Asian Market Update: Australia jobs report mixed as AUD tests 2-month lows; Japan's Sharp rallies on FY results
***Economic Data***
- (JP) JAPAN Q1 HOUSING LOANS Y/Y: 1.9% V 2.2% PRIOR
- (JP) JAPAN MAR MACHINE ORDERS M/M: +5.5% V -2.0%E; Y/Y: 3.2% V +0.8%E
- (AU) AUSTRALIA APR EMPLOYMENT CHANGE: 10.8K V 12.0KE; UNEMPLOYMENT RATE: 5.7% (matches lowest level since July 2013) V 5.8%E
- (NZ) NEW ZEALAND MAY ANZ CONSUMER CONFIDENCE INDEX: 116.2 (7-month low) V 120.0 PRIOR; M/M: -3.2% V +1.7% PRIOR
- (NZ) NEW ZEALAND APR ANZ JOB ADVERTISEMENTS M/M: 1.7% V 3.1% PRIOR; 3rd straight increase
- (PH) PHILIPPINES Q1 GDP Q/Q: 1.1% V 1.4%E; Y/Y: 6.9% V 6.9%E (highest level since Q2 2013)
- (KR) South Korea Apr PPI Y/Y: -3.1% v -3.3% prior; 21st consecutive decline
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 flat, S&P/ASX -0.8%, Kospi -0.6%, Shanghai Composite +0.4%, Hang Seng -0.6%, Jun S&P500 -0.2% at 2,037
***Commodities/Fixed Income***
- June gold -1.3% at $1,259/oz, June crude oil -1.5% at $47.47/brl, Jul copper -0.1% at $2.06/lb
- JGB: (JP) Japan's MoF sells ¥1.00T in 0.4% (0.4% prior) 20-year JGBs; Avg yield: 0.288% v 0.262% (record low) prior; bid-to-cover: 3.36x v 3.55x prior
- (JP) Japan investors bought net ¥1.12T in foreign bonds v ¥270.2B in prior week; Foreign investors bought net ¥71.7B in Japan stocks v sold ¥435B in Japan stocks in prior week
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5531 V 6.5216 PRIOR; weakest Yuan setting since Feb 1st
- (CN) PBOC to inject CNY85B in 7-day reverse repos
***Market Focal Points/FX***
- Asian equity markets are mixed even though today's US meeting minutes from the Fed gave their clearest indication that June FOMC meeting is live for a rate hike. Minutes declared that the market may be underestimating the chance of a June move, as most members were supportive of the hike if warranted by the economy. The jury is still out on whether or not the US conditions are sufficient for that June 15th hike, though investors will now pay even more attention to the next US jobs report on June 3rd and external factors such as the likelihood of a Brexit. In the meantime, US bond yields moved higher across the curve, and the implied probability of a rate hike in Fed Funds futures rose to 34%. In FX, USD consolidated today's gains in the majors - USD/JPY traded in a 30pip range above ¥110, EUR/USD in 20pip range above 1.1210, and AUD/USD extended declines below $0.72 - a 2 1/2 month low.
- Australia employment data - the key economic event of the day - added to the pressure on AUD. Although jobless rate remained at 5.7% v 5.8% consensus, data components showed participation rate falling to a 10-month low of 64.8%, full-time component declining for 2nd straight month, and total hours worked falling for the 3rd straight month and by the biggest margin since mid-2012. Ahead of the jobs report, Macquarie estimated RBA to cut rates by another 75bps or more over the next 2 years, forecasting AUD/USD falling further to $0.65.
- After yesterday's surprisingly strong Japan Q1 GDP report, a private survey estimated the 1.7% annualized rise to be overstated due to the Leap Year effects, with actual adjusted growth closer to 0.5%. Survey also forecast Q2 to return to contraction of about -0.4%, citing factors such as production disruptions from Kumamoto earthquake, less demand for electronic parts due to slowing smartphone market, and overall weakness in the global economy. There was also more speculation surrounding plans for the next round of sales tax increase as Nikkei reported the decision will be made after the upper house elections this summer. Govt spokesperson Suga reiterated however that there have been no changes in the plan for the sales tax hike in H1 of 2017.
- After some delay, Sharp reported FY15/16 and the results are not as bad as feared. Operating loss of ¥162B compared to loss ¥170B latest forecast and Rev was roughly in line at ¥2.46T v ¥2.45T estimate. Consumer electronics sales were down 18% and Display sales down 9%, but sales of components rose 10%.
***Equities***
US equities / ADRs:
- RPRX: Reports positive clinical data for Oral Proellex in women with severe menstrual bleeding due to Uterine Fibroids; +30.2% afterhours
- AEO: Reports Q1 $0.22 (adj) v $0.18e, R$749.4M v $731Me; Guides Q2 $0.20-0.21 v $0.20e; Q1 SSS +6%; +14.6% afterhours
- URBN: Reports Q1 $0.25 v $0.25e, R$763M v $760Me; +7.2% afterhours
- ZIOP: Announces Clinical Data Highlighting Favorable Interim Survival Results with Gene Therapy Candidate Ad-RTS-hIL-12 in Brain Cancer; +7.1% afterhours
- CRM: Reports Q1 $0.24 v $0.23e, R$1.92B v $1.89Be Raises FY17 $1.00-1.02 v $1.01e, R$8.16-8.20B v $8.12Be (prior $0.99-1.01, R$8.08-8.12B); +6.1% afterhours
- CSCO: Reports Q3 $0.57 v $0.55e, R$12.0B v $11.9Be; Guides Q4 $0.59-0.61 v $0.58e, Rev 0-3% y/y, implies $12.8-13.2B v $12.3Be; +5.7% afterhours
- TTWO: Reports Q4 $0.46 v $0.27e, R$342.5M v $309Me; Guides Q1 -$0.40 to -$0.30 v $0.22e, R$225-260M v $364Me; -0.8% afterhours
- TSLA: Offering $2.0B (7.1% of market cap) in common stock and $1.4B (4.9% of market cap) in shares sold by Musk in secondary offering; Musk exercising 5.5M shares (4.1% of shares outstanding) in stock options; -0.3% afterhours
- LB: Reports Q1 $0.59 (adj) v $0.55e, R$2.61B v $2.62Be; Cuts FY16 $3.60-3.80 v $4.01e (prior $3.90-4.10); Expects to report May SSS down low to mid-single digits versus last year; -4.8% afterhours
Notable movers by sector:
- Consumer discretionary: Shinsegae Co 004170.KR +4.5% (opens fist duty-free store in Seoul); JB Hi-Fi JBH.AU +3.9% (prelim talks for acquisition of Good Guys)
- Industrials: Suzuki Motor Corp 7269.JP +3.6% (data manipulation probe); James Hardie Industries JHX.AU +6.9% (FY16 result); Cathay Pacific Airways 293.HK -0.2% (Apr result)
- Technology: Tencent 700.HK -2.2% (Q1 result); Sharp Corp 6753.JP +1.4% (FY15/16 result); YPB Group YPB.AU +3.6% (guidance)
- Materials: Metcash MTS.AU -0.8% (consider bid for Masters business of Woolworths); Baoshan Iron & Steel Co 600019.CN +0.8% (China to cut overcapacity)
- Energy: China Shenhua Energy 1088.HK +0.5% (China to cut overcapacity)
- Healthcare: Chugai Pharmaceutical 4519.JP +1.9% (Phase III result)