Equity FUTs turnaround on CN olive branch on trade - but JP delivers a barb

Asia Market Update: Equity FUTs turnaround on CN olive branch on trade - but JP delivers a barb; Focus on EU Apr CPI, US NFP.

General trend

- US equity FUTs started off on the wrong foot, weighed down by tepid results from Apple and Amazon after hours. Hang Seng outperformed Asia +1.8%, playing catch up after yesterday's holiday.

- However, China appeared to officially open the door to potential trade talks with the US, releasing a statement saying it was conducting an "assessment" on US trade negotiations. USD/JPY immediately strengthened further (following the dovish BOJ yesterday to April 10th highs), to just shy of 146, while US equity FUTs erased losses (about +0.5%) on the China comments.

- However, later came a bit of a trade dampener from both Japan PM Ishiba, who said the Japan-US trade negotiations are “Not in situation where we have found common ground yet”, while earlier Japan Fin Min Kato intimated that Japan’s holdings of US Treasuries are “a card in our trade negotiations”. (Kato had said back in April that Japan will NOT sell US Treasury holdings). USD/JPY continued to lose all its morning gains amid Ishiba's mid-session comments.

- Meanwhile the CEO of Japanese trading house Marubeni expects limited effects from the US-China tariff war overall, pointing out potential positive impacts in its agribusiness and used goods services in US as well as for grain exports from Brazil.

- Starting tonight May 2nd at 12:01 a.m. ET, US Customs and Border Protection started to void the $800 de minimis exemption for parcels from China and Hong Kong, instead imposing either a 120 percent ad valorem duty or a flat $100 fee per package (rising to $200 on June 1st). This change closes a decades-old loophole, and will sharply boost landed costs on low-value imports and force e-commerce players, logistics providers, retailers and consumers to overhaul pricing, fulfillment and supply-chain strategies.

- Of the 6 Asian nations releasing April PMI for manufacturing today, only the Philippines avoided contraction, with Indonesia notably plunging 6 handles from 52 to 46, as concerns about tariffs effect on global growth become tangible.

- Australian retail sales flatter than expected, with q/q figures flat, ahead of the next RBA rate decision on May 20th.

- South Korea CPI for April was 0.1% hotter than expected, keeping annual inflation just above the 2.0% target.

- As the Trump Admin’s attention shifts to passing a ‘big, beautiful bill’ by early Summer with tax and spending cuts included, Pres Trump said he wants to cut $163B in govt programs across health research, climate and education, as the White House issued an Order to end federal funding for long-time national broadcasters, NPR, PBS.

- Ahead of Australia’s general election tomorrow (Saturday), accusations of a China-linked group ‘meddling’ in the election.

- US equity FUTs +0.6% to +0.7% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Fri May 2nd (Fri eve EU Apr CPI, US Non-Farm Payrolls).

Holidays in Asia this week

- Tue Apr 29th Japan.

- Wed Apr 30th Vietnam.

- Thu May 1st China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam.

- Fri May 2nd China.

Headlines/economic data

Australia/New Zealand

- ASX opens -0.1% at 8,142.

- Australia sells A$1.2B vs. A$1.2B indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.2457% v 4.4063% prior; bid-to-cover: 2.75x v 4.02x prior.

- New Zealand Mar Building Permits M/M: 9.6% v 0.8% prior.

China/Hong Kong

- Hang Seng reopens +0.3% at 22,192; Shanghai Composite closed for holiday.

- TTN Reminder: USCBP $800 de minimis duty-free exemption to be voided from Now for China/Hong Kong exports into the US (May 2nd ET at 00:01).

- (HK) Macau Q1 Advance GDP Y/Y: -1.3% v +3.4% prior.

- (US) Follow up: US Sec State Rubio ; There is a broader question about how much we should buy from China going forward; The Chinese want to meet and talk - Fox News interview.

- *China is conducting "assessment" on US trade negotiations – statement.

- China MOFCOM: US initiated trade war, (so) should show sincerity in talks - financial press.

- (VE) China said to renegotiate terms of Venezula oil purchases as the Maduro govt asks China to increase oil purchases - press.

- Reportedly China holding off on trade talks with the US to determine "which way the wind blows" in the divided White House and how other countries respond to the 90-day pause on tariffs; Trump administration said to be “too divided” and China is in no rush to negotiate an end to the tariff deadlock that US initiated – SCMP [overnight update].

Japan

- Nikkei 225 opens +0.6% at 36,671.

- JAPAN MAR JOBLESS RATE: 2.5% V 2.4%E.

- Japan Apr Monetary Base Y/Y: -4.8% v -3.1% prior.

- Japan releases weekly flows data [period ended Apr 25th]: Foreign buying of Japan equities: ¥278.3B v ¥705.6B prior; Japan buying of foreign bonds: ¥435.2B v ¥218.2B prior.

- Japan PM Ishiba: Not in situation where we have found common ground yet [comments on trade talks with the US].

- *Japan Fin Min Kato: Japan's US Treasury holdings are a card in our trade negotiations; Whether we will use that card is a different decision - TV interview.

