The
key focal point of the session was the China data, the official PMIs
for May. Both the Manufacturing and non-Manufacturing PMIs fell from
April, with Manufacturing slipping further into contraction. Large
enterprises (many state-owned and supported) fared better than
mid-size and small, coming in at 50.0, 47.6 and 47.9 respectively.
China’s National Bureau of Statistics (NBS) issued a statement
following the data calling for measures to strengthen the foundation
for recovery and development.
Risk
assets took a hit on the China results. EUR, GBP, AUD, NZD, CAD are
all lower against the US dollar. US equity index futures have also
slipped a little lower.
We
also had data from Australia today, most notably the monthly CPI
report. Headline inflation in April in Australia came in at 6.8%,
above the consensus expectation of 6.4%. The impact was cushioned
somewhat by the
CPI excluding volatile items and holiday travel at 6.5%, down from
6.9% in March. The high headline was also partly explicable by the
dropping out of petrol (gasoline) excise (tax) relief that expired at
end March, sending prices higher. The Australian dollar was marked
higher initially on the CPI number, only to be slammed lower (once
shorts taken out … cough) on the China PMIs. The Reserve Bank of
Australia will be eyeing this inflation data nervously, the higher-than-expected April CPI is going to make hitting the RBA inflation
forecast for Q2 a tight-run thing and increases, at the margin, the
prospect of a June rate hike from the Bank.
Other
data
from Australia today showed private sector credit growth m/m and a
beat on Q1 Construction Work Done. Residential construction declined
but was offset by engineering work.
On
US debt limit news, the bill agreed to by Biden and McCarthy passed
through a House Committee (by just one vote) and will now go to the
full House for a vote, expected Wednesday.
Both
Reserve Bank of Australia Governor Lowe and Bank of Japan Governor
Ueda spoke today, see bullets above.
Asian
equity markets:
-
Japan’s Nikkei 225 -1.1%
-
China’s Shanghai Composite -0.7%
-
Hong Kong’s Hang Seng -2.0% … its even lower as i update down more than 2% now
-
South Korea’s KOSPI -0.2%
-
Australia’s S&P/ASX 200 -1.3%
AUD/USD spiked on the CPI and was hit lower on China PMIs: