Asian Market Update: BOJ on hold again as expected, maintaining assessment for 11th time; Sterling spikes on bullish BOE Gov comments
***Economic Data*** - (NZ) NEW ZEALAND MAY BUSINESS MANUFACTURING PMI: 52.7 (lowest reading since Dec 2012) V 54.4 PRIOR - (NZ) NEW ZEALAND MAY FOOD PRICES M/M: 0.6% V 0.6% PRIOR - (SG) SINGAPORE Q1 FINAL UNEMPLOYMENT RATE: 2.0% V 2.1%E - (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 4.00%, AS EXPECTED - (CL) CHILE CENTRAL BANK LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 4.00%, AS EXPECTED
Market Snapshot (as of 03:30 GMT): - Nikkei225 -0.6%, S&P/ASX -0.8%, Kospi -1.2%, Shanghai Composite +0.4%, Hang Seng +0.1%, Sept S&P500 -0.1% at 1,921, Aug gold flat at $1,273, Jul crude oil 0.7% at $107.32/brl
***Highlights/Observations/Insights*** - As speculated earlier this week in local press, BOJ policy statement raised its economic assessment on overseas economies to "recovering" from "started to recover", but also maintained its take on domestic economy at "recover moderately as a trend" for the 11th consecutive meeting. Outside of that minor change, BOJ policy statement was identical to that of May, targeting annual increase in monetary base at annual pace of ¥60-70T and projecting y/y increase in CPI ex impact of consumption tax hike around 1.25% for some time. BOJ also reiterated it expects domestic economy to continue moderate recovery despite the short term impact of "decline in demand following front-loaded increase prior to consumption tax hike." USD/JPY pair was unmoved even marginally on the release just below ¥101.80.
- BOE Gov Carney made a big splash in the currency markets just after the US close, hinting that the first rate increase could come sooner than the markets are expecting. Carney also noted BOE will take proportionate measures on housing market at next week's meeting amid growing discomfort with inflation in the property sector. Cable spiked some 70pips to $1.69 on those comments and extended those gains toward $1.6960 later in Asian hours - a 1-month high.
- Also just after the US close, Intel raised its revenue outlook for Q2 and FY14 as a result of "higher PC unit volume" as well as gross margin projections amid "improvements in unit cost and volume." Shares of INTC were up over 5.5% at the close of afterhours extended session, above $29.50.
- Electronic trade in the energy markets saw July WTI contract rise as high as $107.60 in the early going before retreating below $107. Crude oil traders remain on edge about Iraq turmoil even though daily production is down less than 10%, as ISIS Jihadis are threatening to continue their sweeping advance toward the capital of Baghdad. Pres Obama said US was exploring all options to save Iraq's security forces from collapse, including the possibility of air strikes.
***Speakers/Political/In the Papers*** - (KR) South Korea Fin Min Hyun: Economic sentiment has been dampened - financial press - (KR) South Korea Pres Park to nominate Choi Kyung-Hwan as the next finance minister and dep PM - financial press - (JP) GPIF investment committee head Yonezawa: Sees cut in JGB allocation to 30-50% - Mainichi News interview
***Fixed Income/Commodities/Currencies*** - (AU) Australia MoF (AOFM) sells A$700M in 3.25% bonds due 2018; Avg yield: 3.1114%; Bid-to-cover: 4.26x - (US) Weekly Fed Balance Sheet Total Assets Week ending June 11th: $4.34T v $4.33T prior; Reserve Bank Credit: $4.30T v $4.29T prior; M1: +$59.1B (biggest increase in 3 months) v -$1.7B prior; M2: +$10.9B (6th consecutive rise) v +$36.1B prior; M1 y/y change: 10.4% (6-week low) v 10.6% w/w; M2 y/y change: 6.3% (5-month high) v 6.2% w/w
***Equities*** US markets: - EXPR: Sycamore Partners discloses 9.9% stake; sent letter to board about submitting proposal to acquire remaining shares; +22.1% afterhours - INTC: Raises Q2 and FY14 Rev and gross margin expectations; Sees Q2 R$13.4-14.0B v $13Be (prior $12.5-13.5B); +5.6% afterhours - XEC: To be added to S&P500 replacing IGT which moves down to the S&P400 index; LYV and MASI promoted to S&P400 index; +0.9% afterhours - CPST: Reports Q4 -$0.01 v -$0.01e, R$36.4M v $38.5Me; -3.9% afterhours - FNSR: Reports Q4 $0.36 v $0.40e, R$306M v $314Me; -22.5% afterhours
- TWC: Univision said to have had prelim discussions with CBS, Time Warner - financial press
Notable movers by sector: - Financials: Industrial Bank 601166.CN +0.7% (strategic alliance with Baidu) - Materials: Perseus Mining PRU.AU +7.3% (production update); BHP Billiton BHP -1.3% (analyst action); Rio Tinto RIO.AU -2.5% (analyst action) - Industrials: Wanxiang Qianchao 000559.CN +6.5%, BYD Co 002594.CN +2.8%, Bejing Dynamic Power 600405.CN +1.9%, Shenzhen Auto Electric Power 002227.CN +1.5% (Tesla confirms to open patent) - Technology: Catcher Technology 2474.TW +0.8% (receives order for iPhone 6 component); Advantest Corp 6857.JP +3.2% (raises guidance); PCI-Suntek Technology 600728.CN +0.7% (announces strategic alliance)