Asian Mid-session Market Update: Brexit worries and slowing China continue to weigh on sentiment
***Economic Data***
- (AU) AUSTRALIA MAY NAB BUSINESS CONFIDENCE: 3 V 5 PRIOR; CONDITIONS: 10 V 10 PRIOR
- (AU) AUSTRALIA APR CREDIT CARD BALANCES: A$51.8B V A$51.8B PRIOR; CREDIT CARD PURCHASES: A$23.5B V A$25.B PRIOR
- (NZ) New Zealand May Food Prices M/M: -0.5% v +0.3% prior
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -1.4%, S&P/ASX -2.0%, Kospi -0.4%, Shanghai Composite -0.3%, Hang Seng -0.3%, Sep S&P500 flat at 2,070
***Commodities/Fixed Income***
- Aug gold -0.3% at $1,283/oz, Jul crude oil -1.1% at $48.34/brl, Jul copper % at $2./lb
- GLD: SPDR Gold Trust ETF daily holdings rise 2.4 tonnes to 896.3 tonnes; highest since Oct 2013
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5791 V 6.5805 PRIOR
- (CN) PBOC to inject CNY75B in 7-day reverse repos
- JGB: BOJ skips today's regular JGB buying operations - financial press
- (AU) Australia MoF (AOFM) sells A$150M in 2% 2035 Indexed bonds; avg yields 0.6922%; bid-to-cover 3.04x
***Market Focal Points/FX***
- Asian equity markets continued to move lower, echoing decline in US indices, as investors await high-profile BOJ and FOMC policy meetings this week. Vote on Brexit and renewed momentum behind the Leave camp is also weighing heavily on overall sentiment as well as on UK currency. GBP/USD has fallen below $1.42 - nearly a 2-month low - with a thrust to the downside in today's session after the latest YouGov Times poll showing 39% voting in favor of remaining and 46% to leave. Sun newspaper became the first major publication with a recommendation of casting off EU - sentiment shared by long-time EU sceptic Ambrose Evans Pritchard.
- Selling in China is somewhat more benign, though traders are still processing yesterday's disappointing retail and fixed investment data while awaiting money supply and new lending figures. Economists with ANZ warned that China may miss 2016 GDP target of 6.5% due to slowing industrial output growth, while Goldman Sachs warned that the property market is expected to reach a point of downward inflection in 6-9 months. Closely tracked power consumption data out of the NDRC did provide some welcome news, rising 2.1% y/y v 1.9% in April.
- Notable economic calendar releases were limited to Australia's NAB business sentiment showing a mixed-to-negative print. NAB chief economist remarked that "services continue to lead the way while manufacturing has pulled back and mining (and related sectors) still look weak", adding that since the inflation indicators in the survey have picked up this month, RBA will likely keep policy on hold for the foreseeable future. AUD/USD traded in a narrow 25pip range just below the $0.74 handle.
- Selling in USD/JPY pair has persisted, with traders piercing decisively below the 106 handle late in the session. Additional policy stimulus by the BOJ is still the preferred outcome for a minority of analysts, though Japan cabinet officials continue to resort to tough talk on currency volatility. Econ Min Ishihara said the govt is closely watching market moves and the historic low long term interest rates, while Fin Min Aso added that FX stability is extremely critical to the economy and that policy action may be needed to curb speculative moves in FX.
***Equities***
US equities / ADRs:
- NXPI: To divest its Standard Products business to a consortium of financial investors consisting of Beijing Jianguang Asset Management and White Road Capital for $2.75B; +1.6% afterhours
- BIDU: Cuts Q2 Rev $2.81-2.82B v $2.88Be (prior $3.12-3.19B); -5.2% afterhours
- IMGN: Announces proposed $100M offering of convertible senior notes due 2021 (23% of market cap); -11.1% afterhours
- RVNC: Reports results for RT001 topical Phase 3 trial for lateral canthal lines; did not achieve co-primary and other endpoints; -24.2% afterhours
- KMPH: FDA issues complete response letter for Apadaz New Drug Application; -30.1% afterhours
Notable movers by sector:
- Consumer discretionary: Cheil Worldwide 030000.KR +3.1% (shareholder talks end)
- Financials: China Resources Land 1109.HK -0.6% (May result); Onevue Holdings OVH.AU +2.3% (merger)
- Industrials: Hanjin Shipping Co 117930.KR +6.0%, Hyundai Merchant 011200.KR +2.4% (possible merger); NTN Corp 6472.JP -1.6% (expects to raise capex)
- Technology: Mesoblast MSB.AU -28.4% (update on Global Heart Failure Program)
- Materials: Regis Resources RRL.AU +5.6% (update at Tooheys well); Newcrest Mining NCM.AU +1.1% (confirms guidance); Yunnan Aluminum 000807.CN +2.0% (China aluminum smelters agree on output cut)
- Energy: Yanzhou Coal Mining Co 1171.HK +1.5% (acquisition)