Asia Mid-Session Market Update: Asia tracks declines in US equities, but initial losses less severe; Infosys down over 6% on CEO change, Lenovo's earnings miss weighs
***Asia Summary***
- Following the over 2% decline seen in the Nasdaq during NY trading, Asian equities are broadly weaker. Some attributed the weakness in US equities to concerns about President Trump’s economic policies amid speculation (that was later denied) that White House Economic Advisor and former Goldman COO Gary Cohn might consider resigning . The earlier terrorist attack in Barcelona was also said to weigh. During today’s Asian session, Catalonia officials said they thwarted a separate incident in Cambrils, which is south of Barcelona.
- In terms of sectors, the Japanese chip equipment sector has been in focus after Applied Materials traded higher on better than expected quarterly results and guidance.
- Shares of Lenovo traded lower after the company reported an unexpected Q1 loss, amid declines in gross margins.
***Key economic data***
- (CN) CHINA JUL PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITES VS 60 PRIOR; Y/Y RISE IN 70 OUT OF 70 CITIES VS 70 PRIOR
***Speakers and Press***
China
- (CN) People’s Daily: US won’t win and cannot afford trade war against China
- (CN) China State Planner (NDRC) Approves CNY165.5B in fixed-asset investment projects in July
- (CN) China insurance regulator (CIRC) wants insurers to disclose info related to ‘big’ investment projects and ‘major’ losses – Chinese Press
Other
- (ES) Catalonia Government: One police officer was injured in alleged terrorist attack in Cambrils; there are 4 presumed terrorists that have been killed**Note: On Thursday, in Barcelona a van rammed into dozens of people at the Ramblas tourist area; Cambrils is located south of Barcelona.
- (NZ) New Zealand Foreign Visitor Spending in June Year at NZ$10.3B, flat y/y; China visitor spending -16%; Avg spending per tourist NZ$3.2K, -8%; Suggests the stronger Kiwi (NZD) could be a factor
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -1.1%, Hang Seng -0.8%, Shanghai Composite -0.2%, ASX200 -0.7%, Kospi -0.1%
- Equity Futures: S&P500 +0.1% ; Nasdaq +0.3% , Dax +0.1% , FTSE100 +0.2%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1709-1.1735; JPY 109.30-109.58 ; AUD 0.7870-0.7900; NZD 0.7276-0.7295
- Aug Gold +0.1% at 1,293/oz; Aug Crude Oil -0.2% at $47.02/brl; Sept Copper +0.4% at $2.92/lb
- GLD SPDR Gold Trust ETF daily holdings unchanged at 795.4 Mt
-(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6744 V 6.6709 PRIOR
-(CN) China PBOC OMO injects CNY120B v CNY100B in 7 and 14-day reverse reports prior: net injection CNY20B v CNY50B prior
-(CN) PBoC auctions 3-month MOF deposits at yield of 4.46%
-(AU) Australia sells A$500M in 2.0% 2021 bonds, avg yield 2.1077%%, bid to cover 5.62x
***Equities notable movers***
Australia
- Kingsgate Consolidated, KCN.AU Favorable regulatory decision in Thailand; +35%
- Kogan.com, KGN.AU FY17 net profit more than doubled; +7%
Hong Kong/China
- Lenovo, 992.HK, Reported unexpected Q1 Net loss as gross margins missed ests; -2.3%
***US markets on close: Dow -1.2%, S&P500 -1.5%, Nasdaq -1.9%, Russell -1.8% ***
- Best Sector in S&P500: Utilities, Real Estate -0.7%
- Worst Sector in S&P500: Tech -2%
- At the close: VIX 15.55 (+3.81pts); Treasuries: 2-yr 1.31% (-2bps), 10-yr 2.19% (-4bps), 30-yr 2.78% (-3bps)
