I. Yesterday’s News
International News

1. Bank of Japan Governor Haruhiko Kuroda said the central bank will telegraph to markets how it plans to exit from ultra-easy policy when conditions for hitting its price goal become robust. But he said it was premature to debate when the BOJ could whittle down its massive stimulus programme, with inflation distant from its 2 percent target. "We will communicate specifics on how we plan to exit once inflation accelerates toward 2 percent and conditions for hitting our target gradually fall into place," Kuroda told the upper house of parliament in a semi-annual testimony on Tuesday. Deputy governor Masazumi Wakatabe said, "If conditions change and our current policy becomes inappropriate, we may need to change policy."

2. Washington and Beijing are nearing a deal that would remove an existing United States order banning American firms from supplying Chinese telecommunications firm ZTE Corp, two people briefed on the talks told Reuters. The people, who declined to be identified because the negotiations were confidential, also said the deal could include China removing tariffs on imported U.S. agricultural products, as well as buying more American farm goods. ZTE, hit by a seven-year ban in April which effectively crippled its operations, would gain a major reprieve after the world's two largest economies stepped back from the brink of a fully blown trade war following talks last week.

3. About two dozen journalists from Western and Chinese news organisations arrived in North Korea on Tuesday to witness the closure of its nuclear test site. Journalists from the Associated Press, CNN, CBS, Russia Today and Chinese state media outlets were among those seen checking in at Beijing Capital International Airport to catch the Air Koryo flight to North Korea. North Korea invited a handful of media to witness the dismantling of the Punggye-ri site this week but not technical experts.

4. Germany’s government will help German firms with business in Iran where it can, but cannot entirely shield them from the U.S. decision to quit the Iran nuclear deal and reimpose sanctions against Tehran, the economy minister told a newspaper. Asked how the German government could assist German firms feeling nervous in the wake of the U.S. decision, Altmaier told the Passauer Neue Presse newspaper that Berlin would help them assess the situation and developments while also urging the U.S. to grant exemptions and deadline extensions.

5. Three weeks before an unprecedented U.S.-North Korea summit is supposed to take place, President Donald Trump will meet South Korean President Moon Jae-in on Tuesday as U.S. officials try to figure out whether Pyongyang is serious about negotiating a deal on denuclearization. Moon's White House visit was originally arranged as a meeting to fine-tune a joint strategy for dealing with North Korean leader Kim Jong Un but has instead become more of a crisis session after Pyongyang last week threatened to pull out of the planned June 12 summit in Singapore.

Domestic News

6. China will steeply cut import tariffs for automobiles and car parts, the country's finance ministry said on Tuesday. Import tariffs will be cut to 15 percent for most vehicles from 25 percent from July 1, the Ministry of Finance said in a statement. A small number of imported trucks are taxed at 20 percent currently. Import tariffs for auto parts would be cut to 6 percent from mostly around 10 percent, the ministry said. The average tax on qualifying vehicles will now be 13.8 percent, and that of car parts at 6 percent, in line with the actual situations of China’s auto industry.

7. China is seeing 'exponential' blockchain growth with large inflow of capitals and sharp increase in startups, revealed by the White Book of the MIIT's Information Center. A preliminary blockchain ecology is formed after aggressive development boosted by IT giants. But regulatory and standard system still need to be completed.

8. Australia should remove its "colored glasses" to get relations back on track with major trading partner China, the Chinese government's top diplomat Wang Yi has told Australian Foreign Minister Julie Bishop on the sidelines of a G20 meeting in Argentina.

II. Market Overview
FX
1. Global Market

The dollar slipped on Tuesday after six straight days of gains, as U.S. Treasury yields dipped and investors looked for fresh incentives to buy the currency following a nearly 7 percent rally since mid-February. In late trading, the dollar index was down 0.1 percent at 93.605, after hitting a five-month high on Monday. In other currency pairs, the euro dipped 0.1 percent against the dollar to $1.1778 amid political uncertainty in Italy. The dollar, meanwhile, slipped 0.1 percent against the yen to 111 yen, after touching a four-month peak on Monday. Investors are now looking to the release on Wednesday of the Fed's minutes from its most recent meeting and analysts said there could be inflationary overtones.

2. Home Market

China's yuan rebounded in the early session of Tuesday on higher midpoint rates, bouncing off a near four-month low after the dollar index slipped after crossing over 94. Forex purchasing and sale was relatively balanced. Yuan prices are expected to hold highs due to heavy foreign exchange purchase.

Precious Metals

Gold steadied just above a 2018 low on Tuesday as the U.S. dollar fell from a five-month high, although risk appetite in the broader financial markets kept the metal's gains in check. Spot gold was down at $1,290.92 . U.S. gold futures for June delivery settled up $1.10, or 0.1 percent, at $1,292 per ounce.

Commodities
Crude Oil

Brent crude prices settled slightly higher on Tuesday after a volatile session in which potential supply concerns surrounding Venezuela and Iran jockeyed with comments from President Donald Trump, who said he was not pleased with U.S.-China trade talks. Brent futures rose 35 cents to settle at $79.57 a barrel, a 0.44 percent gain. U.S. West Texas Intermediate (WTI) crude futures fell 11 cents to settle at $72.13 a barrel, a 0.15 percent loss.

U.S. Treasuries
1. U.S. Bonds

The U.S. Treasury Department sold $33 billion in two-year notes to fair demand on Tuesday, the first sale of $99 billion in coupon-bearing supply this week. The sale came as two-year yields held just below almost 10-year highs reached on Thursday, as investors bet the Federal Reserve will raise rates at least two more times this year. The two-year notes sold at a high yield of 2.59 percent, just below where they traded before the auction.

2. Chinese bonds

China’s cash bonds in the inter-bank market extended losses on Tuesday, while Treasury bonds rose after opening up. Lower U.S. Treasury bond yields, China’s central bank’s moves in steadying liquidity, and solid auction of CDB debts boosted market morale and longing momentum, traders said.

Stock Market
1. U.S. Equities

U.S. stocks ended lower on Tuesday, weighed down by lingering uncertainty over the outcome of trade talks between the United States and China and declines in energy and industrial shares. President Donald Trump on Tuesday said he was not pleased with recent trade talks between the United States and China and earlier said there was no deal yet with China on ZTE Corp. The Dow Jones Industrial Average fell 178.88 points, or 0.72 percent, at 24,834.41, the S&P 500 lost 8.57 points, or 0.31 percent, to 2,724.44 and the Nasdaq Composite dropped 15.58 points, or 0.21 percent, to 7,378.46.

2. Hong Kong Equities

Hong Kong market was closed on Tuesday for public holidays.

3. China Equities

China stocks pared losses to hit a two-month peak on Tuesday, boosted by middle and small caps in the ChinNext late in the session. With heavy selling pressure on cyclical and finance sector, market needs sharply expanding turnover to drive major indexes further higher. The Shanghai Composite Index closed 0.51 points or 0.02 percent higher to 3,214.35 points, after falling as low as 3,192.23. Previous high was 2,263.48 touched on March 22. The blue-chip CSI300 index ended 0.38 percent lower at 3,906.21.