Japanese stocks lead Asian market lower as May starts. Nikkei is trading down -588 pts, or -3.53% and is back pressing 16000 handle at the time of writing. The surge in Yen continues as the Japanese currency reaches 18 month high against Dollar. Also, sentiments are weighed down by a couple of other factors including disappointment on China's PMI data, retreat in oil prices and default of Puerto Rico's Government Development Bank. Meanwhile, Dollar starts the week in a soft note with EUR/USD breaking recent resistance at 1.1464. The greenback will look into manufacturing data for some support later today.
Released over the weekend, the official China manufacturing PMI dropped to 50.1 in April and missed expectation of 50.3. Non-manufacturing PMI also dropped to 53.5. Some economists noted that the data argued that recent optimism on recovery in China might just be "false hope". And the momentum was quickly fading. Nonetheless, there are also comments that the data showed some resilience as the manufacturing PMI stayed above 50 after all. And the government could roll out additional stimulus to keep up the recovery momentum.
WTI crude oil retreats mildly to 45.5, comparing to Friday's close of 45.92. According to a Reuters survey, OPEC output jumped from 32.47m barrels per day to 32.64m in April. That's very close to January's 32.65 million bpd. However, the International Energy Agency executive director Fatih Birol said over the week end that oil prices could have bottomed out already. And, "in a normal economic environment, we will see the price direction is rather upwards than downwards."
It's reported that Puerto Rico will default on USD 422m bond payments for its Government Development Bank. Governor Alejandro Garcia Padilla said on Sunday that "faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice," and, "I decided that essential services for the 3.5 million American citizens in Puerto Rico came first." And, the default could open door to larger and more consequential defaults on general-obligation bonds.
Elsewhere, Australia NAB business confidence dropped to 5 in April, TD Securities inflation rose 0.1% mom in April. Swiss retail sales, SVME PMI and Eurozone PMI manufacturing final will be featured in European session. US ISM manufacturing and construction spending will be released in US session.