Asian Mid-session Market Update: Stocks sell off after deadly US mass shooting, persisting Brexit fears, and soft China data
***Economic Data***
- (CN) CHINA MAY FIXED URBAN ASSETS YTD Y/Y: 9.6% V 10.5%E; multi-year low
- (CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 6.0% V 6.0%E; YTD Y/Y: 5.9% V 5.9%E
- (CN) CHINA MAY RETAIL SALES Y/Y:10.0% (1-year low) V 10.1%E; YTD Y/Y: 10.2% V 10.2%E
- (CN) China May Foreign Direct Investment (FDI) Y/Y: -1.0% at CNY342.6B; YTD Y/Y: 3.8% v 4.8% prior; 3-month low
- (CN) China May fiscal revenue CNY1.55T, +7.3% y/y, spending +17.6% y/y
- (JP) JAPAN Q2 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: -7.9 V -3.2 PRIOR; BSI LARGE MANUFACTURING Q/Q: -11.1 V -7.9 PRIOR
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -2.6%, S&P/ASX closed, Kospi -1.6%, Shanghai Composite -0.8%, Hang Seng -2.6%, Sep S&P500 -0.4% at 2,079
***Commodities/Fixed Income***
- Aug gold flat at $1,276/oz, Jul crude oil -1.3% at $48.42/brl, Jul copper +1.4% at $2.06/lb
- (IR) Iran appoints Ali Kardor as managing director of National Iranion Oil Co, replacing Javadi - Iran press
- SLV: iShares Silver Trust ETF daily holdings rise to 10,587 tonnes from 10,535 tonnes prior; highest since Dec 2014
- GLD: SPDR Gold Trust ETF daily holdings rise 6.5 tonnes to 893.9 tonnes; highest since Oct 2013
- (CN) S&P Global Platts China Steel Sentiment falls to 16-month low
- (CN) PBOC SETS YUAN MID POINT AT 6.5805 V 6.5593 PRIOR; weakest Yuan setting since June 1st
- (CN) PBOC to inject CNY40B in 7-day reverse repos
***Market Focal Points/FX***
- Risk aversion remains the prevailing sentiment for the 3rd straight trading session in Asia, while US futures markets have been in the red from the start. The worst shooting in US history at an Orlando nightclub early on Sunday by a "lone-wolf terrorist" killing over 50 people while professing his loyalty to ISIS has served as a reminder of vulnerability to such attacks. With two weeks until the Brexit vote, polls coming in are hardly suggesting that cooler heads will prevail, with continued momentum behind the Leave camp. In FX majors, USD/JPY is testing the downside of 106 handle for the first time in over a month, while GBP/JPY cross below 150.50 is a 3-year low. GBP/USD fell over 70pips from Friday close below 1.4180, and AUD/USD traded in a 25-pip range above 0.7360.
- China May economic data were generally in line or softer than expected. Most notably, fixed urban investment growth slowed to multi-year low as property sales value and construction activity saw most pronounced declines. China industrial output was more mixed - power generation recovered from last month's decline and crude steel output showed slightly higher growth, even though the headline numbers were as expected. China Stats Bureau noted overall employment is steady and investment is growing, though economy is still faced with uncertainties. Stats Office official added the ministry will develop gauges to track the Services sector as the economy transitions more toward consumption. Separately over the weekend, IMF's dep director Lipton brought up the deterioration in China's credit markets, stating "mounting corporate debt is a key fault line in the economy" particularly with many SOEs already "on life support."
- In US deals news, Symantec announced it is buying Blue Coat Systems for $4.65B amid further consolidation in security space. In materials, Rio Tinto was reportedly working with Goldman to take control in copper assets Turquoise Hill and sell shares to a large investor after increasing its own stake.
***Equities***
US equities / ADRs:
- SYMC: Confirms to acquire Blue Coat for $4.65B; Guides FY18 $1.70-1.80
- RIO: Working with Goldman Sachs on £8B takeover of copper operations - UK press
- TSLA: CEO Musk tweets: "NHTSA confirmed today that they found no safety concern with the Model S suspension and have no further need for data from us on this matter"
- VCYT: On a preliminary basis, Medicare cuts reimbursement rate for Afirma to $2,240 from $3,200
Notable movers by sector:
- Consumer discretionary: Hotel Shilla Co 008770.KR +1.7% (rival under probe); BAIC Motor Corp 1958.HK +2.4% (acquisition)
- Financials: Noble Group NOBL.SG -4.0% (disposal of US business); Poly Property Group Co 119.HK -1.0% (YTD result); China Vanke Co 2202.HK -3.6% (said to resume trading in early July); Industrial Securities Co 601377.CN -2.2% (regulatory probe)
- Industrials: Nippon Yusen 9101.JP -1.5% (acquisition); Calsonic Kansei Corp.7248.JP +5.2% (2nd round bidding); Daewoo Shipbuilding & Marine 042660.KR -3.6% (may further cut jobs)
- Technology: Sharp Corp 6753.JP -2.2% (S&P may upgrade rating); TCL Communication Technology 2618.HK +28.2% (proposes of privatization)