Asian Market Update: Risk sentiment prevails as commodities sustain resurgence
***Economic Data***
- (AU) AUSTRALIA Q1 NAB BUSINESS CONFIDENCE: 4 V 5 PRIOR
- (NZ) NEW ZEALAND APR ANZ CONSUMER CONFIDENCE INDEX: 120.0 V 118.0 PRIOR; M/M: +1.7% V -1.4% PRIOR; first rise in 3 months
- (NZ) NEW ZEALAND MAR ANZ JOB ADVERTISEMENTS M/M: +2.9% V +1.2% PRIOR; 2nd straight increase
- (NZ) NEW ZEALAND MAR RETAIL CREDIT CARD SPENDING M/M: -1.1% v -0.5% PRIOR; Y/Y: 4.8% v 7.3% PRIOR
- (NZ) New Zealand Mar Net Migration: 5.3K v 6.0K prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +2.6%, S&P/ASX +0.9%, Kospi +0.7%, Shanghai Composite +0.4%, Hang Seng +1.8%, Jun S&P500 +0.2% at 2,102
***Commodities/Fixed Income***
- June gold -0.4% at $1,249/oz, June crude oil +0.2% at $44.26/brl, May copper +0.4% at $2.25/lb
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.4803 V 6.4579 PRIOR; first weaker setting in 4 sessions
- (CN) PBOC to inject CNY260B in 7-day reverse repos (2nd consecutive day of record injections)
- (JP) Japan investors bought net ¥844.7B in foreign bonds v sold ¥1.2T in prior week; Foreign investors bought net ¥538.6B in Japan stocks v bought ¥146.5B in Japan stocks in prior week
- JGB: (JP) Japan's MoF sells ¥1.00T in 0.4% (0.4% prior) 20-year JGBs; Avg yield: 0.262% (record low) v 0.427% prior; bid-to-cover: 3.55x v 3.08x prior
***Market Focal Points/FX***
- Asian equity markets treaded water in the opening hours until the rally picked up some steam in the 2nd half of the session. Much like overnight gains in China, there is little in the form of a fundamentally-driven catalyst. Instead, investors are taking their cue from clear signs of stabilization in commodities space while also responding positively to the early reports of the earnings season. WTI crude oil rolled over into June with bullish momentum above $44/brl, copper was up 0.4%, and silver spiked up some 3% in Asian hours to 11-month high around $17.40. Volatility in FX majors was somewhat more subdued - USD/JPY traded in a 40pip range below 109.90, AUD/USD traded some 15pips around $0.78, and NZD/USD was contained to a 25pip band below 0.6980.
- Investor George Soros spoke extensively about China, warning that March credit growth is a warning sign that reminds him of US conditions just before GFC. Likewise, Fitch head of Asia-Pac research remarked that its is difficult to achieve both objectives of reaching a 6.5% growth target and carrying out reforms, questioning govt ability to accomplish its objectives. China FX regulator SAFE spokesperson was more upbeat however, noting there is more stability in exchange rate, reserves are ample, and cross border flows are back to normal after some volatility at the start of the year.
- Japan cabinet may be headed for a showdown with the rest of the LDP ruling party as more senior officials reportedly expressed support for delaying sales tax increase. Outspoken LDP lawmaker Yamamoto also proposed ¥20T in JGBs for stimulus and earthquake disaster response, while former BOJ Dep Gov Iwata said the central bank may need to lower interest rate to about -1.0% (currently -0.1%) in order to put deflation behind. Recall the next BOJ decision is coming up at the end of the month, while the decision on sales tax will likely be announced next month after review of the latest GDP data.
- In Australia, ANZ came out with a fairly hawkish research note shrugging some of the credit risks while acknowledging political risks ahead of this year's elections. ANZ also stated that risks are skewed toward front-month fixed income starting to price in rate hikes, though such moves likely about 6-12 months away.
***Equities***
US equities / ADRs:
- CTXS: Reports Q1 $1.18 v $0.93e, R$826M v $787Me; +8.2% afterhours
- FFIV: Reports Q2 $1.68 v $1.63e, R$484M v $486Me; Board authorizes $1B share repurchase (15% of market cap); +4.2% afterhours
- YUM: Reports Q1 $0.95 v $0.83e, R$2.62B v $2.66Be; SSS positive in all segments; Raises FY16 guidance; +4.0% afterhours
- AXP: Reports Q1 $1.45 v $1.36e, R$8.09B v $8.00Be; +3.9% afterhours
- NEM: Reports Q1 $0.34 v $0.21e (unclear if comp), R$2.0B v $1.89Be; +1.2% afterhours
- STLD Reports Q1 $0.26 v $0.24e, R$1.74B v $1.70Be; -2.0% afterhours
- QCOM: Reports Q2 $1.04 (adj) v $0.96e, R$5.5B (adj) v $5.30Be; -3.2% afterhours
- LVS: Reports Q1 $0.45 v $0.61e, R$2.72B v $2.88Be; -6.0% afterhours
- MAT: Reports Q1 -$0.13 adj v -$0.08e, R$869.4M v $855Me ; -6.2% afterhours
Notable movers by sector:
- Consumer discretionary: SA SA International Holdings 178.HK +0.4% (Q4 result); KT & G Corp 033780.KR +4.8% (Q1 result)
- Financials: China Life Insurance 2628.HK -0.7% (Q1 guidance); Challenger Financial Services Group CGF.AU +5.1% (Q3 result); WesFarmers WES.AU +2.1% (Q3 result)
- Industrials: Aurizon Holdings AZJ.AU +1.3% (Q3 result)
- Technology: Brambles BXB.AU +0.6% (9-month result); FujiFilm Holdings Corp 4901.JP +6.1% (FY15/16 result speculation)
- Materials: China Minmetals Resources 1208.HK +4.5% (Q1 result); LG Chem 051910.KR -2.2% (Q1 result); South32 S32.AU +7.7% (Q3 result); OZ Minerals OZL.AU +0.5% (Q1 result); Iluka Resources ILU.AU +0.3% (Q1 result); Evolution Mining EVN.AU +1.0% (Q3 result)
- Healthcare: Australian Pharma API.AU +0.5% (H1 result)
- Telecom: Ten Network TEN.AU -1.5% (H1 result)
- Utilities: Yaskawa Electric 6506.JP -5.5% (FY15/16 result)