TradeTheNews.com Asian Market Update: Risk-aversion at a boil after Moody's cut

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(CL) CHILE CENTRAL BANK LEAVES OVERNIGHT RATE TARGET AT 5.00%, AS EXPECTED
- (CN) CHINA APR NEW HOME PRICES M/M: FELL IN 43 OF 70 CITIES V 46 PRIOR; Y/Y: FELL IN 46 OF 70 CITIES V 37 PRIOR >- (JP) JAPAN CABINET MAY MONTHLY ECONOMIC REPORT: UPGRADES ECONOMIC ASSESSMENT (First upgrade in 9 months)
- (KR) South Korea Mar Conference Board Leading Economic Index: -1.5% v +2.9% prior

***Markets Snapshot (as of 04:45GMT)***
- Nikkei225 -2.5%
- S&P/ASX -2.4%
- Kospi -2.6%
- Singapore Straits Times Index -1.6%
- Shanghai Composite -1.1%
- Hang Seng -2.6%
- Jun S&P Futures -0.2% at 1,298
- June gold -0.1% at $1,573/oz
- June Crude -0.6% at $92.01

***Overview/Top Headlines***
- Asian equity markets are sliding ever lower in the final trading session of the week, giving little reverence to the G8 summit taking place this weekend in Camp David. Regional indices are off by over 2% just about across the board, S&P500 futures have reversed initial gains to fall over 7 handles, while EUR, AUD, and NZD are all at fresh multi-month lows against the greenback. Govt bonds of US and Japan meanwhile are firmly bid, broadly benefiting USD and JPY currencies. In commodities space, front-month crude has also pared initial gains to fall over $1.00 below $92/brl, while copper retraced its run-up from $3.49 all the way down to $3.45.

- Continued selling has been attributed to more bad news from Europe, where Moody's cut the ratings of 16 Spanish banks by 1-3 notches. Top two banks - Santander and BBVA - bore the brunt of the action with a 3-notch downgrade to A-3, as the credit rating agency noted deteriorating asset quality and little expectation of improvement for the sovereign economy. In China, April home prices saw accelerated declines with 1.2% y/y slide in prices vs -0.7% drop in the prior month. Prices also fell m/m and y/y in 43 and 46 cities respectively out of 70 cities.

- Japan cabinet economic monthly report saw the defiant govt upgrade its economic assessment for the first time in 9 months on expectation of continued reconstruction-related demand. Exports and consumer spending were also upgraded, even as Japan remained mindful of Europe-related risks. Finance Min Azumi noted economic data suggests Japan is in good shape and Econ Min Furukawa saw prospects for sustained recovery. Tokyo officials also argued the recent strength in JGBs reflects market perception of the safety of the asset, just as 10-yr yields hit multi-year lows of 0.82%.

***Speakers/Geopolitical/In the press***
- (CN) According to gov't economist Zhu Baoliang, lending rates could be cut as soon as the current quarter (Q2), but rates could be left unchanged amid concerns about inflation - financial press >- (CN) China Q2 GDP estimated around 7.5% y/y; Inflation around 3.3% - Chinese press citing State Information Center
- (EU) Former ECB Pres Trichet: EMU needs more integration measures such as emergency federal powers to guard against significant risks in Europe - financial press
- (JP) Japan lawmakers continue to oppose entry into TPP free trade talks - Nikkei News
- JPM: Purchased European MBS and other debt securities over the past 3 years, building a position of as much as $100B - FT

***Equities***
- (AU) S&P/ASX extends decline below 4,070; Down over 2.2% and at lowest level in 2012
- TM: To expand capacity at 2 of 3 engine plants in N America; Total investment seen at about $110M - Nikkei News
- BIDU: To cooperate with Foxconn in a launch of cloud computing smartphones - Chinese press
- ACH: Received regulatory approval for a $1B IPO in Hong Kong - financial press

**US Equities**
- CRM: Reports Q1 $0.37 v $0.34e, R$695M v $678Me; +6.4% afterhours >- GPS: Reports Q1 $0.47 v $0.46e, R$3.49B v $3.5Be; +4.7% afterhours
- INTU: Reports Q3 $2.51 v $2.48e, R$1.95B v $2.0Be; -0.1% afterhours
- MRVL: Reports Q1 $0.23 v $0.20e, R$796M v $769Me; +3.0% afterhours
- AMAT: Reports Q2 $0.27 v $0.24e, R$2.54B v $2.4Be; -0.7% afterhours

***Fixed Income/Commodities/Forex***
- AUD/USD: Extending decline below $0.9870; 6-month lows
- NZD/USD: Extending decline to $0.76; 6-month lows
- EUR/USD: Extending decline below $1.2666; fresh 4-month low
- Japan 10-yr JGB yield falls to 9-year lows below 0.82%
- iShares Silver Trust ETF daily holdings rise to 9,619 tons from 9,516 tons (highest level since Apr 11th)
- SPDR Gold Trust ETF daily holdings rise by 2.1 tons to 1,278.7 tons (highest since Apr 27th)
- (MX) Mexico central bank gov Carstens: Mexico inflation is low and stable; Volatility in MXN does not change impact inflation or call for adjustment in monetary policy - financial press
- (US) Weekly Fed Balance Sheet Assets Week ending May 16th: $2.83T v $2.85T prior; M1: -$34B v -$4.0B prior; M2: -$1.7B v +$57.1B prior

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