Asia Mid-Session Market Update: China Services PMI soothes soft manufacturing data; World Bank maintains global outlook; Oil rallies on Saudi Arabia-Qatar row
***Friday US Session Highlights***
- (US) MAY UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest since May 2001)
- (US) MAY CHANGE IN NONFARM PAYROLLS: +138K V +182KE; (birth/death adjustment +230)
- (US) MAY AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
- (US) White House econ adviser Cohn: not worried about slowing job growth; we must create a better US jobs market
- (US) Atlanta Fed cuts Q2 GDP to 3.4% from 4.0% on 6/1
***Weekend corporate activity***
- HLF: Cuts Q2 guidance $0.75-0.95 v $1.00e (prior $0.88-1.08); Volume -8% to -4% y/y (prior -5% to -1%); Cuts FY17 $4.10-4.50 v $4.50e (prior $4.25-4.65); Volume -1% to +2% y/y (prior 2-5%)
- P: Verizon may be interested in making a $100M investment in Pandora if it fails to reach sale to SiriusXM this week - NY Post
***Politics***
- (RU) Russia President Putin denies knowledge of any attempts to set up back-channel discussions with Trump administration officials - US press
- (US) White House not planning to give Congress a detailed tax reform draft until the August recess - Politico
- (JP) Survey from Japan national broadcaster TBS saw PM Abe's cabinet approval rating fall 8.9 to 54.4%; lowest in over a year - press
- (MX) MXN rallies from 18.82 to 18.72 on projections of a narrow win for ruling party in Mexico's key governor race - press
- (UK) Survation/Mail poll on Parliamentary elections: Support for UK Conservatives at 40% (-6 ppt); Labour at 39% (+5 ppt)
***Key economic data:***
- (CN) CHINA MAY CAIXIN PMI SERVICES: 52.8 V 51.5 PRIOR (4 month high); COMPOSITE: 51.5 V 51.2 PRIOR
- (HK) HONG KONG MAY COMPOSITE PMI: 50.5 V 51.1 PRIOR (2nd straight expansion)
- (AU) AUSTRALIA Q1 COMPANY OPERATING PROFIT Q/Q: 6.0% (4th straight quarter of increase) V 5.0%E; INVENTORIES Q/Q: 1.2% V 0.5%E
- (AU) AUSTRALIA MAY ANZ JOB ADVERTISEMENTS M/M: 0.4% V 1.5% PRIOR (3rd straight increase)
- (AU) AUSTRALIA MAY MELBOURNE INSTITUTE INFLATION M/M: 0.0% (3-month low) V 0.5% PRIOR; Y/Y: 2.8% V 2.6% PRIOR
- (AU) AUSTRALIA MAY AIG PERF OF SERVICES INDEX: 51.5 V 53.0 PRIOR (3rd consecutive expansion. 3-month low
- (SG) SINGAPORE MAY PMI COMPOSITE: 51.4 V 52.6 PRIOR
***Asia Session Notable Observations***
- Asian indices slide despite the gains on Wall St as investors digest mixed US employment data on Friday. Outlook for June hike remains above 90%, though the case for 3 hikes total in 2017 stands more damaged by slow wage growth.
- GBP down slightly in the wake of another terror attack in London that left 7 people dead; UK polls ahead of June 8th elections also continue to tighten.
- China May Caixin Services PMI hits a 4-month high and Composite rises slightly. Among Services components, expansion in new orders was the most marked in the year-to-date, employment continued to increase but at slower pace, and input price inflation picked up from 6-month lows.
- China Shenhua (China's largest coal miner) speculated to merge with GD Power Development; Both halted on A-shares.
- World Bank maintained 2017 global GDP growth forecast at 2.7% and 2018 at 2.9%; WB also cut US by 0.1pt, Affirmed China at 6.5%, and raised EU and Japan by 0.2pts and 0.6pts respectively, citing recovery in industrial and a pick-up in global trade.
