Key News

Asian equities were mostly higher overnight as calm was restored in global markets following a week of geopolitical jitters.

Steel names were relatively unaffected after Biden’s tariff proposal. Some analysts are saying that this is because the US remains a relatively small market for China’s steel producers. This could also be a Trump-like campaign position that might be walked back. It is just astonishing that we are still talking about increasing tariffs in the US after Americans have been faced with the highest inflation rates in over a decade. Remember that tariffs are a regressive tax that is usually accounted for by foreign exchange, meaning they end up having little to no impact on the actual flow of trade. Smoot and Hawley did not go down well in history. As usual, this is a distraction technique.

JD.com announced that the company repurchased $1.2 billion worth of its own shares in the first quarter, representing nearly 3% of its shares outstanding. The company also initiated a new share repurchase program, which will last until 2027 and involve repurchases worth nearly $3 billion. JD.com still fell -0.71% in Hong Kong overnight, though it is trading basically flat in the US today.

Hong Kong rebounded after underperforming the Mainland in recent sessions. Financials were top-performers in the Mainland and Hong Kong, still on the back of positive policy indications. Real estate was also positive in Hong Kong. Home appliance makers have also been rallying recently, on expectations for higher demand due to incentives, announced during the “Two Sessions” policy meeting , for the trading up and upgrading of large household items such as furniture, appliances, and automobiles.

The Hang Seng and Hang Seng Tech indexes both closed higher by +0.80% and +0.50%, respectively, on volume that decreased -4% from yesterday. Mainland investors bought a net $848 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Financials, which gained +0.62%, Real Estate, which gained +1.29%, and Consumer Staples, which gained +1.24%. Meanwhile, the worst-performing sectors were Health Care, which fell -0.97%, Energy, which fell -0.19%, and Utilities, which gained +0.13%.

Shanghai, Shenzhen, and the STAR Board diverged to close +0.09%, -0.11%, and -0.69%, respectively, on volume that increased +3% from yesterday. Foreign investors sold a net -$734 million worth of Mainland-listed stocks overnight via Northbound Stock Connect. The top-performing sectors were Financials, which gained +0.93%, Materials, which gained +0.67%, and Consumer Discretionary, which gained +0.63%. Meanwhile, the worst-performing sectors were Utilities, which fell -1.27%, Energy, which fell -1.01%, and Health Care, which fell -0.70%. CNY is still holding to the 7.24 per USD position. Treasury bonds rallied slightly. Copper gained while steel fell.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.24 versus 7.24 yesterday
• CNY per EUR 7.72 versus 7.72 yesterday
• Yield on 1-Day Government Bond 1.37% versus 1.40% yesterday
• Yield on 10-Year Government Bond 2.25% versus 2.26% yesterday
• Yield on 10-Year China Development Bank Bond 2.32% versus 2.34% yesterday
• Copper Price +1.62%
• Steel Price -0.19%