Asian Mid-session Update: China GDP, June economic figures all top consensus; BOJ cuts FY15 GDP and CPI targets
***Economic Data***
- (CN) CHINA Q2 GDP Q/Q: 1.7% V 1.6%E; Y/Y: 7.0% V 6.8%E; YTD: 7.0% v 6.9%E
- (CN) CHINA JUN INDUSTRIAL PRODUCTION Y/Y: 6.8% (4-month high) V 6.0%E; INDUSTRIAL PRODUCTION YTD Y/Y: 6.3% V 6.2%E; Power generation: 474.5B KWH, +0.5% y/y
- (CN) CHINA JUN RETAIL SALES Y/Y: 10.6% (4-month high) V 10.2%E; RETAIL SALES YTD Y/Y: 10.4% V 10.3%E
- (CN) CHINA JUN YTD FIXED URBAN ASSETS Y/Y: 11.4% V 11.2%E
- (AU) AUSTRALIA JUL WESTPAC CONSUMER CONFIDENCE INDEX: 92.2 V 95.3 PRIOR, M/M: -3.2% (2nd straight decline) V -6.9% PRIOR
- (AU) AUSTRALIA JUN NEW MOTOR VEHICLE SALES M/M: 3.8% V -1.3% PRIOR; Y/Y: 4.4% V 0.8% PRIOR
- (KR) SOUTH KOREA JUN UNEMPLOYMENT RATE: 3.9% V 4.0%E
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.00%, AS EXPECTED
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.9%, Kospi +0.3%, Shanghai Composite -2.4%, Hang Seng -0.4%, Sept S&P500 +0.1% at 2,104
***Commodities/Fixed Income***
- Aug gold flat at $1,153/oz, Aug crude oil +0.4% at $53.23/brl, Sept copper +0.3% at $2.54/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 10,189 tonnes from 10,156 tonnes; 3-week high
- (US) API Petroleum Inventories: Crude -7.3M (largest draw since May 2014) v -1Me
- (CN) China MOF sells 10-year bonds, avg yield 3.5%
- (AU) Australia MoF (AOFM) sells A$900M in 4.25% 2026 Bonds; avg yield: 3.0788%; bid-to-cover: 2.19x
***Market Focal Points/FX***
China economic data were better than expected across the board, but Shanghai Composite headed lower by over 2% yet again, presumably on implications of less proactive monetary policy actions by the PBoC. Also of note, another 100+ A-shares have resumed trade after last week's large-scale halts, lifting volatility, and overall leverage of margin trading headed higher. China's Q2 GDP came in at 7% for the quarter and YTD, and the Stats Bureau noted H2 economy will improve, implying that 2015 GDP should top 7% official target. Industrial production and Retail Sales y/y growth also hit 4-month highs. The latter is particularly notable after concerns that equity market volatility would imperil "wealth effect" and spill over into reduced spending. Power generation was up just 0.5%, while separately announced NEA's power consumption gauge rose 1.8% - up from 1.6% prior. China Stats Bureau further said the economy is still facing some downward pressure, but employment situation is improving and property sector is on the upswing.
As expected, the BOJ maintained its policy stance and overall economic assessment in today's decision but lowered its forecasts for FY15/16 GDP and inflation. FY15 growth target was cut to 1.7% from 2% and inflation to 0.7% from 0.8%. FY16/17 and 17/18 CPI targets were also lowered by a decimal to 1.9% and 1.8% respectively - all lower than 2% target previously expected to be achieved in H1 of FY16. BOJ's economic assessment for economy remained as "continued to recover moderately", though policymakers also shifted lower their assessments for exports and production to acknowledge they were picking up with some fluctuation.
Ahead of tomorrow's critical Greek Parliament vote on the harshly austere bailout program, IMF put out a Debt Sustainability Report that poked major holes in the Athens' assumptions and targets. IMF is warning that the only path to sustainable debt would be through more relief than being considered, and that the current €85B in proposed financing will likely not be sufficient, requiring further injections into the banking system. IMF also calls for the likely dramatic extensions to debt, noting that "haircuts could be avoided if instead there was a significant further extension of the maturities of the entire stock of European debt."
Comments from Fed's George were largely in line with her generally hawkish stance. George noted the main risks to the US economy were now external, adding the economy appears to be back on track in Q2 to grow by a "solid" pace of around 2%. On employment, George said the latest jobless rate print implies some labor market vitality.
In FX, trading in USD majors was largely subdued. AUD/USD saw the most pronounced move of over 20pips above 0.7480 on China data release. USD/JPY was unaffected by the BOJ, remaining capped below 123.50. Ahead of tomorrow's Fonterra auction results, NZD was supported above 0.67, trading in a 20pip range.
***Equities***
US equities / ADRs:
- RCPT: Celgene to Acquire Receptos for $7.2B or $232/shr in all-cash deal; +10.1% afterhours
- PETX: Announces positive Pivotal results for AT-003; +7.3% afterhours
- PYPL: To be added to S&P500 and S&P100 index following spinoff, replacing NE (in 500) and EBAY (in 100); SYNA to enter MidCap400, replacing ROSE; +6.3% afterhours
- CELG: Reports Q2 $1.23 v $1.13e, R$2.28B v $2.24Be (early release due to acquisition of RCPT today); +5.7% afterhours
- CSX: Reports Q2 $0.56 v $0.53e, R$3.06B v $3.14Be; +3.4% afterhours
- YUM: Reports Q2 $0.69 v $0.63e, R$3.11B v $3.18Be; -0.2% afterhours
- MJN: Reports Prelim Q2 EPS $0.76 v 0.88e; Cuts FY15 $3.63-3.78 v $3.93e ($3.90-4.00 prior), FY15 Rev growth 0-2% (implies $4.4-4.5B v $4.46Be) vs +7% prior; -5.3% afterhours
- ATI: Guides Q2 -$0.17 to -$0.15 v +$0.22e; cites challenging conditions in flat rolled products; -7.7% afterhours
Notable movers by sector:
- Financials: East Money Information Co 300059.CN +2.7% (H1 guidance); Suning Universal Co 000718.CN +1.2% (H1 guidance); Bank of China Hong Kong 2388.HK +3.3% (approval to dispose asset); Founder Securities 601901.CN -7.3% (CSRC's probe); New World China Land Ltd 917.HK -0.7% (Q4 result)
- Industrials: China High-Speed Railway Technology Co 000008.CN -9.9% (H1 guidance); Bradken Ltd BKN.AU +14.5% (Reaffirms guidance)
- Technology: Central China Land Media 000719.CN -8.3% (H1 guidance); Toshiba Corporation 6502.JP -1.0% (speculation that CEO to step down)
- Materials: Angang Steel 347.HK -4.2% (H1 guidance); China Nonferrous Metal Industry's Foreign Engineering and Construction Co 000758.CN -6.0% (H1 guidance); Mount Gibson Iron MGX.AU +7.9% (Q4 result); BHP Billiton BHP.AU -1.6% ($2B asset impairment)
- Utilities: China Datang Renewable Power 1798.HK +6.5% (H1 guidance, Q2 result); Weichai Power 2338.HK -12.6% (H1 guidance); Huaneng Renewable Corp 958.HK -3.6% (H1 guidance)