Asian Market Update: China bad loans continue to rise; BOJ's Kuroda more upbeat on export and consumption, but leaves room for more easing; BOK on hold
***Economic Data***
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
- (CN) China Apr Fiscal Revenue CNY1.55T, +14.4% y/y v +7.1% prior; Spending CNY1.31T, +4.5% y/y v +20.1% y/y prior
- (JP) Japan Apr M2 Money Stock Y/Y: 3.3% v 3.2%e; M3 Money Stock Y/Y: 2.7% v 2.6%e
- (NZ) NEW ZEALAND Q1 RETAIL SALES (EX-INFLATION) Q/Q: 0.8% V 1.0%E
- (PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
- NPD: Apr video game sales -15% y/y at $509.5M
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 -1.1%, S&P/ASX -0.6%, Kospi -0.6%, Shanghai Composite flat, Hang Seng -0.9%, Jun S&P500 -0.3% at 2,053
***Commodities/Fixed Income***
- June gold -0.1% at $1,269/oz, June crude oil -0.9% at $46.27/brl, Jul copper +0.3% at $2.08/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.3 tonnes to 845.2 tonnes; 7th straight increase; highest since Nov 2013
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5246 V 6.4959 PRIOR; weakest Yuan setting since Mar 4th
- (CN) PBOC to inject CNY30B in 7-day reverse repos; Drains CNY110B for the week v drained CNY220B prior (3rd week of drain)
- (JP) BOJ offers to buy ¥450B in 5-10yr JGBs, ¥240B in 10-25yr JGBs and ¥160B in JGBs with maturity over 25-yr and ¥3T in T-bills
***Market Focal Points/FX***
- Asian equity markets are tracking the losses on Wall St, where less dovish Fed-speak from Rosengren and Mester underscored the notion that markets are underpricing expectations of further FOMC tightening this year. USD rallied and commodities fell on those remarks. Rosengren endorsed more hikes, stating that early Q2 data is consistent with inflation closer to 2% target. Mester also noted that inflation is rising toward desired levels. Bullish USD momentum was most evident against high-beta FX that benefit from lower rates - AUD/USD was down over 30pips below 0.73, a 2-month low, and NZD/USD fell over 30pips below 0.68.
- China is bracing for more April economic data, namely industrial output, retail sales, and fixed asset investment. Lending and money supply may also be released in the coming hours. Ahead of those figures, latest findings from CBRC saw NPL ratio to overall lending rise 0.36pts to 1.75% in April. Y/Y, bad load volume spiked up over 40% to CNY1.4T. China Finance Ministry also unveiled its fiscal revenue for Apr up 14% and spending up 20% y/y, adding that downward economic pressure still exists and structural adjustments are difficult.
- BOJ Gov Kuroda delivered a speech for Research Institute of Japan, defending negative rate policy, calling for more time to allow easing to work itself through the economy, but also reiterating the door remains open to more measures. Kuroda did note that risks to the outlook are tilted to the downside and export recovery has paused, but also pointed to 3rd straight year of higher wages, momentum of non-manufacturing, and expectations of improving domestic demand.
- Bank of Korea left rates on hold as expected at 1.50%. This time, the decision was unanimous and the accompanying statement was less dovish. Going into the decision, analysts were evenly split that another easing is possible at the next meeting. BOK's assessment of improvement in economy and consumption, along with more gradual slowdown in China, could tilt those expectations to a neutral BOK stance.
***Equities***
US equities / ADRs:
- NVDA: Reports Q1 $0.46 v $0.32e, R$1.30B v $1.27Be; +7.4% afterhours
- SHAK: Reports Q1 $0.08 v $0.06e, R$54.2M v $52.5Me; +5.6% afterhours
- ADRO: First patient dosed in Phase 1 study of ADU-S100 for treatment of Cutaneously Accessible Tumors; To receive $35M milestone payment; +0.4% afterhours
- PTC: Cuts Q3 $0.28-0.33 v $0.34e (prior $0.31-0.36); -0.8% afterhours
- SYMC: Reports Q4 $0.22 v $0.24e, R$873M v $879Me (in line with prelim Q4 on 4/28); Enters into $2B credit facility; -3.4% afterhours
- DAR: Reports Q1 $0.01 v $0.13e, R$779.6M v $807Me; -5.5% afterhours
- JWN: Reports Q1 $0.26* v $0.45e, R$3.19B v $3.29Be; -17.1% afterhours
- AAPL: To invest $1B in China's Didi Chuxing (direct competitor of Uber)
Notable movers by sector:
- Consumer discretionary: APN News APN.AU +7.9% (entitlement offer); Chow Tai Fook Jewellery Group 1929.HK -2.8% (profit warning); Toray Industries 3402.JP -0.5% (FY15/16 result); Unicharm 8113.JP -0.5% (Q1 result, share buyback)
- Industrials: Yue Yuen Industrial 551.HK -2.1% (Q1 result); RUSAL PLC 486.HK +0.4% (Q1 result); Nissan Motor Co 7201.JP +4.8%, Mitsubishi Motors 7211.JP -4.7% (FY15/16 result, acquisition of Mitsubishi Motor)
- Technology: Hon Hai Precision Industries 2317.TW +0.6% (Q1 result); Toshiba Corporation 6502.JP +2.2% (FY15/16 result)
- Materials: Nippon Steel & Sumitomo Metal Corp 5401.JP -1.2 % (price rise); Mitsubishi Materials 5711.JP -10.3% (FY15/16 result)
- Healthcare: Sigma Pharmaceuticals SIP.AU +1.3% (settlement)
- Telecom: KDDI Corp (JP) 9433.JP -4.1% (FY15/16 result)