Asian Mid-session Update: RBNZ cuts again but NZD rallies on less dovish undertones; Cigna in buyout talks
***Economic Data***
- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE BY 25BPS TO 3.00%; AS EXPECTED
- (AU) AUSTRALIA Q2 NAB BUSINESS CONFIDENCE: 4 V 0 PRIOR
- (JP) JAPAN JUN MERCHANDISE TRADE BALANCE: -¥69.0B V +¥45.8BE; ADJ TRADE BALANCE: -¥251.7B V -¥260BE
- (KR) SOUTH KOREA Q2 PRELIM GDP Q/Q: 0.3% V 0.4%E; Y/Y: 2.2% V 2.3%E
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.4%, S&P/ASX -0.4%, Kospi -0.1%, Shanghai Composite +1.3%, Hang Seng +0.6%, Sept S&P500 +0.2% at 2,111
***Commodities/Fixed Income***
- Aug gold +0.5% at $1,096/oz, Sept crude oil +0.2% at $49.28/brl, Sept copper +0.2% at $2.43/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.4 tonnes to 687.3 tonnes; lowest since Sept 2008
- (CN) PBoC to inject CNY35B in 7-day reverse repos (9th consecutive injection) ; Injects net CNY30B this week v drained CNY45B prior
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥425B in 3-5yr JGBs, ¥240B in 10-25yr JGBs and ¥140B in JGBs with maturity over 25-yr
***Market Focal Points/FX***
- Asian equity markets are mixed even as the sentiment on Wall St was more cautious for the 2nd straight day. Shanghai Composite is leading the gainers, helped by reports that China Securities Finance Corp denied reducing its holdings in listed companies. Earlier, MIIT was also upbeat that China industrial sector will improve in H2. Chinese Academy of Social Sciences (CASS) saw Q3 GDP at 7.0% at Q4 GDP 7.1% - in line with latest remarks that H2 would at least maintain the pace of H1 growth.
- Down under, Australia markets are relatively weaker, weighed down by Fortescue in spite of its improved iron ore production report. FMG shipments were 42.4Mt v 40.4Mt q/q and v 38.7Mt y/y, and FY16 shipment target was maintained at 165Mt. Newcrest outperformed on strong Q4 gold production rising to 673.5K oz v 610Koz q/q. Macquarie was up modestly after AGM commentary that FY16 results would top FY15.
- RBNZ cut rates by 25bps for the 2nd straight month as widely expected to 3.00%, but NZD/USD spiked up by as much as 70pips to $0.6650. Expectations for 25bp move were fully priced and traders anticipated more dovish outlook flagging continued easing. Instead, RBNZ only said "some further easing seems likely" and also removed prior statement on exchange rate that "further significant downward adjustment is justified".
- Japan merchandise trade remained in deficit despite expectations of a slight surplus, but underlying components were more promising. Specifically, exports posted their biggest rise in 5 months of 9.5%, while exports decline was lower than expected at -2.9% v -4.3%e. Exports to Asia, US, and Europe all rose double digits.
- EUR/USD hit session highs above $1.0955, rising over 30pips on confirmation that Greek parliament has voted to approve the second reform bill on bailout containing provisions on banking reforms and speeding up Greece's judicial proceedings. PM Tsipras continued to enjoy strong lawmaker support, with 230 out of 300 MPs voting YES.
- Shares of Cigna spiked up over 5% after reports of takeover interest by Anthem in the latest bout of consolidation in the US healthcare industry. The two have engaged in talks in the past, and today's speculated offer of $187/shr is an improvement from $184 offered last month. Recall 3 weeks ago Humana also confirmed a buyout by Aetna in a $37B deal.
***Equities***
US equities / ADRs:
-SNDK: Reports Q2 $0.66 v $0.32e, R$1.24B v $1.19Be; Guides Q4 R$1.35-1.45B v $1.38Be - earnings call; +13.1% afterhours
-CRUS: Reports Q1 $0.54 v $0.48e, R$282.6M v $271Me; +10.5% afterhours
-FTNT: Reports Q2 $0.11 v $0.09e, R$239.8M v $227Me; +9.2% afterhours
-CI: Anthem said to be in talks to acquire Cigna for around $187/shr or more than $48B - financial press; +5.9% afterhours
-FFIV: Reports Q3 $1.67 v $1.60e, R$483.6M v $483Me; +5.5% afterhours
-CAKE: Reports Q2 $0.69 v $0.62e, R$529.1M v $531Me; raises dividend 11% to $0.20 from $0.18 (implied yield 1.5%); +4.3% afterhours
-LVS: Reports Q2 $0.60 v $0.61e, R$2.92B v $2.96Be; +3.3% afterhours
-TXN: Reports Q2 $0.65 v $0.65e, R$3.23B v $3.26Be; +0.9% afterhours
-NEM: Reports Q2 $0.26 v $0.25e, R$1.91B v $2.03Be; -0.9% afterhours
-XLNX: Reports Q1 $0.55 v $0.53e, R$549M v $555Me; -1.0% afterhours
-QCOM: Reports Q3 $0.99 v $0.94e, R$5.83B v $5.85Be; -1.3% afterhours
-AXP: Reports Q2 $1.42 v $1.33e, R$8.28B v $8.39Be; -1.8% afterhours
-WFT: Reports Q2 -$0.10 v -$0.12e, R$2.39B v $2.40Be; -3.9% afterhours
-URI: Reports Q2 $1.95 (adj) v $1.83e, R$1.43B v $1.46Be; approves additional $1B buyback program (13% of market cap); -5.2% afterhours
Notable movers by sector:
- Consumer discretionary: Lianhua Supermarket Holdings 980.HK +0.2% (H1 guidance); Sands China 1928.HK +9.1% (Q2 result); Hangzhou Robam Appliances Co 002508.CN +1.1% (H1 result)
- Financials: Ping An Insurance 2318.HK +2.2% (H1 guidance); Guotai Junan International Holdings 1788.HK +0.3% (H1 guidance); Bank of Communications 3328.HK +1.0% (to issue offshore shares); Macquarie Group MQG.AU +0.5% (FY16 guidance)
- Industrials: Beijing SDL Technology Co 002658.CN +0.2% (H1 result); Hyundai Motor 005380.KR +5.0% (sets first interim dividend); CIMIC Group CIM.AU +1.4% (H1 result)
- Technology: Hynix Semiconductor 000660.KR +1.6% (Q2 result, share buyback)
- Materials: Korea Zinc 010130.KR -5.0% (Q2 result); Drillsearch Energy DLS.AU +0.5% (Q4 result); Fortescue Metals Group FMG.AU -6.1% (Q4 result); Newcrest Mining NCM.AU +2.4% (Q4 result)
- Energy: Xinyi Solar 968.HK +0.3% (raises H1 guidance); SDIC Xinji Energy 601918.CN +3.2% (H1 result); SK Innovation 096770.KR -5.5% (Q2 result)
- Telecom: China Mobile 941.HK -1.0% (salary cut speculation)