>>> Asian Update

Asia Mid-Session Market Update: USD at post US-election lows as new Trump obstruction allegations surface

***US Session Highlights***
- (US) Goldman Economist Chain Store Sales w/e May 13th w/w: -1.1%; Y/Y: +1.0%
- (US) APR HOUSING STARTS: 1.17M V 1.26ME; BUILDING PERMITS: 1.23M V 1.27ME; single family permits drop
- Reportedly Iran will support a 9-month extension of the oil production cut agreement if there is a consensus among participants - press
- (US) APR INDUSTRIAL PRODUCTION M/M: 1.0% V 0.4%E; CAPACITY UTILIZATION: 76.7% V 76.3%E (largest total industrial production gain since Feb 2014)
-Stocks rose to new highs in the first half of today's session, with the S&P reaching a new all-time top at 2,405.8. Eventually, investors appetite for risk took a more subdued tone and indices closed mostly flat on the day. Markets are now concerned about the leaks from Trump's meeting with Russian officials and the political turmoil it is creating. Techs continued to hold positive ground; NASDAQ closed up 20 points on the day, and the S&P Tech sector gained 0.4%.

***US markets on close: Dow flat, S&P500 -0.1%, Nasdaq +0.3%***
- Best Sector in S&P500: Technology
- Worst Sector in S&P500: Utilities
- Biggest gainers: FTR +4.7%; QRVO +4.6%; YHOO +2.2%
- Biggest losers: TGNA -6.4%; HRB -6.0%; DVA -6.0%
- At the close: VIX 10.6 (+0.2pts); Treasuries: 2-yr 1.28% (-2bps), 10-yr 2.33% (-1bps), 30-yr 2.99% (-2bps)

***US movers afterhours***
- RRGB Reports Q1 $0.89 v $0.58e, R$418.6M v $417Me; Guides slightly higher FY17 EPS $2.80-3.10 v $2.73e ; +16.3% afterhours
- JACK Reports Q2 $0.98 v $0.90e, R$369.4M v $369Me; hires advisers to consider potential alternatives for Qdoba unit; +11.2% afterhours
- GNC Interim CEO Moran bought 300K shares at $6.69/shr- Moran now holds 953.3K shares ; +3.9% afterhours
- URBN Reports Q1 $0.13 v $0.16e, R$761M v $772Me; +1.7% afterhours
- BZUN Reports Q1 $0.08 v $0.08e (1 est), R$116.9M v $103.6M y/y; -12.4% afterhours

- AMZN: Said to seek entry into pharmacy market; to hire a GM to oversee the effort - financial press
- CL: CEO said to have indicated company may be open to sale at $100/shr (vs $71.58 last close) - NY Post

***Key economic data***
- (JP) JAPAN MAR MACHINE ORDERS M/M: 1.4% V 2.5%E; Y/Y: -0.7% V 1.2%E
- (AU) AUSTRALIA MAY WESTPAC CONSUMER CONFIDENCE INDEX: 98.0 V 99.0 PRIOR, M/M: -1.1% V -0.7% PRIOR
- (AU) AUSTRALIA Q1 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 1.9% V 1.9%E
- (NZ) NEW ZEALAND Q1 PPI INPUT Q/Q: 0.8% V 1.0% PRIOR; PPI OUTPUT Q/Q: 1.4% V 1.5% PRIOR (4th consecutive quarter of gains, first time in 6-yrs)
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +3.2% v +3.6% prior; 5th straight increase

***Asia Session Notable Observations, Speakers and Press***
- Asia session is in clear risk-off mode despite the mixed-flattish Wall Street trade as political risk surrounding the White House administration appears to be getting worse. In late US after-market, NY Times reported that Pres Trump asked former FBI Director Comey to shut down investigations of former NSA Flynn. Investors are concerned that the latest gaffe may translate into obstruction investigation by Congress, with leaders of both parties already hinting about a subpoena for the Comey documents. S&P e-minis fell over 0.5% or 15 handles, USD/JPY slid some 70pips below 112.40, US Treasury yield was down 2.5% on safehaven US debt demand, and Gold rose 0.5% above 1,240. EUR/USD also broke above the 1.11 handle - its best level since the US elections that first triggered the now-stalled greenback surge.
- In economic data, Australia Westpac Consumer Index fell for the 2nd straight month to 98.0 from 99.0. Westpac economist noted that confidence in housing and the outlook for house prices deteriorated sharply while the assessment of the Budget around the outlook for family finances was decidedly weaker. Also of note in Australia, S&P became the last major rating agency to affirm Australia AAA following its recent FY budget, but also warned it may cut rating if its confidence in surplus outlook dissipates.

