Asian Mid-session Update: NZD falls to 5-year lows on 2-year low New Zealand GDP; China property price slowdown eases
***Economic Data***
- (NZ) NEW ZEALAND Q1 GDP Q/Q: 0.2% (2 year low) V 0.6%E; Y/Y: 2.6% V 3.1%E
- (CN) CHINA MAY HOME PRICES M/M: FALL IN 41 OUT OF 70 CITIES VS 47 PRIOR; Y/Y: FALL IN 69 OUT OF 70 CITIES V 69 PRIOR
***Index Snapshot (as of 02:00 GMT)***
- Nikkei225 -0.6%, S&P/ASX -1.2%, Kospi +0.7%, Shanghai Composite -0.7%, Hang Seng -0.2%, Sep S&P500 -0.2% at 2,085
***Commodities/Fixed Income***
- Aug gold +0.2% at $1,187/oz, Jul crude oil -0.3% at $59.60/brl, Jul copper +0.8% at $2.63/lb
- (CN) PBoC won't conduct open market operations (OMO) in today's session (18th consecutive halt); Net zero position this week (8th consecutive week of neutral position)
- USD/CNY: PBoC sets yuan mid point at 6.1126 v 6.1158 prior setting (strongest Yuan setting since May 20th)
- JGB: (JP) Japan MoF sells ¥399.8B in 40-year bonds, bid to cover: 2.60x v 2.58x prior
- (JP) Japan investors net sellers ¥1.9T in foreign bonds V sold ¥385.2B in prior week; Foreign investors net sellers ¥413B in Japan stocks v bought ¥255.3B in prior week
***Market Focal Points/FX***
Asian indices traded generally lower despite the post-FOMC reversal in US equities that helped Wall St to a 2nd day of gains. S&P/ASX is the leading decliner among the major bourses, weighed down by lower iron ore prices even though commodities were generally higher on lower USD. The Fed statement changes were rather marginal, citing improvement and labor in housing while remaining concerned about the risks to the outlook. The fairly dovish update of staff projections was the culprit behind lower short-term rates, lower USD, higher stocks and higher commodities. Officials lowered 2015 GDP to 1.8-2.0% from 2.3-2.7 and maintained inflation projections below 2% for the foreseeable future. The update to the dot chart was also telling. Even though the median forecast was 2015 stayed at 0.625%, the number of Fed officials who see 0.375% at 2015-end also rose to 5 from 1 in March forecast a far more considerable camp favoring just one 25bp hike this year vs two hikes implied by the median. 2016 and 2017 end median rates also came in by 25bps, as Fed members aligned their outlook closer to a much more gradual liftoff in rates being priced in by the Fed Funds futures markets. In notable after-market commentary, Goldman Sachs pushed back its expectation for US fed funds rate liftoff to December from September.
Tepid recovery in China property prices continued with the release of May data. M/M prices fell in 41 cities vs 47 prior, and calculated average across the top 70 cities showed a 0.2% increase after coming in flat last month. Y/Y nationwide prices fell for the 9th straight month but at a slower pace of -5.7% vs -6.1% prior. China Stats Bureau head said the price recovery was much more evident in 1st tier cities, 2nd tier prices were stable, while speculative 3rd tier mainly saw more declines.
NZD/USD was hit hard by a disappointing Q1 GDP print, falling nearly 90pips to a 5-year lows below $0.6880. 0.2% q/q rise was a 2-year low and just a third of the consensus growth rate, with much slower exports growth of 1.5% v 6.1% prior on soft dairy prices compounded by a big decline in govt expenditures. Economist with ANZ noted the disappointing GDP should solidify the case for a 2nd straight RBNZ rate after an easing surprise earlier this month, while ANZ forecasted a 2nd easing on top of another one that has already been priced in before the end of 2015.
Ahead of tomorrow's BOJ policy decision, a Nikkei report speculated that more board members could break camp with Gov Kuroda on open-ended view for Japan's QQE. Report focusing on BOJ member Sato, who has already suggested that QE decisions should be taken meeting by meeting. Note that Sato would potentially join Kiuchi, who has already advocated on several occasions for a taper in annual monetary base increase to ¥45T.
***Equities***
US afterhours:
- PIR: Reports Q1 $0.08 v $0.08e, R$432M v $434Me; +7.0% afterhours
- BMRN: BMN 111 (vosoritide) improves growth velocity in Children with Achondroplasia in Phase 2 Study; +6.4% afterhours
- ORCL: Reports Q4 $0.78 v $0.87e, R$10.71B v $10.9Be; -6.7% afterhours
- JBL: Reports Q3 $0.49 v $0.49e, R$4.4B v $4.46Be; -7.5% afterhours
Asia-Pac equity news by sector:
- Energy: Oil Search OSH.AU -2.0% (maintains output)
- Materials: Syrah Resources SYR.AU +9.4% (results for coated spherical graphite facility); Fortescue FMG.AU -3.6% (not rushing into deals)
- Consumer Discretionary: Oriental Watch 398.HK -2.9% (reports FY15)