Asian stocks traded with a subdued tone following a yo-yo session in US where stocks finished mostly negative although well off worst levels

Ireland reportedly has the support of EU leaders to veto Brexit trade agreement and collapse discussions if there is no solution on the Irish border issue

Looking ahead, highlights include Eurozone services PMIs, US jobs and a slew of speakers and earnings

ASIA

Asia stocks traded with a subdued tone following a yo-yo session in US where stocks finished mostly negative although well off worst levels, while the absence of Japan and looming US NFP jobs data added to the lacklustre tone. ASX 200 (-0.5%) was negative with the index dragged by financials and most commodity-related sectors, while KOSPI (-0.7%) also traded downbeat as index heavyweight Samsung Electronics slumped on its re-open from a 50-to-1 stock split. Elsewhere, Shanghai Comp. (-0.1%) and Hang Seng (-0.3%) conformed to the gloom following another liquidity drain by the PBoC and amid IPO activity in which Ping An Insurance unit Good Doctor failed to set-off fireworks on its debut, however mainland losses were stemmed amid encouraging Caixin Composite and Services PMI data.

PBoC injected CNY 20bln via 7-day reverse repos for a net weekly drain of CNY 110bln. (Newswires)

PBoC set CNY mid-point at 6.3521 (Prev. 6.3732)

Chinese Caixin Services PMI (Apr) 52.9 vs. Exp. 52.2 (Prev. 52.3). (Newswires)
Chinese Caixin Composite PMI (Apr) 52.3 (Prev. 51.8)

UK/EU

Ireland reportedly has the support of EU leaders to veto Brexit trade agreement and collapse discussions next month if PM May fails to push through a customs agreement which averts a hard border for Northern Ireland. Furthermore, reports added that EU officials warned that negotiations on future partnership will be suspended at European summit next month until there is a solution to the customs issue. (Times)

Ministers were told during a briefing earlier this week that UK may not be able to leave customs union for another 5 years as it may take that long to prepare the technology required to operate the border. (Telegraph)

The Conservatives have seen off a Labour assault on their flagship councils in London, with both parties losing control of key areas elsewhere in across the nation. The Conservatives appeared to benefit most from a sharp reduction in the Ukip vote, making progress outside the capital in the largest test of public opinion since last year’s snap election. (Times)

NIESR lowered its GDP forecast for 2018 to just under 1.5% from 1.9% mainly due to weak performance in Q1, but said the slowdown is likely to be temporary. (Newswires)

FX

In FX markets, price action was predominantly quiet amid tentativeness ahead of the key US jobs data which contained most major pairs near the prior session’s levels. As such EUR/USD traded sideways and just shy of 1.2000, while GBP/USD was relatively unchanged and brushed aside the local council election results which have so far seen Labour remain with the largest number of councillors. Elsewhere, the greenback slightly softened as USD/JPY briefly retreated below 109.00 and after the PBoC set a firmer fix, while AUD outperformed on cross-related flows in which EUR/AUD slipped below 1.5900 and AUD/NZD reclaimed the 1.0700 handle to the upside.

RBA Statement on Monetary Policy stated board sees no strong case for a change in rates in the near-term and that higher rates are likely to be appropriate at some time if the economy improves as forecast. Furthermore, the RBA stated that significant strengthening of AUD would adversely impact growth and inflation, while it maintained its economic growth at 3.25% for December 2018, while forecasts for inflation and unemployment were slightly raised for December 2018. (Newswires)

COMMODITIES

Commodities were relatively quiet overnight in which WTI crude futures traded sideways above the USD 68/bbl level after the late support during US trade as stocks recovered from lows and risk sentiment improved. Elsewhere, gold and copper were similarly uneventful but were kept afloat amid a softer greenback, while the red metal also weathered an early wobble seen in Dalian iron ore futures which slipped 2% at the open during the 1st day foreign investors were permitted to trade Chinese iron futures.
GEOPOLITICS

US President Trump was said to order the Pentagon to consider a reduction in the number of US troops in South Korea, while there were also reports from South Korean press that North Korea agreed to fully denuclearize by 2020. (Newswires)

US

Treasuries closed slightly higher for the session, with action choppy (taking its cue from choppy trade in the equity complex) but within contained ranges ahead of NFP day tomorrow. Action was indecisive ahead of tomorrow’s payrolls data, and the AHE data will likely provide the next catalyst for the TPLEX. Most of the buying action was concentrated in the belly and front end of the curve as 2yr and 5yr yields were lower by c.2bps. 2s30s and 5s30s narrowed by c. 2bps. US 10yr T-Notes futures settle 5+ ticks higher at 119-11.

US and China are said to issue joint statement on trade to be released Friday morning, while it was reported that the sides are to shake hands and make peace, strengthen trade cooperation and cancel or revise number of trade indicators, according to Twitter reports citing CNN. (Twitter/CNN)

White House Economist Calabria said the first day of talks with China have been pretty positive and that the US delegation will ask China to lower tariffs to match US levels. Calabria added that President Trump wants to see a free trade deal with Japan and is also optimistic on a tentative NAFTA deal before June. (Newswires)

White House said it raised concerns with China about its latest militarisation of the South China Sea, while it added that the consequences will be in the short term and long term. (Newswires)

There were initial reports that federal investigators wiretapped Trump’s lawyer Cohen, but then NBC corrected the report and stated that federal investigators monitored and kept a log of Trump lawyer Cohen’s phone calls but did not have a wiretap and were not listening in. (Newswires)