Asian Mid-session Market Update: Sentiment still subject to Brexit speculation
***Economic Data***
- (AU) AUSTRALIA Q1 HOUSE PRICE INDEX Q/Q: -0.2% (1st decline since Sept 2012) V 0.8%E; Y/Y: 6.8% V 7.5%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 118.8 v 116.4 prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.1%, Kospi -0.2%, Shanghai Composite +0.3%, Hang Seng +0.5%, Sep S&P500 +0.3% at 2,080
***Commodities/Fixed Income***
- Aug gold -0.2% at $1,289/oz, Aug crude oil -0.4% at $49.78/brl, Jul copper -0.2% at $2.08/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 0.9 tonnes to 908.8 tonnes; highest since Oct 2013
- SLV: iShares Silver Trust ETF daily holdings fall to 10,403 tonnes from 10,492 tonnes prior; lowest since Apr 20
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5656 V 6.5708 PRIOR; strongest Yuan setting since June 8th
- (CN) PBOC to inject CNY110B in 7-day reverse repos
***Market Focal Points/FX***
- Asian equity markets are mixed with little outside of the Brexit waiting game to drive sentiment. Just after the US close, another poll by ORB/Telegraph saw the Stay camp momentum building with a 53% for remain, 46% for leave breakdown vs 48% to remain, 49% to leave last week. GBP/USD hit a 3-week high above 1.47, though minutes later, a YouGov poll saw a 44% to 42% preference for the Leave camp, sending GBP/USD below 1.4640. The pair traded in sideways range for the balance of the Asia session, supported by 1.4640 level. Famed investor George Soros remarked that if Brexit vote succeeds, there will be an immediate GBP drop of at least 15% and possibly 20% below $1.15, cautioning that voters are "grossly underestimating" the true costs of the exit. In other USD majors, AUD/USD was up over 30pips above $0.7480 following the release of fairly neutral RBA meeting minutes, while USD/JPY traded up about 50pips from the lows above 104.10 in spite of non-committal rhetoric from Fin Min Aso.
- Japan's Aso said that even though FX stability is critical and rapid fx moves are undesirable, the threshold for an intervention by the finance ministry would be high. Aso added the govt is still targeting a balanced budget, but also expressed concern about the risks of a Brexit. Recall last week BOJ officials hinted of opening up dollar funding swaps with 5 other central banks if markets get too turbulent from Brexit vote. Earlier in the day, USD/JPY came in by about 30pips below 104 after a Nikkei report speculated that Japan exporters have begun curbing yen purchases due to recent appreciation, adding that the resulting pent-up demand will prevent the yen's weakening down the road.
- China's former PBoC adviser Li Daokui offered more of his downbeat projections, stating economy likely has not seen bottom yet as import/export decline may not subside until H2 of next year. China Daily also speculated that the much awaited SOE restructuring guidance is close to being published.
- Down under, RBA June policy meeting minutes remarked that the hold was consistent with sustainable growth, and that recent data on domestic economy has been generally positive where GDP in March quarter exceeded expectations. AUD rallied on those remarks even though the minutes warned that inflation is expected to remain low for some time.
***Equities***
US equities / ADRs:
- IMPV: Reportedly activist Elliott Management is building a new stake in IMPV - press; +8.3% afterhours; +9.6% afterhours
- WERN: Guides Q2 EPS $0.21-0.25 v $0.39e; sees negative effects on earnings; trading halted afterhours; -10.9% afterhours
Notable movers by sector:
- Consumer discretionary: Bega Cheese BGA.AU +0.9% (cuts FY16/17 farm gate milk price); Asahi Co 3333.JP +5.1% (Q1 result); Panasonic Corporation 6752.JP +1.0% (acquisition)
- Financials: Shanghai Jinqiao Export Processing Zone Development Co 600639.CN +10.0% (reportedly a frontrunner for Tesla production site)
- Industrials: Daiwa House Industry Co. 1925.JP +0.3% (guidance); Japan Steel Works 5631.JP -6.1% (Morgan Stanley cut); Harmonic Drive Systems 6324.JP +5.2% (added to Goldman conviction buy list)
- Technology: Samsung SDS Co 018260.KR -2.6% (not consider share buyback or interim dividend); Samsung SDI Co 006400.KR -2.7% (fail to win battery certification in China); Cowell e Holdings Inc 1415.HK -9.5% (profit warning)
- Materials: BHP Billiton BHP.AU -0.8% (business update)
- Healthcare: Daiichi Sankyo Co 4568.JP +8.3% (share buyback)