com Asia Market Update: Training wheels are being removed in terms of monetary and FX intervention policies; Q3 chip-maker volatility contin

***General Trend and Developments*** - TECH: Shares of Meta rallied by >8% in NY trading.

The move came as the co. is said to be building a cloud business to sell excess AI compute, which could ease concerns about the co’s costs [press].

Recent cost reduction news also circulated in The Information related to OpenAI on Wed. - -There was additional press speculation about Apple becoming the latest US tech firm to seek chip supplies from China Recall, HP, Dell, Acer, Asus were said to consider using Chinese chips for first time amid the chip shortage that threatened product launches [Nikkei report from Feb 4th] - -More details have surfaced about possible US government stakes in AI companies. - -Meanwhile, SoftBank has yet to receive its margin loan backed by its stake in OpenAI.

The firm is said to have, however, renewed talks with lenders on securing a $10B margin loan backed by its OpenAI stake and repayment guarantee [press] - -Biotech and AI continue to collide.

HK drug maker InSilico Medicine Cayman announced a $600M ‘AI drug discovery’ deal with Japans’ Takeda. - -Trade-sensitive Chinese names have seen gains after recent figures.

BYD has rallied on monthly sales figures, while JL Mag Rare-Earth sees strong H1 and Q2 results, - - Berkshire continues to raise exposures to the trading companies in Japan, despite the firm’s leadership transition, - -Weaker demand seen at 10-year JGB auction after recent soft 20-year auction; JGB yields rise. - -Forward Guidance became the focal point on the last day of the ECB conference with the discussion driven by remarks from Warsh.

The ECB Forum on Central Banking held in Portugal [attended by US Fed Chair Warsh, ECB Chief Lagarde, BOE Governor Bailey, and Bank of Canada Governor Macklem] reflected on previous interest rate decisions and recent economic metrics within respective economies highlighting inflation rates.

ECB Chief Lagarde said she had ‘given up on forward guidance’.

BOE Governor Bailey also noted ‘forward guidance becomes quite problematic after a while’, reflecting Warsh’s previous insights on moving away from forward guidance and dot plots. - - Meanwhile, Japan’s FX policy might become more unpredictable.

Japan might shift away from telegraphing intervention risks in advance, according to a recent press report.

Recall, in early Jun Japan’s Finance Minister Katayama said ‘we have certain phrases on FX warning, changing them will risk confusing markets.’ This news is particularly interesting ahead of Friday’s NY holiday. - - Japan’s PM Takaichi is currently visiting India.

There has been press speculation that both countries will reach an agreement on 120 projects in total worth ¥2.00T.

Prior reports suggested that the two countries could collaborate on ammonia and hydrogen production.

Both sides are also said to be considering direct yen-rupee settlements [Nikkei from Jun 30th].

Nikkei also noted various Japanese financial institutions will lend up to $490M to India for the development of power grids, while Japan is further said to provide trade insurance to Reliance Industries [RIL.IN] on a ¥100B syndicated loan. - - -US equity FUTs +0.1% to +0.2% during Asia trading - - ***Looking ahead (Asian-weighted focus, using Asian time zone)*** - -Mon June 29th: EU Jun Consumer Confidence - -Tue June 30th: KR May Industrial Production & Retail Sales, JP May Industrial Production & Unemployment Rate, NZ Jun ANZ Business Confidence, AU RBA Meeting Minutes, CN Jun PMIs, UK Q1 GDP, (Tue night, US Jun Consumer Confidence, US May JOLTs) - -Wed July 1st: JP Q2 Tankan, KR Jun Prelim Trade Balance, EU & US Jun final S&P/HCOB Mnfg PMIs, CN June RatingDog Mnfg PMI, EU Jun Prelim CPI - -Thu July 2nd: KR Jun CPI, AU May Trade Balance, JP 10-Year JGB Auction, EU May Unemployment Rate, (Thu night, US Jun Nonfarm Payrolls ) - -Fri July 3rd: AU & JP Jun Final S&P PMIs, CN Jun RatingDog Svcs PMI, Global final Jun S&P/HCOB Services PMIs, (Note: “ Independence Day (Observed)” – U.S. markets closed, reduced liquidity ) - - ***Holidays in Asia this week*** - -Wed July 1st: Hong Kong - -Fri July 3rd: US Independence Day - - ***Headlines/Economic Data*** - Australia/New Zealand - -(AU) ASX 200 opens -0.3% at 8,696 - -(AU) Australia May Trade Balance (A$): -3.0B v +2.2Be - -(NZ) New Zealand Government 11-Month Financial Statements: Budget Deficit NZ$6.79B (NZ$3.04B narrower than expected) - -(NZ) New Zealand May Building Permits M/M: -4.0% v 10.9% prior - -(NZ) RBNZ: Not seeking additional Monetary Policy Committee member [ahead of the NZ election] - -(NZ) RBNZ: Names 'Angus McGregor' Assistant Gov of financial stability, effective 'later this month' - - China/Hong Kong - -(CN) Shanghai Composite opens -1.4% at 4,054; (HK) Hang Seng opens +0.8% at 23,071 - -(CN) Mainland China equities open sharply lower, led by tech-heavy Shenzhen; CSI Semis index -5.5%; CSI AI index -3.7% - -(CN) A record number of public funds in China said to have doubled their AI-related returns – China Securities Journal - -(CN) China companies increase stock buybacks after price declines – Chinese press - -(CN) China AI start-up Vast closes $150M funding round – US financial press - -(HK) 3696.HKConfirms to sign AI-powered drug discovery collaboration with Takeda worth $600M, including $60M in upfront and near-term payments - WSJ - -(CN) China PBOC sets the yuan mid-point at 6.8088 v 6.8067 prior - -(CN) China PBOC Open Market Operation (OMO): Sells CNY289B in 7-day Reverse Repos; Net drains CNY82B v drains CNY1.16T prior - - Japan - -(JP) Nikkei 225 opens -0.6% at 70,017 - -(JP) Japan sells ¥2.6T vs. ¥2.6T indicated in 10-year JGB bonds; Avg yield: 2.7920% v 2.649% prior; Bid-to-cover: 3.13x v 3.53x prior - -(JP) Berkshire continues to raise stakes in the Japan trading cos. - update - -(JP) Japan shifts away from telegraphing intervention risks in advance, focusing on hitting speculators - US financial press [citing sources] - -(JP) Japan's [final] tax revenue for last fiscal year expected