>>> Airbnb said to approach Tujia over capital tie-up - report (translated)

Airbnb said to approach Tujia over capital tie-up - report (translated)
07 JUN 2017
Airbnb, a San Francisco, California-based home sharing network, was said to have approached Tujia, a China-based holiday apartment booking website operator, over a potential capital cooperation, Beijing Business Today reported, without specifying its source.
An unidentified person close to Airbnb said that the company could have approached Tujia over the possible tie-up but failed to make any progress up to now, the Chinese-language report said. The information on the potential cooperation could be leaked by institutional investors, it added.

>>> Santander weighs EUR 5bn-plus stock sale in event of Banco Popular bid - rep

Santander weighs EUR 5bn-plus stock sale in event of Banco Popular bid - report
07 JUN 2017
Banco Santander [BME:SAN] of Spain is discussing with advisers, a potential EUR 5bn-plus capital increase via a stock sale if it proceeds with a bid for smaller competitor Banco Popular Espanol [BME:POP], a newswire report said on Tuesday (June 6).
Sources familiar with the situation said underwriting commitments for the potential sale were being discussed, Bloomberg reported.
A Santander representative declined to make any comment, the report said.
Popular has a market cap of about EUR 1.3bn after its shares plummeted over the past week amid concerns over the effects of toxic mortgages on its balance sheet, the report noted.

>>> Asian Update

Asia Mid-Session Market Update: AUD hits 5-week high as Australia GDP dodges slowdown; S&P affirms US rating

***US Session Highlights***
- (CN) China reportedly ready to acquire more US Treasuries under the right circumstances as CNY currency (Yuan) stabilizes - financial press
- (US) Goldman Economist Chain Store Sales w/e Jun 3rd w/w: -4.8%; Y/Y: +1.2%
- (US) APR JOLTS JOB OPENINGS: 6.044M V 5.75ME (record high, first time above 6M)
- (US) S&P AFFIRMS US SOVEREIGN RATING AT AA+; OUTLOOK STABLE
- Stocks drifted to the downside as the inability of the US administration to push its economic agenda continued to take its toll. While the attention of Congress is mostly on the Russia probe, news of China buying more US debt also entered the scenario, helping fuel investor risk-off bias, sending bonds higher and stocks lower. Two sectors in S&P managed to post gains: Energy rose 1.2%, while Materials was also slightly in the black, gaining 0.1%.

***US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.3%***
- Best Sector in S&P500: Energy
- Worst Sector in S&P500: Consumer Discretionary
- Biggest gainers: SWN +5.6%; NEM +4.8%; FCX +3.8%
- Biggest losers: M -8.2%; KSS -5.8%; FAST -5.7%
- At the close: VIX 10.5 (+0.4pts); Treasuries: 2-yr 1.30% (flat), 10-yr 2.15% (-3bp), 30-yr 2.81% (-3bps)

***US movers afterhours***
- CVNA Reports Q1 -$0.28 v -$0.28e, Rev $159.1M v $158Me; Guides Q2 R$193-203M v $188Me, EBITDA margin -18.5% to -18.0%; +10.2% afterhours
- KEYS Reports Q2 $0.64 v $0.58e, Rev $758M v $748Me; Guides Q3 $0.51-0.65 v $0.58e, Rev $840-880M v $838Me ; +5.8% afterhours
- UNFI Reports Q3 $0.77 v $0.76e, Rev $2.37B v $2.42Be; cuts FY17 Rev $9.29-9.34B v $9.35Be; -2.2% afterhours
- SIGM Reports Q1 -$0.25 v -$0.18e, Rev $39.6M v $39.3Me- non-GAAP Gross margin 47.6% v 46.6% y/y; -4.1% afterhours
- AMBA Reports Q1 $0.39 v $0.36e, Rev $64.1M v $63.4Me; authorizes $50M share buyback (2.5% of market cap); Guides Q2 Rev $69-72M v $72.3Me, gross margin 62-63.5%; -5.7% afterhours
- DLTH Reports Q1 $0.01 v $0.06e, Rev $83.7M v $82.9Me; Affirms FY17 GAAP EPS $0.66-0.71 v $0.70e, net sales $455-465M v $463Me ; -10.8% afterhours

***Politics***
- (US) House Freedom Caucus said to call for cancellation of Congressional August recess
- (US) Pres Trump said to side with Treasury Sec Mnuchin on Debt Ceiling strategy - Politico
- (MX) Mexico's MORENA party calls for recount of all State of Mexico precincts

***Key economic data***
- (AU) AUSTRALIA Q1 GDP Q/Q: 0.3% V 0.3%E; Y/Y: 1.7% (weakest annual growth since 2009) V 1.6%E
- (AU) AUSTRALIA MAY AIG PERFORMANCE OF CONSTRUCTION INDEX: 56.7 V 51.9 PRIOR (4th consecutive expansion; highest level since Sept 2014)
- (NZ) NEW ZEALAND Q1 MANUFACTURING ACTIVITY (SA) Q/Q: 2.8 V 1.3% PRIOR; VOLUME Q/Q: -0.3% (2nd straight decline) V -2.0% PRIOR
- (NZ) NEW ZEALAND MAY ANZ JOB ADVERTISEMENTS M/M: -0.6% V 0.2% PRIOR

***Asia Session Notable Observations***
- Asian equity markets are mixed and volatility is thinner despite 2nd straight day of losses on Wall St. Investors are bracing for China FX reserves and trade data, ECB decision, UK elections, and Congressional testimony of former FBI director about Pres Trump's potential involvement in campaign investigation all within the next 48 hours. Shanghai Composite is the outperformer amid strength in China property developer names. Also of note in China, PBoC set Yuan midpoint higher for the 6th straight time, while PBoC returned to conducting open market repos with a full range of reverse repo maturities (7-, 14- and 28-day)
- Trading in FX majors was also fairly quiet with exception of AUD. Aussie dollar rose over 40pips after Australia Q1 GDP dodged potential contraction in the wake of yesterday's wider than expected Current Account deficit. AUD/USD hit 5-week highs above 0.7540, and AUD/NZD cross rose above 1.05 for a 1-week high. Short term rates also rose as markets repriced the possibility of another rate cut in the next 12 months to just 15% from 22% prior. Yield on the 3-yr rose 4bps to 1.70%, though worries over the medium term still persisted, with the 10yr-3yr yield spread at narrowest level since Nov 2016.
- In the corporate space, M&A speculation lifted shares of Vocus in Australia and Japan Display, with reported interest from KKR and Sharp respectively.
- S&P affirmed US sovereign rating at AA+ with a Stable Outlook, thanks to "resiliency of US economy, policy flexibility, and proactive monetary policy helping keep US GDP growth stable over next several years.

***Speakers and Press***
China
- (CN) ANZ analyst: China spending program will support economic growth; rising US rates will not be a headwind for gold
- (CN) China National Institution for Finance and Development Chairman Li Yang: China must rein in rapid build-up in local government debt and should implement reforms at the local level to raise transparency and let market forces play a bigger role
- (CN) Kynikos Associates' Jim Chanos: China added $5T in new credit dollars last year; Less short on China now than in the past - press

Japan
- (JP) Japan Chief Cabinet Sec Suga: BOJ Gov will be the one who understands beating deflation

Australia/New Zealand
- (AU) Implied probability of another RBA rate cut in the next 12 months fell to about 15% from 22% following GDP data - press

Korea
- (KR) South Korea submits KRW11.2T stimulus package to Parliament - press
- (KR) South Korea Fin Min Nominee Kim Dong-Yeon: South Korea faces serious external challenges - speaking in parliament

***Asian Equity Indices/Futures (23:30ET)***
- Nikkei -0.3%, Hang Seng +0.1%, Shanghai Composite +0.9%, ASX200 -0.1%, Kospi -0.1%
- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax +0.1%, FTSE100 -0.1%

