Asian Market Update: Retreat in China property prices accelerates
***Economic Data*** - (CN) CHINA MAY NEW HOME PRICES M/M: PRICES RISE IN 15 OF 70 CITIES V 44 PRIOR; Y/Y: PRICES RISE IN 69 OF 70 CITIES V 69 PRIOR - (SL) SRI LANKA LEAVES REVERSE REPO RATE UNCHANGED AT 8.00%; LEAVES REPURCHASE RATE UNCHANGED AT 6.50% (EXPECTED) - (AU) AUSTRALIA MAY WESTPAC LEADING INDEX: +0.1% V -0.5% PRIOR - (AU) Australia Apr Conference Board Leading Index: -0.1% (first decline in 8 months) v +0.2% prior - (NZ) NEW ZEALAND Q1 CURRENT ACCOUNT BALANCE (NZ$): 1.40B (1st surplus in 4 years; Largest surplus on record) V 1.40BE; CURRENT ACCOUNT GDP RATIO YTD: -2.8% (smallest deficit in 3 years) V -2.8%E - (JP) JAPAN MAY MERCHANDISE TRADE BALANCE: -¥909.0B V -¥1.19TE ; ADJ TRADE BALANCE: -¥862.2B V -¥1.03TE - (JP) BANK OF JAPAN (BOJ) RELEASES MINUTES FROM MAY 21 MEETING; ALL MEMBERS AGREE IMPACT OF SALES TAX RISE WITHIN EXPECTATIONS
Market Snapshot (as of 03:30 GMT): - Nikkei225 +0.4%, S&P/ASX -0.1%, Kospi -0.4%, Shanghai Composite -0.2%, Hang Seng flat, Sept S&P500 flat at 1,934, Aug gold -0.1% at $1,270, Jul crude oil +0.3% at $106.71/brl
***Highlights/Observations/Insights*** - Adobe hit 52-week highs in extended session, rising nearly 10pct on much stronger than expected Q2 results. Creative Cloud subscriptions of 2.3M were +464K q/q. - New Zealand current account hit its first surplus in 4 years going into tomorrow's release of Q1 GDP. Also of note in New Zealand, Fonterra's dairy auction saw prices rise for the first time in 9 auctions. - China property sector prices rose m/m in just 15 out of 70 cities v 44 prior; Prices were flat in 20 cities and fell in 35 cities, rising sharply from 8 prior. - BOJ Meeting Minutes saw members agree the impact of sales tax hike is within expectations, potentially foreshadowing a Q2 contraction that would not be deeper than expected. Most members also noted that inflation expectations are rising and exports expected to increase moderately. Note that these minutes are for the meeting before this month's when BOJ reiterated its assessment on all sectors of the economy. Today's Japan merch trade data was also mixed - deficit was smaller than expected, but both imports and exports fell (imports marked 1st decline in 19 months and exports saw 1st decline in 15 months)
- USD majors are in narrow ranges going into today's FOMC meeting. EUR/USD and USD/JPY in 10-pip ranges below $1.3550 and ¥102.22. AUD/USD and NZD/USD in 15-pip ranges below $0.9345 and $0.8665. USD was higher across the board after the US CPI data, with the yield on the 10-year rising to 1-month high of 2.66%.
