Asian Mid-session Update: AUD sinks as RBA Gov Stevens keeps the door open for more easing; Post-earnings weakness in US techs weighs on futures
***Economic Data***
- (AU) AUSTRALIA Q2 CONSUMER PRICES (CPI) Q/Q: 0.7% (6-quarter high) V 0.8%E; Y/Y: 1.5% V 1.7%E; TRIMMED MEAN Q/Q: 0.6% V 0.6%E ; Y/Y: 2.2% V 2.3%E
- (AU) AUSTRALIA JUNE WESTPAC LEADING INDEX M/M: 0.0% V -0.1% PRIOR
- (AU) AUSTRALIA JUN SKILLED VACANCIES M/M: -0.9% V -1.1% PRIOR
- (CN) CHINA JUN CONFERENCE BOARD LEADING ECONOMIC INDEX M/M: 1.0% v 1.1% prior
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.3%, S&P/ASX -1.1%, Kospi -1.1%, Shanghai Composite -0.4%, Hang Seng -1.0%, Sept S&P500 -0.4% at 2,106
***Commodities/Fixed Income***
- Aug gold -0.8% at $1,094/oz, Sept crude oil -1.4% at $50.15/brl, Sept copper -0.2% at $2.47/lb
- (US) API Petroleum Inventories: Crude +2.3M v -1.5Me (first build in 3 weeks; Largest build in nearly 3 months)
- GLD: SPDR Gold Trust ETF daily holdings fall 4.8 tonnes to 689.7 tonnes; lowest since Sept 2008
- GLD: Aug Gold contract extending decline to $1,092; down 1% in electronic trade
- JGB: (JP) Japan's MoF sells ¥1.09T in 1.3% (1.3% prior) 20-year JGBs; Avg yield: 1.188% v 1.293% prior; bid-to-cover: 3.09x (multi-month high) v 2.56x prior
***Market Focal Points/FX***
- Asian equity markets are broadly lower, tracking weakness in US indices along with disappointing set of earnings from some of the tech heavyweights afterhours. Shares of Apple and Microsoft were down 7% and 4% respectively, weighing on US futures. Front month S&P e-minis are down another 8pts or about 0.4% in electronic trade, while Dax, CAC, and FTSE futures are down about 0.2% heading toward European open.
- China Conference Board leading index showed another marginal increase, and resident economist noted growth continues to be driven by bank credit rather than stronger performance in the real economy, justifying "fragile" economic outlook. In that vein, China economist Ba Shusong warned annual GDP could slow to 6.0-6.5% in next 5 years, since the recent growth drivers of investment and exports were not sustainable. Ba further called for a more proactive fiscal policy approach.
- AUD/USD was the most volatile among USD majors, sinking as low as $0.7370 on RBA Gov Stevens comments leaving the door open to more easing. Speaking at Anika Foundation Luncheon, Stevens also said AUD adjustment is occurring with expansionary effect, endorsing "somewhat lower exchange rate was likely to be a part of the necessary adjustment." On China, Stevens said property market outlook and the broader financial sector are likely to be more important. In terms of longer term policy expectations, Stevens also said neutral rates are lower than in the past and will be so for some time. Also of note in Australia, Q2 CPI was largely in line with expectations and generated little reaction in the exchange rate. AMP economists did note the sub-2% headline inflation could potentially further justify more easing.
- BHP Billiton reported mixed quarterly output data for Q4, and shares were down about 1.5% in late session. Q4 iron ore output of 60M tons was up from 59.0M q/q and 14% y/y. Copper output fell 1%, Aluminum down 67%, and energy coal was down 5%. For the year, 2015 iron ore was at 233Mt, above 230Mt prior forecast, while FY16 target was set at a more ambitious 247Mt. Copper production was in line with prior guidance of 1.7M, though FY16 forecast was set lower at 1.5Mt.
- Going into tomorrow's RBNZ decision, NZIER Shadow Board recommended not to cut rates too aggressively, calling for a 25bp move even as a 50bp move was discussed. NZD/USD was down about 30pips, falling to $0.66 level. BNZ also lowered its outlook for dairy payout prices, joining other economists who had similar reaction to the latest disappointing auction results in recent sessions.
***Equities***
US equities / ADRs:
- ISRG: Reports Q2 $4.57 v $3.98e, R$586M v $568Me; +12.5% afterhours
- NUAN: Guides Q3 higher $0.31-0.32 v $0.27e; R$485-489M v $475Me (prior $0.25-0.29; R$468-482M); Name Dan Tempesta CFO; +4.1% afterhours
- CMG: Reports Q2 $4.45 v $4.41e, R$1.20B v $1.22Be; authorized repurchases of common stock up to $100M (0.5% of market cap); +2.2% afterhours
- GPRO: Reports Q2 $0.35 v $0.25e, R$420M v $395Me; Guides Q3 $0.29-0.32 v 0.23e, R$430-445M v $404Me; +1.4% afterhours
- VMW: Reports Q2 $0.93 v $0.91e, R$1.52B v $1.59Be; +0.7% afterhours
- YHOO: Reports Q2 $0.16 v $0.18e, R$1.04B ex tac v $1.03Be; Guides Q3 op income $50-90M, Rev $1.0-1.04B (ex-TAC) v $1.06Be; -1.8% afterhours
- MSFT: Reports Q4 adj $0.62* (ex $1.02 in charges) v $0.56e, R$22.2B v $22.0Be; -4.0 afterhours
- LLTC: Reports Q4 $0.54 v $0.56e, R$379.5M v $385Me; -5.6% afterhours
- AAPL: Reports Q3 $1.85 v $1.80e, R$49.6B v $49.1Be; -6.9% afterhours
- ILMN: Reports Q2 $0.80 v $0.78e, R$539M v $543Me; -9.5% afterhours
Notable movers by sector:
- Consumer discretionary: SA SA International Holdings 178.HK -3.8% (Q1 result); Wumart Stores Inc 1025.HK -3.7% (H1 result); Anhui Jianghuai Automobile Co L 600418.CN +10.0% (private placement)
- Financials: Guotai Junan International Holdings 601211.CN +1.2% (H1 result); Gemdale Properties and Investment Corp 535.HK +2.2% (H1 guidance); Evergrande Real Estate Group 3333.HK +0.4% (unit filed for listing); SooChow Securities 601555.CN +2.8% (H1 result); Haitong Securities 6837.HK -1.7% (proposes employee stock ownership plan)
- Industrials: Boral Ltd BLD.AU +1.3% (FY15 guidance); Mitsui Chemical 4183.JP +9.6% (raises H1 guidance)
- Technology: ZTE Corp 763.HK +1.1% (H1 result); Asahi Glass Co 5201.JP +1.5% (Raises FY15/16 guidance)
- Materials: China Coal Energy 1898.HK -1.3% (June result); Energy Resources of Australia ERA.AU +1.4% (to write down deferred tax assets); Silver Lake Resources SLR.AU +7.1% (Q4 result); Saracen Mineral Holdings SAR.AU +2.7% (FY15 result); South32 S32.AU -1.0% (FY15 result); BHP Billiton BHP.AU -1.5% (Q4 result)
- Energy: China Petroleum & and Chemical Corp 386.HK -1.3% (H1 result); Datang International Power Generation 991.HK -1.7% (H1 power generation); Huadian Power International Corp 1071.HK -2.9% (H1 power generation); S-Oil Corp 010950.KR +1.3% (Q2 result)