***US Market Summary***
- Unfounded market speculation that White House economic advisor Gary Cohn was considering stepping down sent prices tumbling in the morning, followed by more pressure on equities as reports came in of a horrendous terrorist attack in Barcelona, Spain. The S&P extended its fall to the lowest level in a month, while the VIX index gained 28%, rising above 15.00 for the first time in a week. Treasury yields continued to decline as investors sought safety, with the 10-year yield down 3 bps to 2.19. Gold also on the rise today amid uncertainty, with the precious metal rising 0.4% to $1,288.00
***US Afterhours Movers***
-SPWH Reports Q2 $0.15 v $0.13e, Rev $191.5M v $192Me; Guides Q3 $0.23-0.26 v $0.24e, Rev $220-225M v $228Me, SSS -6 to -8%; +14.2% afterhours
-ROST Reports Q2 $0.82 v $0.76e, Rev $3.43B v $3.37Be- Guides Q3 $0.64-0.67 v $0.77e, SSS +1-2% - Guides Q4 $0.88-0.92, SSS +1-2% +10.1% afterhours
-GPS Reports Q2 $0.68 v $0.52e, Rev $3.80B v $3.77Be- Raises FY17 $2.02-2.10 v $2.00e (prior $1.95-2.05) +6.3% afterhours
-ZOES Reports Q2 $0.00 v $0.02e, Rev $74.3M v $75.4Me; affirms FY17 Rev $314-322M v $316Me, SSS flat to -3%; -2.0% afterhours
Asia Mid-Session Market Update: Australia again shows a healthy employment figure; USD under pressure after Fed minutes
***Asia Summary***
- Asian equity markets opened mixed before falling to the downside, again the stand out is the Kospi rising 0.5%. Fed meeting minutes weighed on the dollar in the session, as the outlook on inflation remains subdued. South Korea President Moon affirmed that nothing would happen with North Korea without South Korea’s approval. Onshore yuan gained over 0.3%, the largest advance in 1-week after China govt data showed that outflows have eased. The USD/CNY had its first strengthening in 3 days by 0.1% to 6.6709. Market had little reaction the Japan trade figures, most of Japan, including the Nikkei, has been under pressure from the stronger yen. Australia employment figures gave some strength to the A$ before giving most of it back later in the session. In Australia Telstra reported results and suspended its dividend reinvestment plan, sending the stock down over 8%, this weighed on the ASX200 of which it is a major component. Earnings continue to ramp up in China and Hong Kong with property and retail names showing positive results, tech players will look ahead to Lenovo, reporting on Friday.
***Key economic data***
- (AU) AUSTRALIA JULY EMPLOYMENT CHANGE: +27.9K V +20.0KE (5TH CONSECUTIVE INCREASE); UNEMPLOYMENT RATE: 5.6% V 5.6%E
- (NZ) NEW ZEALAND Q2 PPI INPUT Q/Q: 1.4% V 0.8% PRIOR; PPI OUTPUT Q/Q: 1.3% V 1.4% PRIOR
- (JP) JAPAN JULY TRADE BALANCE: ¥418.8B V ¥327.1BE; ADJ TRADE BALANCE: ¥337.4B V ¥195.3BE
- (SG) SINGAPORE JULY NON-OIL DOMESTIC EXPORTS M/M: -2.5% V -0.4%E; Y/Y: 8.5% V 9.1%E; ELECTRONIC EXPORTS Y/Y: 16.3% V 15.0%E
- (PH) PHILIPPINES Q2 GDP Q/Q: 1.7% V 1.9%E; Y/Y: 6.5% V 6.4%E
- (AU) Australia Jul RBA Govt FX Transactions (A$): -1.03B v -1.12B prior
***Speakers and Press***
China/Hong Kong
- (CN) China Hebei province to meet capacity cutting targets by end of September - Chinese press
- (CN) China National Development and Reform Commission (NDRC): expect prices to be stable in H2
Korea
- (KR) South Korea President Moon: Critical to address minimum wage and stability in housing; Only S Korea can decide any military option on peninsula - 100 day press conference
Taiwan
- (TW) Taiwan planning to reshuffle cabinet in Sept - Taiwan press
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.1%, Hang Seng -0.1%, Shanghai Composite +0.4%, ASX200 0.0%, Kospi +0.5%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.2%, Dax -0.1%, FTSE100 +0.1%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1790-1.1765; JPY 110.16-109.66; AUD 0.7949-0.7922; NZD 0.7330-0.7303