***Speakers/Political/In the Papers*** - (US) Fed watcher Hilsenrath (WSJ) comments on the debate within the Fed regarding the labor market and the long-term unemployed - (CN) PBoC Chief Economist Ma Jun: CNY close to equilibrium level with current account surplus close to normal - Chinese press - (CN) According to PricewaterhouseCoopers (PwC), China's liberal interest rates pose the biggest challenge to China banks - Shanghai Daily (CN) China Merchants Securities: PBoC could cut RRR for Shanghai Pudong Development Bank, Bank of Beijing, AgBank - Chinese press - (CN) China Merchants Securities: PBoC could cut RRR for Shanghai Pudong Development Bank, Bank of Beijing, AgBank - Chinese press - (JP) Japan Econ Min Amari seeking corporate tax rates comparable to those seen in Germany - Japanese press - (NZ) New Zealand Institute of Economic Research (NZIER) chief economist Eaqub: Latest interest rate hike by the RBNZ is a "huge mistake" that punishes economically struggling provinces - NZ press
***Fixed Income/Commodities/Currencies*** - (CN) China MoF sells 10-year bonds, avg yield 4% - US financial press - (CN) PBoC sets yuan mid point at 6.1559 v 6.1529 prior setting (weakest Yuan setting since June 6th) - (JP) BOJ offers to buy ¥150B in JGB with maturity over 10-yr and ¥140B in floating rate notes - (AU) Australia MoF (AOFM) sells A$700M in 2.75% bonds due 2024; Avg yield: 3.7393%; Bid-to-cover: 3.17x
- SLV: iShares Silver Trust ETF daily holdings fall to 10,262 tonnes from 10,321 tonnes prior (lowest since May 1st) - GLD: SPDR Gold Trust ETF daily holdings fall 0.3 tonnes to 782.6 tonnes (lowest since May 23rd) - (US) API PETROLEUM INVENTORIES: CRUDE: -5.7M (largest draw since May 20th) v -1Me, GASOLINE: -48K v +0.5Me, DISTILLATE: +531K v +0.5Me - (NZ) Fonterra Global Dairy Trade auction: Dairy Trade price index: +0.9% from prior auction (first rise in 9 auctions)
***Equities*** US markets: - ADBE: Reports Q2 $0.37 v $0.29e, R$1.07B v $1.03Be; Guides Q3 $0.22-0.28 v $0.27e, R$975M-1.025B v $1.02Be - slides; +9.4% afterhours - AES: Reaches Agreement to Sell Majority of Its Solar Business for up to $207M; +0.2% afterhours - GWPH: Offering 1.7M ADS (9% of shares outstanding); -5.1% afterhours - LZB: Reports Q4 $0.33 (adj) v $0.33e, R$353M v $368Me; -10.7% afterhours - ECYT: Regains worldwide rights to Vintafolide; Merck no longer wants to pursue development; -19.4% afterhours
Notable movers by sector: - Consumer Discretionary: Chow Tai Fook Jewelry Group 1929.HK +2.9% (FY13 results); Komeri 8218.JP -3.3% (analyst action); Echo Entertainment Group EGP.AU +0.7% (analyst action); JB Hi-Fi JBH.AU +2.2% (analyst action) - Materials: Aquila Resources AQA.AU +7.2% (recommends shareholders to accept offer) - Industrials: AVIC Aircraft 000768.CN +1.5%, Jiangxi Hongdu Aviation Industry 600316.CN +2.7%, Sichuan Chengfei Integration Technology 002190.CN +7.1% (China Press comments on Air Force) - Technology: Nikon Corp 7731.JP -3.3% (FY16 guidance; analyst action) - Healthcare: PKU International Healthcare Group Southwest Pharmaceutical 000788.CN +10.0% (acquisition)
After Hours Summary: ADBE +9.2%, GAME +0.4%, LZB -11.0%, NPTN -0.2%
After Hours Gainers: Companies trading higher in after hours in reaction to earnings: ADBE +9.2%, GAME +0.4%
Companies trading higher in after hours in reaction to news: ETRM +16.5% (FDA Advisory Committee voted 6-2 to recommend approval of VBLOC vagal blocking therapy for the treatment of obesity), NEWL +14.5% (announced inappropriate issuance of NewLead's shares by Ironridge), ENB +2.4% (Northern Gateway Project received approval from the government of Canada), HCLP +1.9% (announced long-term contract with Liberty Oilfield Services), SUNE +1.5% (co reached a definitive agreement to acquire a 50% ownership stake in Silver Ridge Power from a subsidiary of The AES Corporation), FLXN +1.3% (announced positive topline results from Phase 2a pharmacokinetic trial with lead compound FX006)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: LZB -11.0%, NPTN -0.2%
Companies trading lower in after hours in reaction to news: ECYT -16.8% (regained the worldwide rights to vintafolide in all indications from Merck), GWPH -4.9% (announced 1.7 mln ADS public offering), NGL -4.7% (announced the commencement of an underwritten public offering of 8,000,000 common units representing limited partner interests), FBIZ -2.8% (co said it expects to join the Russell 2000 index), CONE -2.5% (announced public offering of 12.5 mln shares of common stock), CBPO -2.2% (announced proposed public offering of common stock: CBPO to sell 1 mln shares, selling stockholders to sell ~2.2 mln shares)
Closing Market Summary: Small Caps Lead Stocks Higher Ahead of FOMC
The stock market ended the Tuesday session on a modestly higher note with participants gearing up for the latest policy directive from the FOMC, which will be released on Wednesday afternoon.
Small- and mid-cap stocks led the way with the Russell 2000 and S&P Mid Cap 400 climbing 0.7% and 0.8%, respectively. Meanwhile, the S&P 500 added 0.2% with five sectors posting gains.