***FX ranges/Commodities/Fixed Income (23:30ET)***
- EUR 1.1260-1.1280; JPY 109.30-109.60; AUD 0.7500-0.7545; NZD 0.7170-0.7190
- Aug Gold -0.2% at 1,295/oz; July Crude Oil -0.1% at $48.14/brl; July Copper +0.2% at $2.55/lb
- (US) Weekly API Oil Inventories: Crude: -4.6M v -8.7M prior (3rd straight draw)
- SPDR Gold Trust ETF daily holdings rise 4.2 tonnes to at 855.2 tonnes; second straight increase
- (CN) PBOC SETS YUAN MID POINT AT 6.7858 V 6.7934 PRIOR; 6th straight firmer Yuan fix; Strongest Yuan fix since Nov 9th
- (CN) PBOC injects CNY180B in combined 7-day, 14-day and 28-day reverse repos v skipped prior
- (AU) Australia Finance Ministry (AOFM) sells A$600M in 4.5% 2020 bonds; avg yield 1.6419%; bid-to-cover 4.81x
- (KR) South Korea sells KRW1.47T in 30-yr Govt bonds; avg yield 2.33%
- (KR) Bank of Korea (BOK) sells KRW2.84T v KRW2.8T offered in 2-yr monetary stabilization bonds; avg yield 1.58% v 1.61% prior

***Asia equities notable movers***
Australia
- Vocus Group (VOC) +19.9%; Receives A$3.50 cash offer from KKR (~22% premium)
- Newcrest (NCM) +0.9%; Gold price prices; Van Eck builds stake
- IOOF Holdings (IFL) -1.1%; Cut at Citigroup
- Virgin Australia (VAH) -1.7%; New board members Warwick Negus and David Baxby may be pushing for privatization; while shareholders HNA Group (19.17%) and Nanshan Group (19.98%) prefer to keep the company public - Australian
- WesFarmers (WES) -3.5%; Guides FY17 CAPEX A$1.1-1.2B, Curragh metallurgical coal exports estimated at lower end of range - investor day

Japan
- Japan Display (6740) +10.8%; Sharp said to have expressed interest in the company - Nikkei
- McDonald's Japan (2702) +1.6%; May SSS +10%

Hong Kong
- Aac Technologies Holdings (2018) +16.6%; Gotham City research to publish a new report on company
- China Vanke (2202) +7.9%; Halted on speculation of takeover by Shenzhen Metro
- China Overseas Grand Oceans Group (81) +6.6%; May contracted sales
- Great Wall Motor (2333) -1.8%; May auto Sales
- Geely Auto (175) -2.1%; May auto sales
- CAR Inc (699) -2.4%; May contracted sales

>>> US After Hours Summary: CVNA +8%, KEYS +7% higher following earnin

After Hours Summary: CVNA +8%, KEYS +7% higher following earnings/guidance, NNVC +45% on HerpeCide updates... DLTH -11%, ALOG -10%, AMBA -6%, PLAY / OXM -3% lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CVNA +8.1%, KEYS +6.6%

Companies trading higher in after hours in reaction to news: DRWI +47.1% (awarded contract from SmartSky Networks, a North American 4G LTE inflight service provider), NNVC +45.7% (reports 'excellent' inhibitory effects of its topical shingles treatment candidates against VZV in multiple cell culture studies), WINS +8.3% (continued strength-closed up 107% on the day), DVAX +2.1% (Point72 Asset Management increases passive stake), HA +0.9% (light volume; reports May 2017 traffic statistics with RPMs +8%, ASMs +5% and load factor +2.4 pts; sees Q2 Operating Revenue Per ASM +7.5-10.5%, prior +5.5-8.5%)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: DLTH -11.3%, ALOG -10.2%, AMBA -5.9% (also authorized the repurchase of up to an additional $50 million of its ordinary shares over a twelve-month period commencing July 1, 2017), SIGM -4.8%, PLAY -2.7% (also adds $100 mln to repurchase), OXM -2.7%

Companies trading lower in after hours in reaction to news: QHC -2.3% (initiated with Underweight rating at Morgan Stanley; also North Tide Capital liquidated 5.25% passive stake), EXAS -2.2% (to sell 7 mln shares of its common stock to Jefferies LLC, BofA Merrill Lynch and Robert W. Baird & Co), GBDC -1.3% (announces public offering of 1.75 mln shares of its common stock), WIT -1.2% (downgraded to Underperform from Hold at Jefferies), UPLD -1.1% (to offer and sell shares of its common stock)

>>> July WTI crude oil futures fall back below $48/barrel follow

July WTI crude oil futures fall back below $48/barrel following weekly API storage data

  • The API reported a draw of 4.62 mln barrels of oil (notably larger than expected), for the week ending June 2 vs. last week's draw of 8.67 mln barrels
  • Gasoline showed a build of 4.08 mln barrels and distillates showed a build of 1.75 mln barrels
  • July crude is now +$0.56 at $47.96/barrel