Asian Market Update: China supported by apparent easing of property curbs by PBoC; Moody's affirms Australia AAA after annual budget
***Economic Data*** - (NZ) NEW ZEALAND Q1 RETAIL SALES EX-INFLATION Q/Q: 0.7% V 0.9%E; CORE Q/Q: 0.8% V 1.0% PRIOR - (JP) JAPAN APR DOMESTIC CGPI M/M: 2.8% V 2.8%E ; Y/Y: 4.1% (5-yr high) V 4.0%E - (JP) JAPAN MAR LOANS & DISCOUNTS CORP: 1.9% V 2.2% PRIOR - (KR) SOUTH KOREA APR UNEMPLOYMENT RATE: 3.7% V 3.4%E; Number employed +581,000 y/y v 649K; 2nd consecutive slowdown. - (KR) SOUTH KOREA APR EXPORT PRICE INDEX M/M: -2.5% V -0.4% PRIOR; Y/Y: -7.3% V -4.3% PRIOR; IMPORT PRICE INDEX M/M: -2.5% V -0.5% PRIOR; Y/Y: -7.0% V -4.5% PRIOR
Market Snapshot (as of 03:30 GMT): - Nikkei225 -0.3%, S&P/ASX -0.3%, Kospi +0.7%, Shanghai Composite -0.2%, Hang Seng +0.2%, Jun S&P500 +0.1% at 1,895, Jun gold -0.1% at $1,293, Jun crude oil +0.3% at $101.98/brl
***Highlights/Observations/Insights*** - China property sector has kept a lid on the selloff in Shanghai after a set of disappointing economic data overnight, when Retail Sales, Industrial Production, and Fixed Asset Investment all missed estimates. PBoC held a meeting with 15 local banks that reportedly focused on reducing mortgage lending risks through more timely approval of qualified home loans and also providing credit resources to satisfy first home buyer demand. Top mainland property developers traded up about 2% despite a modest slide in the broader Shanghai Composite.
- Australia's budget, also released overnight, delivered tough cuts to entitlements for the elderly and education, as well as tax hikes for the high earners as a means to save A$36B over the next 4 years. Moody's announced it has affirmed Australia sovereign rating at Aaa and Stable Outlook, noting Budget provisions are positive for deficit and debt. - Also of note in Australia, CBA was up nearly 1% after its Q3 trading update. Cash earnings rose to A$2.2B v A$1.9B y/y, CET1 ratio was unchanged at 8.5%, while net interest margin was said to be slightly lower. Other major Australia financials were down slightly, trading ex-dividend.
- New Zealand, which will release its annual budget tomorrow, saw RBNZ release its Financial Stability report. Most notably, RBNZ warned Fonterra 2014/15 forecast payout would likely be materially lower than in current year to reflect the steady decline in dairy prices. RBNZ also expressed concern that a slowdown in China economy would have a significant impact on domestic economy, but cheered a more balanced housing market as a result of its macro-prudential LVR measures.
***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥400B in 5-10yr JGB and ¥170B in JGB with maturity over 10-yr - (AU) Australia MoF (AOFM) sells A$700M in 2.75% 2024 Bonds; avg yield: 3.8081%; bid-to-cover: 4.12x - (US) API PETROLEUM INVENTORIES: CRUDE: +910K v 0e, GASOLINE: -2M v 0e, DISTILLATE: +885K v +0.5Me - USD/CNY: (CN) PBoC sets yuan mid point at 6.1653 v 6.1636 prior setting (Weakest Yuan setting since Sep 6th)
- USD is on the defensive on dollar majors, particularly against AUD and NZD. AUD/USD is up about 40pips approaching $0.94 handle - its 1-month high - while NZD/USD rose 40 pips to $0.8660. USD/JPY is under slight pressure below 102.20.
***Equities*** US markets: - RUBI: Reports Q1 -$0.15 v -$0.52e, R$23M v $20.0Me (1 est); +21.8% afterhours - ARTX: Reports Q1 $0.05 v $0.01e, R$22.4M v $21.3Me; +10.2% afterhours - TTWO: Reports Q4 $0.21 v $0.11e, R$233M v $204Me; -4.0% afterhours - FOSL: Reports Q1 $1.22 v $1.19e, R$776.5M v $776Me; reaffirms FY14 guidance; Guides Q2 $0.90-0.97 v $1.16e; -5.0% afterhours - URS: Reports Q1 $0.60 v $0.67e, R$2.54B v $2.70Be; -6.8% afterhours
Notable movers by sector: - Consumer Discretionary: Jiangsu Phoenix Publishing & Media 601928.CN +1.3% (acquisitions); Dentsu 4324.JP -4.7% (FY13/14 results) - Financials: China Vanke 000002.CN +1.5%, Poly Real Estate Group 600048.CN +2.2%, China Merchants Property Dev 000024.CN +2.2% (PBoC asks commercial banks to support 1st home mortgage); Commonwealth Bank of Australia CBA.AU +0.8% (Q3 results) - Materials: Shandong Kingenta Ecological Engineering 002470.CN -5.0% (private placement plan) - Energy: Cosmo Oil 5007.JP -2.6% (FY13/14 results) - Industrials: Chengdu Road & Bridge Engineering 002628.CN +1.3% (awarded contract); Kubota Corp 6326.JP +4.9% (FY13/14 results); CSR Ltd CSR.AU -5.7% (FY14 results) - Technology: Nikon Corp 7731.JP -4.8% (FY13/15 results)