Overall, cyclical groups did the bulk of the grunt work as five of six growth-sensitive sectors advanced. Financials (+0.9%) seized the lead at the start of the session and never looked back. Top-weighted components like Bank of America (BAC 15.59, +0.31) and Morgan Stanley (MS 32.50, +0.79) posted respective gains of 2.0% and 2.5%, while the entire sector extended its June advance to 1.9%.
Financials notwithstanding, gains in other areas were much more subdued as the second-best sector of the day—consumer discretionary—added just 0.3%. Retailers contributed to the strength with the SPDR S&P Retail ETF (XRT 86.28, +0.74) climbing 0.9%, while shares of Netflix (NFLX 443.65, +13.39) jumped 3.1% amid reports indicating lawmakers are finalizing a proposal that would ban internet fast lanes.
Also of note, the technology sector (+0.2%) contributed to the outperformance of the Nasdaq Composite (+0.4%), but it is worth mentioning that the bulk of the strength came from high-beta chipmakers. The PHLX Semiconductor Index jumped 0.7% as 25 of its 30 components finished in the green.
Although most growth-oriented sectors posted gains, that was not the case with the energy space (-0.2%). The sector trimmed its loss into the close, but could not turn positive as its top-weighted listing—ExxonMobil (XOM 102.42, -0.50) weighed. Shares of ExxonMobil fell 0.5%, while crude oil slumped into the pit close, diving 0.6% to $106.28/bbl.
Meanwhile, the other commodity-related sector, materials (+0.2%), received support from steelmakers and miners. The Market Vectors Steel ETF (SLX 46.55, +0.41) rose 0.9% and Market Vectors Gold Miners ETF (GDX 24.12, +0.14) added 0.6% even as gold futures retreated.
The yellow metal slipped 0.3% to $1271.80/ozt, but still ended above its pre-CPI levels. Gold traded at $1265 ahead of the report and fell to $1260 immediately after, before spending the remainder of the day in a slow climb.
On the fixed income side, Treasuries fell to lows following this morning's data and continued their retreat into the close. The 10-yr yield rose five basis points to 2.65%.
Participation was well below average with less than 600 million shares changing hands at the NYSE.
Economic data was limited to May housing starts/building permits and CPI:
* Housing starts fell 6.5% in May to 1.001 million from a downwardly revised 1.071 million (from 1.072 million) in April. The consensus expected housing starts to fall to 1.028 million. Multifamily construction fell 7.6% to 376,000. There is still room for more declines over the next few months. The bigger concern was the trend in single-family construction. That type of construction is normally stable, but these starts fell 5.9% in May to 625,000. That was the lowest level since 589,000 single-family homes were started in February. Hopefully, this was just a one-month blip but it warrants closer evaluation. * Consumer prices increased 0.4% in May, up from a 0.3% increase in April. That was the largest increase since February 2013. The consensus expected the CPI to increase 0.2%.
* Contrary to the trends in the PPI, both food and energy prices contributed positively to overall consumer price growth in May. * Food prices increases accelerated in May. After increasing by 0.4% for each of the last three months, prices rose 0.5% in May. That was the largest increase since August 2011. Food at home prices rose 0.7%, the biggest increase since July 2011. * Energy prices increased 0.9% in May on a 2.3% increase in electricity costs and a 0.7% increase in gasoline costs. Some of this gain was due to seasonal credits that temporarily lowered electricity prices in California in April and returned to normal in May.
* Excluding food and energy, core CPI increased 0.3% in May after increasing 0.2% in both March and April. That was the largest increase in core prices since August 2011. The consensus expected these prices to increase 0.2%.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while Q1 Current Account Balance (consensus -$97.80 billion) will cross the wires at 8:30 ET. Lastly, the FOMC will release its latest policy directive at 14:00 ET.
* S&P 500 +5.1% YTD * Nasdaq Composite +3.9% YTD * Dow Jones Industrial Average +1.4% YTD * Russell 2000 +1.0% YTD
2014-06-17 14:14:49.911 GMT
By Adam Ewing and Kati Pohjanpalo
June 17 (Bloomberg) -- Nokia paid “several million euros”
to blackmailer in 2007-2008, Finnish broadcaster MTV reports,
without saying how it got the information.
* Extortion related to encryption key for Symbian operating
system, which would have made any software appear genuine to
mobile phone where it was being installed
* Finland’s National Bureau of Investigation probing case of
gross extortion: MTV cites Detective Chief Inspector Tero
Haapala
* James Etheridge, a Nokia spokesman, declined to comment when
contacted by Bloomberg News
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To contact the editor responsible for this story:
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