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Asian stock market, economy and companies update (June 01, 2010)

Contributed by Trade The News

By Trade The News

- Asian equity markets are down across the board, as 3-month low in China Manuf PMI leaked an hour early by the National Bureau of Stats through China Information News sparked a selloff from the start of trading. Entering the final hour of Tokyo trading, Nikkei225 is down 0.6%, paring more pronounced weakness early in the session. Korea's Kospi and S&P/ASX are down just over 0.7%, while Taiex and Shanghai Composite are off by about 1% on the more direct exposure to the soft China PMI data. Ahead of the markets return from the holiday weekend in the US, front-month S&Ps are also down 0.6%.

SPEAKERS/PRESS
- AUSTRALIA/NEW ZEALAND: As widely expected, the RBA left interest rates unchanged at 4.50%, dedicating much of the attention in the statement to the ongoing fiscal saga in Europe. The commentary outside the sovereign debt turmoil was perceived as rather upbeat however, boosting AUD across the board. Specifically, RBA said inflation would remain in the upper half of target range over the next year, with growth in Asia remaining strong and recovery in N America becoming more established. In Australia, RBA said the high levels of terms of trade would support incomes and demand. New Zealand central bank, widely believed to embark on its own tightening campaign as early as next meeting, was urged not to move on rates before September by NZIER, pointing to the fragility of global recovery.

- JAPAN: The aftermath of failed campaign promise on Okinawa US military base continued to plague PM Hatoyama. Japanese press reported that several influential lawmakers in PM Hatoyama's own party - Secretary General Ozawa and the Head of DPM upper house caucus Koshiiishi - approached the PM about his role as the leader of DPJ. PM Hatoyama said he would remain in office, also receiving support from Fin Min Kan.

- CHINA: PBOC adviser and voting member Li Daokui told FT that property market problems in China are worse than those in the US/UK before the financial crisis, exacerbated by risks of social discontent. Li did suggest that China is only on the verge of overheating, and "situation is not out of control." On a related note, Shanghai Securities News reported China real estate closings in Beijing, Shanghai, and Shenzhen for the month of May fell about 70% m/m in evidence the govt measures to control the property bubble are working.

EQUITIES
- In individual names, Honda appears to have put the worker strikes at its Chinese plants in rearview mirror, with most of the workers accepting an over 20% wage hike offered by the company. Also in Japan, incoming President of Shinsei Bank said the company will not consider mergers for at least two years. In Sydney, Axa confirmed press speculation of extended exclusivity agreement with NAB to July 15 after its expiry overnight. The Australian named Tenet Healthcare and KKR/CVC Asia Pacific as the two bidders offering A$5.80/shr for the company - a A$1.84B deal. Also in Australia, consumer goods distributor Metcash reported FY10 Net A$227.6M v A$233Me on sales of A$11.6B v A$12Be, and BHP reached an agreement with Japanese steelmakers on 12.5% q/q price increase.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, European majors were weaker, with EUR/USD falling from 1.2310 to 1.2250, weighed down by ECB report that banks in the Eurozone may still have to write off as much as ?195B in bad loans. Sterling was slightly firmer, rising back above 1.45 after response by Prudential PLC to AIG terms. In commodity FX, AUD traded lower across the board going into the RBA meeting but regained the 0.84 handle after the upbeat RBA comments on Asia and US, gaining about 30 pips from the levels just ahead of the rate decision. Japanese Yen traded in a narrow range against the greenback just above 91.00, but gained on EUR and GBP.

- In commodities, spot gold resumes its safe-haven rally, rising to near 2-week high above $1,220 amid EUR weakness. Front-month crude was up 1.0% on geopolitical concerns related to a clash between Israeli naval troops and a Turkish-sponsored flotilla before falling from $75/brl to $74/brl.

ECONOMIC DATA
- (KS) SOUTH KOREA MAY CPI M/M: 0.1% V 0.3%E (7-month low); Y/Y: 2.7% V 2.8%E (4-month high); CORE Y/Y: 1.6% V 1.5% PRIOR
- (KS) SOUTH KOREA EXT TRADE BALANCE: $4.4B V $4.4B prior
- (AU) AUSTRALIA MAY AIG PERFORMANCE OF MANUF INDEX: 56.3 V 59.8 PRIOR
- (JP) JAPAN APR LOANS & DISCOUNTS CORP Y/Y: -3.4% V -3.2% PRIOR
- (CH) CHINA MAY PMI MANUFACTURING: 53.9 V 54.5E (3-month low)
- (AU) Australia APR Retail Sales adj m/m: 0.6% v 0.3%e
- (AU) AUSTRALIA APR BUILDING APPROVALS M/M: -14.8% V -5.0%E (multi-year low); Y/Y: 21.3% V 34.0%E (6-month low)
- (TT) Taiwan MAY HSBC Taiwan Manufacturing PMI: 57.4 v 60.7 prior
- (CH) China MAY HSBC Manufacturing PMI: 52.7 v 55.4 prior
- (ID) Indonesia MAY Inflation m/m: 0.3% v 0.3%e; y/y: 4.2% v 4.2%e; Core inflation 3.8% v 3.8%e
- (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE UNCHANGED AT 4.50% (AS EXPECTED)
- (IN) INDIA MAY MARKIT MANUFACTURING PMI: 59.0 V 57.2 PRIOR; highest reading in 27 months