Asia Mid-Session Market Update: China Premier Li upbeat on economic prospects amid another double-digit Industrial Profit growth
***US Session Highlights***
- (US) Fed’s Dudley (dove, FOMC voter): Fed's taken very measured and careful approach to shrinking bond portfolio
- (US) MAY PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.6E (the largest drop in six months); DURABLES EX TRANSPORTATION: 0.1% V +0.4%E
- (US) May Chicago Fed National Activity Index: -0.26 v +0.49 prior
- (US) JUNE DALLAS FED MANUFACTURING ACTIVITY: 15.0 V 16.0E
-Stocks opened the week on a positive note, spurred by a rally in Europe, as two Italian banks were saved from bankruptcy with public money and Nestle hit a new all-time high, gaining 4% on the day. Technology stocks fell out of favor, down 0.3%. Best performing sectors in the S&P were Utilities and Financials, gaining 0.8% and 0.5% respectively.
***US markets on close: Dow +0.1%, S&P500 flat, Nasdaq -0.3%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Technology
- Biggest gainers: FE +4.1%; EQT +3.8%; CVS +3.5%
- Biggest losers: FTR -6.6%; ARNC -6.0%; QRVO -5.1%
- At the close: VIX 9.9 (-0.1pts); Treasuries: 2-yr 1.36% (+1bps), 10-yr 2.14% (-1bps), 30-yr 2.70% (-2bps)
***Politics***
- (US) Sen Collins (R-ME) to vote NO on motion to proceed on healthcare legislation - tweet
- (US) CBO scores Senate Republican healthcare bill: 22 million more people uninsured by 2026
- (BR) Brazil Prosecutor General Janot confirms to proceed with corruption charges against President Temer - Brazil press
***Key economic data***
- (CN) CHINA MAY INDUSTRIAL PROFITS Y/Y: 16.7% V 14.0% PRIOR; YTD 22.7% V 24.4% PRIOR
- (NZ) NEW ZEALAND MAY TRADE BALANCE (NZD): 103M (3rd straight surplus) V 419ME; 12-MONTH YTD: -3.75B V -3.39BE
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 111.8 v 112.4 prior
***Asia Session Notable Observations***
- China Premier Li spoke at World Economic Forum, pleding to maintain policy settings amid steady growth expectations in Q2; Unemployment seen at 4.9%.
- China profit growth accelerates to 16.7% from 14.0%, while Liabilities growth slows to 6.5% from 6.7% in May.
- New Zealand posts 3rd straight trade surplus; Exports in line with estimates and Imports higher than expected; Shipments of Dairy spike over 40% y/y to NZ$1.2
- Brazil Prosecutor confirms proceeding with corruption charges against Pres Temer.
- White House notes signs of Syria preparing another chemical attack, warns Assad will pay heavy price if he proceeds.
***Speakers and Press***
China
- (CN) China Premier Li: Economy maintaining steady growth and improving in Q2; To keep proactive fiscal policy and prudent monetary policy - World Economic Forum comments
- (CN) PBOC said to be in talks with MoF on asset management tax plan
- (CN) China May Lottery Sales CNY37.7B, +8.9% y/y
Japan
- (JP) Japan Fin Min Aso: Takata bankruptcy may impact jobless rate; Will work with METI to gauge impact - press
- (JP) Japan ruling Liberal Democratic Party lawmaker Shigeru Ishiba: Japan must keep its 2020 primary balance target; faith in currency is extremely important
- (JP) Japan Q1 Household Assets ¥1,809T, +2.7% y/y
Korea
- (KR) South Korea Pres Moon: Extra budget will help economy get back to 3% GDP growth - press
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +0.3%, Hang Seng +0.1%, Shanghai Composite -0.1%, ASX200 -0.1%, Kospi +0.3%
- Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax flat, FTSE100 flat
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1180-1.1195; JPY 111.80-112.10; AUD 0.7575-0.7605; NZD 0.7275-0.7300
- Aug Gold flat at 1,246/oz; Aug Crude Oil +0.3% at $43.50/brl; July Copper -0.2% at $2.63/lb
- SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 853.7 tonnes
- Morgan Stanley lowers Q3 Iron Ore price forecast by 23% to $50/ton - press
- (CN) PBOC SETS YUAN MID POINT AT 6.8292 V 6.8220 PRIOR; Weakest Yuan fix since May 31st
- (CN) PBoC: To skip today's open market operation (OMO); 3rd straight skip
- (JP) Japan MoF sells ¥1.77T v ¥2.2T indicated in 2-yr 0.1% JGBs; Avg yield: -0.103% v -0.162% prior; bid to cover: 6.79x v 5.06x prior
- (AU) Australia (AOFM) sells A$150M in 2.5% 2030 indexed bonds; avg yield 0.6562%
***Asia equities notable movers***
Australia
- QBE Insurance (QBE) +1.3%; Exec: Seeing higher claims in emerging markets - press
- Blackmores Limited (BKL) -3.9%; CEO Christine Holgate to resign
- Metcash (MTS) -4.1%; Cut at Credit Suisse
Japan
- Nissan (7201) +0.7%; Targets 8% global market share as part of its next mid-term plan - press
- Mitsubishi Motor (7211) +1.4%; Guides FY19 global vehicle production at least 1.5M units, +40% from last FY
- Nikon (7731) +0.7%; Said to increase display device output for camera and TV products - Nikkei
Hong Kong
- China Southern (1055) -3.5%; To raise up to $1.9B in share sale
- Pioneer Global Group (224) +13.4%; Reports FY17 (HK$) Net loss 67.6M v loss 67.7M y/y; Rev 295.0M v 258.7M y/y
- Bosideng International Holdings limited (3998) +5.1%; Reports FY (CNY) net 391.8M v 280.9M y/y, Rev 6.82B v 5.79B y/y