Today, service-sector ISM data from the US is the main point to watch, though there is also a probable 25bp rate cut coming from the Bank of Canada. Tomorrow is the ECB meeting, where a 25bp rate cut also looks likely. Here is our European team’s “Cheat Sheet” on what to expect and what it means for markets.

Australia:  Yesterday’s net export contribution to GDP data was a little more negative than had been expected, which could put the consensus (and ING) forecast for a 0.2% QoQ increase in GDP under some downside risk. That said, the earlier capex figures were decent. The data is released at 0930 SGT/HKT.

China:  A report from the South China Morning Post flagged that the EU has decided to impose provisional tariffs on Chinese electric vehicles effective July 4th. Details on the exact rate will be announced next week. This development was largely expected, but will nonetheless come as a blow to the sector, as Europe has been the largest export destination for Chinese autos. A silver lining for Chinese automakers would be within the larger Europe categorisation, the two largest country export destinations have been Russia and the UK, which would not be affected by this decision. Having decided to hike tariffs, we may see a significant escalation of the current 10% tariff rate to significantly restrict imports, with many analysts expecting this rate could exceed 50%. There will probably be retaliatory measures if the final tariff hike is that significant, marking an unfavourable development for global trade starting in the second half of 2024. If we see a smaller tariff hike to 25-50%, it may be seen as a token gesture and consequently incur minimal retaliation as well.

Japan: Labour cash earnings rose more than expected to 2.1% in April (vs revised 1.0% in March, 1.8% market consensus). The more closely watched BoJ measure, same-sample earnings, rose 1.7%, missing the consensus of 2.1%. Nonetheless, today’s data confirms that the gradual increase in wage growth is continuing, as scheduled pay rose firmly. April’s figures also do not fully reflect the recent spring wage negotiations, which will kick in from April through the summer, and more prominently in May and June. We expect real wage growth to turn positive by then, giving the BoJ more confidence for another rate hike. We now expect a 15bp hike at its July meeting.

South Korea: South Korea’s GDP grew by 1.3% QoQ sa in the first quarter, in line with an earlier estimate. Expenditure details changed, but only marginally so. Private spending was revised down to 0.7% (vs 0.8% flash estimate). Services consumption rose for the third consecutive quarter, but durable goods consumption fell for the sixth consecutive quarter, confirming overall goods consumption remains sluggish as monthly activity data have suggested. Meanwhile, export growth was revised up to 1.8% (vs 0.9% flash estimate), slowing from 3.9% in the previous quarter. Today’s revised data was compiled using the new base year of 2020 (from the previous base year of 2015). According to the BoK, the annual GDP growth has been revised up by 0.1pp on average between 2001 and 2023.

South Korea GDP (5 June)

Philippines CPI inflation (5 June)

Australia GDP (5 June)

China Caixin PMI services (5 June)

Singapore retail sales (5 June)

US ADP employment and ISM services (5 June)

Australia trade balance (6 June)

Taiwan CPI inflation (6 June)

ECB policy meeting (6 June)

US initial jobless claims (6 June)

India RBI policy meeting (7 June)

Taiwan trade (7 June)

US non-farm payrolls (7 June)