Asian Mid-session Market Update: Equities, risky assets rally as Stay camp seizes the momentum in new Brexit poll
***Economic Data***
- (JP) JAPAN MAY TOTAL MERCHANDISE TRADE BALANCE: -¥40.7B V +¥70BE; ADJUSTED TRADE BALANCE: ¥269.8B V ¥113BE; Exports y/y: -11.3% v -10.0%e (8th straight decline); Imports y/y: -13.8% v -13.8%e (17th straight decline)
- (NZ) NEW ZEALAND MAY PERFORMANCE OF SERVICES INDEX: 56.9 V 57.8 PRIOR
- (NZ) NEW ZEALAND Q2 WESTPAC CONSUMER CONFIDENCE: 106.0 V 109.6 PRIOR
- (KR) South Korea May PPI Y/Y: -3.1% v -3.0% prior; 22nd consecutive decline
- (UK) UK JUNE RIGHTMOVE HOUSE PRICES M/M: 0.8% V 0.4% PRIOR; Y/Y: 5.5% V 7.8% PRIOR
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +2.2%, S&P/ASX +1.2%, Kospi +1.2%, Shanghai Composite -0.2%, Hang Seng +0.9%, Sep S&P500 +1.1% at 2,081
***Commodities/Fixed Income***
- Aug gold -0.6% at $1,286/oz, Aug crude oil +1.2% at $49.16/brl, Jul copper +1.0% at $2.07/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 5.4 tonnes to 907.9 tonnes; highest since Oct 2013
- SLV: iShares Silver Trust ETF daily holdings fall to 10,492 tonnes from 10,661 tonnes prior
- (CN) PBOC SETS YUAN MID POINT AT 6.5708 V 6.5795 PRIOR
- (CN) PBOC to inject CNY170B in 7-day reverse repos
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr, ¥450B in 5-10yr JGBs
- (KR) South Korea sells 10-yr bonds at 1.62%
***Market Focal Points/FX***
- Markets are in rally mode as polls resume following a pause in Brexit campaigning in the wake of last week's death of pro-Labour MP Jo Cox. As suspected, more likely voters have picked up the mantle of her position on the issue - the momentum behind the Leave camp that was picking up before the MP's murder has stalled. In the first survey since the news - Survation poll for Daily Mail - 45% now support Remain and 42% in favor of Leave. Prior Survation poll saw the opposite breakdown - 42% for remain, 45% for leave.
- Among FX majors, GBP is sharply higher on the reversal, rising over 250pips from Friday close to test above 1.46. EUR/USD is up about 100pips above 1.1380, and USD/JPY is up 50pips above 104.60. High-beta AUD/USD and NZD/USD are both up above 60pips around 0.7450 and 0.7120 respectively. Gold prices were down about $15 below $1285.
- India Rupee was fairly volatile, falling about 1% in early Asia trade after central bank Gov Rajan has bowed to pressure and announced plans to resign at the end of his term in September. The departure has raised the probability of more aggressive rate cuts by the incoming governor - something that Rajan has been reluctant to do due to persistently high India inflation.
- Latest trade figures out of Japan are showing few signs of progress. Headline merch. trade dipped into deficit as export decline was wider than expected while imports were in line. Shipments to Asia fell for the 9th straight month, to China and US for the 3rd straight month, and to Europe for the first time in 4 months. Influential former MOF official Sakakibara (Mr. Yen) did not pull any punches with his prognosis on the currency despite the yen selloff today, forecasting gradual JPY appreciation to ¥100 by the end of the year, at which point an intervention will become more likely.
- China property sector seem to be moderating with latest May price data showing 60 out of 70 cities reporting m/m increases v 65 prior. Y/Y, 50 cities saw prices rise vs 46 prior. The average all-70 city prices also rose for the 8th straight month y/y, up 6.9% v 6.2% prior. Also of note, China Association of Automobile Manufacturers (CAAM) released May vehicle sales data showing a 9.8% y/y increase - comparable to 11.4% rise in the survey by China Passenger Car Association release last week.
***Equities***
US equities / ADRs:
- BA: Said to sign a contract with Iran for about 100 aircraft; terms not specified but estimated at several billion dollars - financial press
Notable movers by sector:
- Consumer discretionary: Cabbeen Fashion 2030.HK -7.2% (profit warning) Asics Corp 7936.JP -7.8% (cuts guidance); Surfstitch Group SRF.AU +2.1% (restructures US operations)
- Financials: China Vanke Co 2202.HK -2.9% (acquisition and issue new shares)
- Industrials: Worley Parsons WOR.AU +6.7% (oil gains); Toshiba Machine Co 6104.JP +7.1% (MUFJ upgrades); Nissan Motor Co 7201.JP +2.7% (to roll out electric car in China); Mitsubishi Motors 7211.JP -3.8% (to book charges); Austal ASB.AU +4.3% (awarded contracts)
- Technology: Inotera Memories 3474.TW -1.7% (Nanya Tech and Micron not consider price change)
- Materials: Metcash MTS.AU -11.6% (annual result); Gryphon Minerals GRY.AU +20.0% (acquisition)
- Energy: China Coal Energy 1898.HK +1.4% (May result); Origin Energy ORG.AU +7.3% (to sell wind farm)
- Utilities: ERM Power EPW.AU -21.3% (guidance)