- Dec Gold +0.8% at $1,292/oz; Sept Crude Oil +0.3% at $46.91/brl; Sept Copper +0.3% at $2.97/lb
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.6709 V 6.6779 PRIOR
- (CN) China PBoC OMO injects CNY100B v CNY280B in 7 and 14-day reverse repos; injects net CNY50B v CNY180B prior
- USD/PHP (PH) Philippines Economic Planning Sec Pernia: See no reason for concern on peso, its unlikely to gyrate wildly, will curb volatility
- JGB (JP) Japan MoF sells ¥4.38T v ¥4.4T offered in 3-month bills; avg yield -0.1275%; bid-to-cover 5.21x
- JGB (JP) Japan MoF sells ¥1.81T v ¥2.2T offered in 0.1% JGBs; avg yield -0.0830%; bid-to-cover 4.46x
***Equities notable movers***
Hong Kong/China
- Tencent, 700.HK Reports Q2 (CNY) Net 18.2B v 13.5Be, Rev 56.6B v 52.9Be; +5.3%
- Cathay Pacific, 293.HK Reports Q1 (HK$) Net -2.1B (1st loss in ~20-yrs) v -1.2Be; Rev 45.9B v 45.7B y/y; +1.5%
Australia
- Telstra, TLS.AU Reports FY17 Net A$3.89B v A$3.82Be; EBITDA A$10.7B v A$10.5B y/y; Rev A$26.0B v A$26.7B y/y; suspends dividend reinvestment plan; -8.5%
- Godfreys,GFY.AU Reports FY17 Underlying Net A$5.9M v A$9.2M y/y; EBITDA A$14.1M v A$17.5M y/y; Rev A$174.1M v A$179.3M y/y; +16.7%
- RungePincockMinarco,RUL.AU Guides FY17 Rev A$74.7M v A$57.1M y/y; +15.6%
Asia Mid-Session Market Update: China July figures show a slowdown in lending; As Korea quiets down focus returns to macro data and possible Fed action
***Asia Summary***
- Asian equity markets opened mixed, with the biggest mover the Singapore Straits Times index falling 1.1%, led by banks. Most of the move is attributed to the fact that the odds for a Fed Dec rate hike his risen back up to 50/50 following US data. Late yesterday a PBOC adviser said that China is unlikely to raise rates or use RRR, more likely to use other measures. The PBOC did resume open market operations after skipping yesterday, with a next injection of CNY180B. An analyst report noted that China state owned firms are dominating M&A deals, accounting for 60% in H1 of 2017. As tensions continue to ease on the Korea peninsula, BOK Gov Lee and Fin Min Kim hold a meeting and jointly agree that any action from their respective offices will be harmonious. USD?KRW rose over 0.5% to 1,142 today.
***Key economic data***
- (AU) AUSTRALIA JUL WESTPAC LEADING INDEX M/M: +0.12% V -0.14% PRIOR
- (AU) AUSTRALIA Q2 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 1.9% V 1.9%E
- (CN) China July yuan forex positions down CNY4.65B m/m to CNY21.5T
***Speakers and Press***
China/Hong Kong
- (CN) According to Rhodium Group, China state-owned firms accounted for almost 60% of total M&A deal value in H1 - financial press
- (CN) Moody's: China non-performing loan (NPL) securitization performance solid, though information limited – Xinhua
- (CN) PBOC Adviser: Cut of RRR is not in line with China's policy, more likely to use SLF, MLF and PSL
Korea
- (KR) US intel officials: North Korea has ability to produce missile engines and is not reliant on imports to do so – press
- (KR) Bank of Korea (BOK) Gov Lee: Market volatility rising on North Korea risks; South Korea to put in efforts to stabilize markets
- (KR) South Korea Fin Min Kim: Government will discuss with BOK and take "stern" action to stabilize markets if needed
Japan
- (JP) Japan PM Abe: Govt is on high alert to deal with the possible threat faced by the prefectures over which North Korean missiles en route to Guam could fly
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei 0.0%, Hang Seng +0.5%, Shanghai Composite -0.2%, ASX200 0.0%, Kospi +0.5%