- Oil rises nearly 1.5% on Saudi-Qatar spat. Saudi Arabia, Bahrain, and Egypt reportedly cut diplomatic relations after leaked tape where Qatari Emir Tamim bin Hamad al-Thani criticized Gulf rhetoric against Iran. Qatar also alleged to have provided assistance to terrorist organizations.
***Speakers and Press***
China
- (CN) China Securities Regulatory Commission (CSRC) rejected IPO application from 9 out of 64 companies in May - Chinese press
- (CN) China Securities Regulatory Commission (CSRC) announced new rules to curb disorderly stock sales
- (CN) China Securities Regulatory Commission (CSRC) announced new rules to curb disorderly stock sales
- (CN) China to accelerate approvals for green car subsidies, approving ~300 more green energy vehicle models to receive subsidies - Chinese press
- (CN) China plans to continue its restructuring of SOEs in the coal power and steel sectors – Chinese Press
Japan
- (JP) BoJ approx doubles ETF holdings in 1 year to ¥15.9T v ¥8.83T y/y - Nikkei
Australia / New Zealand
- (AU) Australia's Queensland has commissioned an energy security taskforce to ensure state’s power system is secure during peak demand over 2017-18 and 2018-19 summers
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei flat, Hang Seng -0.3%, Shanghai -0.5%, ASX200 -0.7%, Kospi +0.1%
- Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax closed, FTSE100 -0.2%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1265-1.1285; JPY 110.30-110.65; AUD 0.7420-0.7460; NZD 0.7115-0.7145; GBP 1.2855-1.2875
- June Gold +0.3% at 1,284/oz; July Crude Oil +1.3% at $48.26/brl; July Copper -0.5% at $2.56/lb
- SPDR Gold Trust ETF daily holdings rise 3.5 tonnes to at 851 tonnes; first rise since May 22nd
- iShares Silver Trust ETF daily holdings fall to 10,601 tonnes from 10,605 tonnes prior; 3rd straight decline
- (SA) Saudi Arabia, Bahrain, and Egypt said to have cut diplomatic relations with Qatar after leaked tape where Qatari Emir Tamim bin Hamad al-Thani criticized Gulf rhetoric against Iran; July WTI crude oil rises 1.5% above $48.35/brl
- (US) Weekly Baker Hughes US Rig Count: 916 v 908 w/w (+0.9%) (20th straight weekly rise)
- (CN) PBOC SETS YUAN MID POINT AT 6.7935 V 6.8070 PRIOR; 4th straight firmer Yuan fix; Strongest Yuan fix since Nov 10th
- (CN) PBOC to inject combined CNY70B v CNY50B prior
- (AU) Australia Finance Ministry (AOFM) sells A$400M in 3.25% 2029 bonds; avg yield 2.5171%; bid-to-cover 4.16x
- (KR) South Korea sells 3-yr Govt bonds; avg yield 1.65%
***Asia equities / Notables / movers***
Australia
- Fortescue (FMG) +0.3%; CEO: China steel demand remains strong
- Tatts (TTS) -0.7%; ACCC not satisfied Tabcorp/Tatts merger is in best interest of public - AFR
- Sirtex (SRX) -2.3%; Presents Phase 3 data from SIRVENIB study
Hong Kong
- China Gas Holdings (384) +2.4%; Guides FY17
- Guangzhou R&F Properties (2777) +0.5%; May sales
- China Vanke (2202) -0.7%; May sales
- IPE Group Limited (929) -1.5%; Guides Jan-Apr
Japan
- Eisai (4523) +1.9%; Further Study of Combination of Eisai's Lenvatinib and Merck's Pembrolizumab in Previously Treated Patients with Metastatic Endometrial Cancer Supported by Interim Analysis of Ongoing Phase1b/2 Trial
- ANA (9202) +0.3%; ANA and JAL to cut international route fuel surcharges by 50% in Aug - Japanese Press
- Toshiba (6502) -0.6%; Foxconn Chairman: We have backing from Apple and Amazon in bid for Toshiba's memory chip unit - Nikkei