Asian Mid-session Market Update: Rebound continues after more good news from US financial sector; June PMIs on tap
***Economic Data***
- (JP) JAPAN MAY PRELIMINARY INDUSTRIAL PRODUCTION M/M: -2.3% V -0.2%E; Y/Y: -0.1% V +1.9%E
- (JP) Japan May Loans & Discounts Corp Y/Y: 2.6% v 3.1% prior
- (AU) AUSTRALIA MAY PRIVATE SECTOR CREDIT M/M: 0.4% V 0.5%E; Y/Y: 6.5% V 6.7%E
- (AU) AUSTRALIA MAR-MAY SKILLED VACANCIES Q/Q: -1.9% V +2.8% PRIOR
- (NZ) NEW ZEALAND MAY BUILDING PERMITS M/M: -0.9% V +6.8% PRIOR
- (NZ) NEW ZEALAND JUNE ANZ ACTIVITY OUTLOOK: 35.1 (14-month high) V 30.4 PRIOR; BUSINESS CONFIDENCE: 20.2 (4-month high) V 11.3 PRIOR
- (NZ) New Zealand May M3 Money Supply y/y: 7.3% v 7.8% prior
- (KR) SOUTH KOREA MAY INDUSTRIAL PRODUCTION M/M: 2.5% V 0.3%E; Y/Y: 4.3% (first rise in 3 months) V 0.3%E
- (UK) JUNE GFK CONSUMER CONFIDENCE: -1 V -2E
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.8%, S&P/ASX +1.8%, Kospi +0.6%, Shanghai Composite -0.2%, Hang Seng +1.6%, Sep S&P500 flat at 2,067
***Commodities/Fixed Income***
- Aug gold -0.7% at $1,318/oz, Aug crude oil -0.9% at $49.43/brl, Jul copper flat at $2.20/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 950.1 tonnes; highest since July 2013
- USD/CNY: (CN) SWIFT: CNY use in international transactions: 1.90% of total in May v 1.82% prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6312 V 6.6324 PRIOR; 2nd straight firmer setting
- (CN) PBOC to inject CNY130B in 7-day reverse repos
- (JP) Japan investors bought net ¥394B in foreign bonds v sold ¥458B in prior week; Foreign investors sold net ¥184B in Japan stocks v sold ¥233B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian equity markets are tracking another session of impressive gains on Wall St, as Brexit fears continue to subside with the help of a easy-Fed-for-longer narrative. Vix index was down for the 3rd straight day, falling to pre-Brexit levels, as Fed funds futures now imply rates remaining on hold well into 2017. Among FX majors, GBP/USD remained volatile, falling about 70pips from the highs below 1.34, but other pairs were less active - USD/JPY traded in a 40pip range below ¥103, AUD/USD was in a 40pip range below 0.7470, and NZD/USD retreated about 30pips below 0.7090. Gold was down over $10 from the highs below $1,310. Markets are looking ahead to tomorrow's raft of June PMI data for hints over concern regarding the spillover of Brexit in the far east.
- Federal Reserve's annual capital analysis review (CCAR) of major financials gave passing grades to 30 out of 33 key institutions and once again singled out Santander and Deutsche Bank units based on "qualitative concerns." Among the dividend/buyback plans of top financials, Citigroup was most notable with a payout increase of 220% and a buyback of $8.6B (~7% of market cap). JPM and BAC plans were more modest - former maintained div with a 4.7% shares buyback and the latter raises its div by 50% with 3.7% share buyback.
- Mainland China markets underperformed, weighed down by cautious rhetoric from Fin Min Lou and mixed sentiment in the China Beige Book. Lou remarked that the govt is struggling to meet annual fiscal targets, as the Treasury's intake in the first 5 months of the year has risen only 0.6% - below 2% budgeted growth rate. China Beige Book pointed to Services and Construction helping spur stronger growth along with a notable rise in employment expectations, but added that Brexit does pose significant downside risk for the economy as its growth rate is unlikely to have hit bottom. Meanwhile, PBoC has once again set Yuan fix slightly firmer to match the retreat in USD in other major pairs.
- Japan's preliminary May industrial output was the most notable datapoint, missing estimates on both sequential and annual basis. Economists warn that these figures could portend a more pronounced GDP deterioration in Q2, which bolsters the case for more BOJ easing next month accompanying central bank's growth and inflation outlook revisions.
***Equities***
US equities / ADRs:
- PRGS: Reports Q2 $0.33 adj v $0.30e, R$96.7M v $95.3Me (1 est); +6.2% afterhours
- C: Fed does not object to its CCAR plan; approves $8.6B (~7% of market cap) share buyback and 220% dividend increase to $0.16/shr (implied yield 1.52%); +2.1% afterhours
- JPM: Fed does not object to its CCAR plan; approves $10.6B (4.7% of market cap) share buyback and maintains dividend at $0.48/shr (implied yield 3.2%); +0.9% afterhours
- PIR: Reports Q1 -$0.07 v -$0.06e, R$418.4M v $421Me; Cuts FY guidance; -6.1% afterhours
- TSCO: Reports prelim Q2 $1.85B v $1.93Be, SSS -0.5% v +5.6% y/y; cuts FY16 guidance; -7.4% afterhours
Notable movers by sector:
- Consumer discretionary: Intime Department Store Group Co 1833.HK +7.0% (Alibaba to hold stake); DeNA Co.2432.JP +5.1% (joint development speculation with Docomo)
- Consumer staples: Australian Dairy Farms AHF.AU -1.7% (guidance)
- Financials: National Storage REIT NSR.AU -5.8% (Macquarie cuts to underperform); ANZ Bank ANZ.AU +2.5% (divestment)
- Industrials: Mitsubishi Heavy Industries 7011.JP +4.8% (Daiwa raises to outperform); BBMG Corp 2009.HK +1.8% (asset disposal); Beijing Dinghan Technology 300011.CN -0.4%, China High-Speed Railway Technology Co 000008.CN -0.8% (China approves railway network plan); Daewoo Shipbuilding & Marine 042660.KR +0.5% (creditors seek partial sales)
- Technology: MediaTek 2454.TW +2.1% (to be Samsung supplier)
- Materials: Aluminum Corporation of China 2600.HK +1.7% (asset disposal); Kuraray Co 3405.JP -1.0% (guidance)
- Healthcare: Mayne Pharma MYX.AU +29.0% (plans to acquire assets from Teva's US generics portfolio)