- Japan Economic Revitalization Min Akazawa: Talk with US counterparts lasted for 130 minutes; continues to decline comment on the specifics of the trade negotiations

- Japanese brokerage houses said to compensate for phishing losses - Nikkei.

- Chairman Akio Toyoda met with PM Ishiba over tariffs - NHK.

- BOJ Gov Ueda: Time of underlying inflation to achieve the 2% target will be somewhat delayed; Expect US tariffs to be above the base 10% levied; Timing of next rate hike could be swayed a lot depending on impact of tariffs on economy - post rate decision press conference [overnight update].

- BOJ Gov Ueda: No need to raise rates in haste when underlying inflation is stalling [overnight h.

Korea

- Kospi reopens flat at 2,556.

- SOUTH KOREA APR CPI M/M: 0.1% V 0.1%E; Y/Y: 2.1% V 2.0%E (Annual pace stays above target for the 2nd straight month).

- South Korea Apr PMI Manufacturing: 47.5 v 49.1 prior (Sept 2022 low and fourth month of contraction).

- Bank of Korea (BOK): Inflation likely to be in the 2% target range - financial press.

- South Korea Former acting Pres Han says will amend Constitution and then step down - financial press.

- South Korea Acting Fin Min: To continue to monitor financial markets - financial press.

- South Korea Acting Pres Lee Ju-ho holds national security council meeting - TV coverage.

- South Korea acting Pres Lee Ju-ho says the military will remain on alert and ready - South Korean press [overnight update].

- Reportedly South Korea's Education Min to become Acting Pres from midnight; South Korea will hold 'F4' meeting on Friday - press.

- South Korea PM and acting Pres Han formally resigns ahead of Presidential bid, as expected (Add prior story) [overnight update].

- South Korea PM and acting Pres formally resigns ahead of Presidential bid [overnight update].

Other Asia

- Taiwan Apr PMI Manufacturing: 47.8 v 49.8 prior (2nd straight contraction).

- Indonesia Apr PMI Manufacturing: 46.7 v 52.4 prior (first contraction in 5 months).

- Philippines Apr PMI Manufacturing: 53.0 v 49.4 prior (move back into expansion after one month.

- Thailand Apr PMI Manufacturing: 49.5 v 49.9 prior (second straight contraction).

- Malaysia Apr PMI Manufacturing: 48.6 v 48.8 prior (11th month of contraction).

- Indonesia Apr CPI M/M: 1.2% v 1.0%e; Y/Y: 2.0% v 1.5%e.

- Taiwan dollar +2% , largest intra-day move since 2011.

North America

- US Pres Trump said to seek budget cuts in govt programs of ~$163B, in areas such as health research, climate and education programs - WSJ.

- (US) Treasury Sec Bessent: US-Ukraine deal shows no daylight between Ukraine and US; On China, first we need de-escalation on tariffs; If holiday orders not placed, it could be bad for China.

- (US) Reportedly US chamber to ask White House for small business tariff exemption - CNBC.

- (US) White House NEC Dir Hassett: Hopeful for China trade progress; I have not spoken with Chinese officials; Have hard trade offers from more than 20 countries.

- (US) INITIAL JOBLESS CLAIMS: 241K V 223KE (highest since Feb 2025); CONTINUING CLAIMS: 1.916M V 1.865ME (highest since Nov 2023).

- (CA) Canada Apr Manufacturing PMI: 45.3 v 46.3 prior (3rd straight contraction).

- (US) White House Deputy Chief of Staff Miller: Relief for small businesses will come in the form of tax cuts; Massive incentive for automakers to increase US output - comments to media.

- (US) APR S&P FINAL MANUFACTURING PMI: 50.2 V 50.5E (confirms 4th month of expansion); Sentiment about future output at ten-month low; Concerns have also spiked in terms of input costs and selling prices; Notes several tariff impacts.

- (US) APR ISM MANUFACTURING: 48.7 V 48.0E, Prices Paid: 69.8 v 73.0e, New Orders: 47.2 v 45.0e; Demand and output weakened while input strengthened further

- (US) MAR CONSTRUCTION SPENDING M/M: -0.5% V 0.2%E.

- (MX) Mexico Pres Sheinbaum: Agreed with US Pres Trump that Treasury, Finance, Economy and Commerce Secretaries will continue working in coming days on options to improve trade balance - X post.

Europe

- (EU) Reportedly Euro is ready to make Trump a €50B offer - FT citing EU negotiator.

Levels as of 01:20 ET

- Nikkei 225 +1.2%, ASX 200 +1.1%, Hang Seng +1.7%; Shanghai Composite closed; Kospi +0.1%.

- Equity S&P500 Futures +0.7%; Nasdaq100 +0.5%; DAX +1.5%; FTSE100 +0.1%.

- EUR 112.75-1.1313; JPY 145.15-145.92; AUD 0.6375-0.6420; NZD 0.5903-0.5938.

- Gold +1.2% at $3,260/oz; Crude Oil +0.6% $59.62/bbl; Copper +1.4% at $4.6988/lb.