- Equity Futures: S&P500 +0.4%; Nasdaq100 -0.1%, Dax -0.1%, FTSE100 -0.1%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1746-1.1729; JPY 110.77-110.55; AUD 0.7838-0.7817; NZD 0.7241-0.7224
- Dec Gold -0.1% at $1,278/oz; Sept Crude Oil +0.5% at $47.77/brl; Sept Copper +0.0% at $2.89/lb
- (AU) Australia sells A$900M in 3.25% 2029 bonds; avg yield 2.7608%; bid-to-cover 2.96x
- (JP) Bank of Japan (BoJ) announces expected purchase amounts for daily operation: Offers to purchase ¥440B in 5-10 yr JGBs v ¥470B prior
- (CN) China PBoC OMO injects CNY280B v skips in 7 and 14-day reverse repos
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.6779 V 6.6689 PRIOR
- (KR) Bank of Korea sells KRW2.2T in 2-year monetary stabilization bonds at 1.74% v 1.64% prior
- (CN) China sells 7-yr bonds; avg yield 3.6518%; bid-to-cover 2.89x
- (TH) Thailand sells THB20B in 9.34-yr govt bonds; avg yield 2.4389%; bid-to-cover ratio 2.34x
***Equities notable movers***
Hong Kong/China
- Carnival Group, 996.HK Announces rights offering to raise HK$1.72B; -12%
- Geely, 175.HK Reports H1 (CNY) Net profit 4.34B v 4.04Be, Rev 39.4B v 18.1B y/y; +0.4%
Australia
- Aveo Group, AOG.AU Reports FY17 adj Net A$252.8M, +118% y/y; FFO A%163.9M v A$141.3M y/y; Announces up to 54.3M share buyback; +10.5%
- iSelect, ISU.AU Reports FY17 Net A$16.4M v A$18Me; EBIT A$22.5M v A$24Me; Rev A$185.1M v A$196Me; -14%
ValueAct Holdings (founder Jeffrey Ubben and Bradley Singer) discloses updated portfolio positions in 13F filing: Affirms increased STX stake
Highlights from 2017 Q2 filing as compared to 2017 Q1 filing:
- New positions in: KKR (~5 mln shares)
- Increased positions in: STX (to ~13.82 mln shares from ~9.54 mln shares)
- Maintained positions in: FOX (~53.33 mln shares), VRX (~18 mln shares), MS (~17.88 mln shares), TRN (~15.58 mln shares), AWI (~9.2 mln shares), ADS (~5.88 mln shares)
- Decreased positions in: CBG (to ~34.38 mln shares from ~41.87 mln shares), MSFT (to ~16.01 mln from ~23.01 mln), WLTW (to ~6.61 mln from ~8.11 mln), BIVV (to ~7.16 mln from ~8.48 mln), NTCT (to ~1.75 mln from ~2.3 mln)
Paulson & Co (John Paulson) discloses updated portfolio positions in 13F filing:
Highlights from 2017 Q2 filing as compared to 2017 Q1 filing:
- New positions in: VST (~11.53 mln shares), HZNP (~4.94 mln), VWR (~2.68 mln), AABA (~2.68 mln), XCRA (~2.52 mln), SA (~0.7 mln), MGI (~0.44 mln), NEWR (~0.35 mln), AMRI (~0.31 mln)
- Increased positions in: VRX (to ~21.81 mln shares from ~19.38 mln shares), TMUS (to ~6.05 mln from ~4.14 mln), DISH (to ~4 mln from ~3.45 mln), TEAM (to ~0.4 mln from ~0.16 mln), MBLY (to ~0.27 mln from ~0.08 mln), MON (to ~0.16 mln from ~0.04 mln), RIGL (to ~0.66 mln from ~0.55 mln) DVAX (to ~0.55 mln from ~0.46 mln), SERV (to ~0.17 mln from ~0.11 mln), FDX (to ~0.08 mln from ~0.05 mln)
- Maintained positions in: MYL (~15.93 mln shares), CACQ (~13.12 mln shares), MNK (~6.89 mln shares), GLD (~4.36 mln shares), AIG (~4.14 mln shares), TWX (~2.99 mln shares), AGN (~2.7 mln shares)
- Closed positions in: AKRX (from ~8.4 mln shares), EBAY (from ~0.47 mln), PFE (from ~0.41 mln), FGL (from ~0.4 mln), NSR (from ~0.2 mln), INSM (from ~0.09 mln), SRPT (from ~0.08 mln), ALDR (from ~0.07 mln)
- Decreased positions in: CIE (to ~2.05 mln shares from ~30.94 mln shares), STAY (to ~1.8 mln from ~20.09 mln), TEVA (to ~6.74 mln from ~11 mln), ODP (to ~12.6 mln from ~14.26 mln), LOXO (to ~0.69 mln from ~0.81 mln), GSK (to ~0.29 mln from ~0.42 mln), SNY (to ~0.05 mln from ~0.15 mln), XENT (to ~0.56 mln from ~0.64 mln), WBMD (to ~0.06 mln from ~0.15 mln)