upbeat, noting the spending revival in US could result in 50% increase in appliance sales.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, Kiwi dollar was an early outperformer, rising about 100 pips on the session to 0.7270 following better than expected Q1 jobs data and hawkish RBNZ Gov Bollard comments. Late in the day however, USD firmed across the board once again, as EUR/USD made fresh 14-month low around 1.2750, GBP/USD fell to 1.5050, while AUD/USD set its sights on 2-month low psychological support of 0.90. Japanese Yen recoupled with broad late day risk aversion, as USD/JPY fell to 93.50.

- In commodities, crude oil prices are higher and trading below $80/bbl, after closing lower in NY trading on continued concerns about the sovereign outlooks for European countries and bearish weekly inventories data (DOE CRUDE: +2.75M V +750KE; GASOLINE: +1.26M V +500KE). Spot Gold is little changed and trading near $1,175/oz. On yesterday's session, XAU/EUR hit a fresh record high on concerns that the sovereign problems related to Greece could spread to other countries. In other commodities, copper prices have moved off of their best levels, as equity losses in China have accelerated following the morning break.

ECONOMIC DATA
- (NZ) NEW ZEALAND Q1 UNEMPLOYMENT RATE: 6.0% V 7.3%E (matches low seen in Q2 of 2009); EMPLOYMENT CHANGE Q/Q: 1.0% V 0.2%E (first increase since Q4 of 2008); Y/Y: -0.1% V -1.2%E (1-yr high)
- (AU) AUSTRALIA MAR RETAIL SALES M/M: 0.3% V 0.7%E; RETAIL SALES EX INFLATION Q/Q: 0.1% V 0.3%E
- (AU) AUSTRALIA MAR TRADE BALANCE: -A$2.08B V -A$2.13BE (biggest deficit in 2 years)
- (CH) China Consumer Confidence Index rises to 108 - highest level since 2007
- (KS) South Korea Apr Department Store Sales Y/Y: 8.5% v 4.1% prior - Finance Ministry
- (RU) RUSSIA APR SERVICES PMI: 56.9 V 53.6 PRIOR
- (JP) JAPAN APR VEHICLE SALES Y/Y: 33.5% V 37.2% PRIOR