Asian Market Update: Equities edge higher going into G7 despite more hawkish Fed comments
***Economic Data***
- (NZ) NEW ZEALAND APR RETAIL CREDIT CARD SPENDING M/M: 2.5% V -1.4% PRIOR; Y/Y: 9.1% V 4.8% PRIOR
- (NZ) New Zealand Apr Net Migration: 5.5K v 5.3K prior
- (MY) MALAYSIA APR CPI Y/Y: 2.1% V 2.1%E (slowest annual pace in 11 months)
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.3%, S&P/ASX +0.7%, Kospi +0.1%, Shanghai Composite +0.1%, Hang Seng +1.2%, Jun S&P500 +0.3% at 2,045
***Commodities/Fixed Income***
- June gold flat at $1,255/oz, July crude oil +0.9% at $49.22/brl, Jul copper +0.2% at $2.07/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 4.4 tonnes to 860.3 tonnes; 10th straight increase; highest since Nov 2013
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5510 V 6.5531 PRIOR
- (CN) PBOC to inject CNY50B in 7-day reverse repos; Injects net CNY50B this week v drained CNY110B prior
- (CN) China MoF sells 50-yr bonds at 3.70%
- (JP) BOJ offers to buy ¥350B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥240B in 10-25yr JGBs, and ¥160B in JGBs with maturity over 25-yr as well as ¥3.0T in T-bills
- (AU) Australia MoF (AOFM) sells A$1.0B in 1.75% 2020 Bonds; avg yield: 1.7538%; bid-to-cover: 3.46x
***Market Focal Points/FX***
- Asian equity markets are edging higher despite some modest losses in the US session where New York Fed's Dudley - one of the most dovish voters on the FOMC - confirmed that June is a live meeting for another rate hike. Hang Seng is the leader among key indices, closely tracked by Australia, as energy names outperform in both markets on a rally in oil prices. In FX, USD/JPY is at the top of its 30pip range late in the day around 110.10, AUD/USD was in a 20pip range above 0.7220, and NZD/USD rallied by over 30pips above 0.6770, with market volatility compressed in the absence of any meaningful economic data.
- As Japan begins its G7 summit of finance leaders, early reports suggest attendees looking for a more balanced approach to sustainable economic growth - stating that monetary policy alone will not lead to recovery. G7 Leaders also expressed concern over risks associated with Brexit, even with the latest polls suggesting the momentum is with the Stay camp. There was little indication over whether Japan's clamoring for weaker JPY would be construed as an inappropriate intervention. In the mean time, Japan lawmakers are also mobilizing to push for the cabinet to go ahead with its plans to raise sales tax by 10% next year. Ruling LDP party official Yamamoto is drafting a proposal recommending that the sales tax be raised, accompanied by a ¥15-20T fiscal package.
- In Australia, Oil Search announced a $2.2B bid for Interoil, entering a partnership with Total on its PNG energy exposure. Recall Oil Search was the target of Woodside Petroleum bid as of late 2015, though it determined the bid undervalued the company. In US corporate afterhours movers, Tesla priced its 9.6M share secondary at $215/shr. Gap initially rallied after reporting Q1 results, but erased all gains after a cut to junk at S&P.
***Equities***
US equities / ADRs:
- ORIG: Reports Q1 $1.17 adj v $0.67e, R$508M v $440Me; +33.7% afterhours
- IOC: Oil Search to acquire Interoil for $2.2B; +31.0% afterhours
- AMAT: Reports Q2 $0.34 v $0.32e, R$2.45B v $2.42Be; +8.5% afterhours
- GPS: Reports Q1 $0.32 v $0.32e, R$3.44B v $3.44Be; To close 75 stores; +0.5% afterhours
- ADSK: Reports Q1 -$0.10 v -$0.14e, R$511.9M v $513Me; -2.1% afterhours
- BRCD: Reports Q2 $0.22 v $0.22e, R$523M v $528Me; Raises dividend 22% to $0.055 (implied yield 2.8%); -2.4% afterhours
- ROST: Reports Q1 $0.73 v $0.73e, R$3.09B v $3.11Be; -6.2% afterhours
- YHOO: Verizon-led consortium said to bid $2-3B for core assets; Bids reportedly may fall short of the $4-8B target range - financial press
Notable movers by sector:
- Consumer discretionary: Bauhaus International Holdings 483.HK -3.4% (profit warning); Anta Sports Products 2020.HK -7.9% (Q1 result); Cogobuy Group 400.HK -1.5% (Q1 result); Southern Cross Media Group SXL.AU +1.4% (enters new affiliation agreement); Hyundai Rotem Co 064350.KR +4.0% (awarded order)
- Industrials: Ningbo Port 601018.CN +3.3% (approval for share sale); Mitsubishi Motors 7211.JP -1.7% (Japan govt to offer aid)
- Energy: Oil Search OSH.AU +1.3% (to acquire Interoil); Cooper Energy COE.AU +0.9% (share purchase plan)