China
- (CN) China National Energy Administration (NEA): Apr power consumption +4.8% y/y to 342B Kwh
- (CN) China hopes for improvement in its relationship with South Korea - financial press
- (CN) China to create CNY150B venture capital fund for central SOEs – Chinese Press

Japan
- (JP) BOJ Gov Kuroda: No particular requests from PM Abe on monetary policy; Discussed global economy - press
- (JP) Financial press looks ahead to Japan GDP data, expecting to see a 5th consecutive quarter of growth, which would be its longest run of growth in 10-yrs
- (JP) Nikkei looks at recent selling pressure on the Nikkei225, attributing part of it to profit-taking by pension funds

Australia/New Zealand
- (AU) S&P AFFIRMS AUSTRALIA SOVEREIGN AAA RATING; OUTLOOK REMAINS NEGATIVE
- (AU) Australia wage growth of 1.9% in Q1 is below the period rise in cost of living of 2.1% - SMH
- (NZ) ASB economist: Latest dairy auction suggests milk prices are fairly well balanced; Maintaining FY18 forecast of NZ$6.75/kg - NZ press


***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.6%, Hang Seng -0.3%, Shanghai Composite -0.1%, ASX200 -0.9%, Kospi -0.4%
- Equity Futures: S&P500 -0.5%; Nasdaq -0.5%, Dax -0.4%, FTSE100 -0.2%

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1080-1.1115; JPY 112.35-113.10; AUD 0.7410-0.7430; NZD 0.6880-0.6905
- June Gold +0.5% at 1,243/oz; June Crude Oil -0.9% at $48.21/brl; July Copper flat at $2.55/lb
- (US) Weekly API Oil Inventories: Crude: +0.9M v -5.8M prior; first build in 3 weeks
- iShares Silver Trust ETF daily holdings rise to 10,650 tonnes from 10,605 tonnes prior (3rd straight increase)
- (CN) PBOC SETS YUAN MID POINT AT 6.8635 V 6.8790 PRIOR; Strongest Yuan setting since Feb 7th
- (CN) PBOC to inject combined CNY140B v CNY190B prior in 7-day and 14-day reverse repos
- (AU) Australia MoF (AOFM) sells A$500M in 4.5% 2033 Bonds; avg yield: 2.934% v 3.0205% prior; bid-to-cover: 2.67x v 3.07x prior
- (KR) Bank of Korea (BOK) sells KRW1.2T in 2-yr monetary stabilization bonds; avg yield 1.61%

***Asia equities notable movers***
Australia
- Wesfarmers (WES) -1.3%; Review of Officeworks finds now is not the right time for an IPO given market conditions
- Paladin (PDN) -26.7%; Reports 9-month
- BHP (BHP) +0.5%; Reportedly to meet with Elliott to discuss oil business - press
- Fortescue (FMG) +3.7%; Morgans Financial Ltd Raised FMG.AU to Add from Hold

Japan
- Sumitomo Chem (4005) +3.0%; Reports FY16/17
- Toshiba (6502) +0.5%; Japan Securities Finance restricts short sale of Toshiba shares beginning May 17th - Nikkei
- Takeda (4502) +2.1%; Takeda-Teva joint venture reportedly plans to boost overseas manufacturing of generic medications - Nikkei
- Rakuten (4755) +0.7%; to issue ¥100B in 3, 5, 7 and 10-year straight bonds in order to cut debt and redeem maturing bonds - Nikkei

Hong Kong
- Vtech (303) +5.1%; Reports FY16/17
- Meitu (1357) -6.3%; Not being added to MSCI CHina index as speculated
- Alibaba Health (241) +8.3%; Reports FY17
- Car Inc (699) -3.2%; Reports Q1
- Future Bright (703) -5.3%; Reports Q1

>>> After Hours Summary: RRGB +16%, JACK +10% following earnings/gui

After Hours Summary: RRGB +16%, JACK +10% following earnings/guidance, GNC +5% on interim CEO insider buy disclosure.... ACXM -4.3% following earnings/guidance, AMD under pressure with ongoing Analyst Day

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RRGB +16%, JACK +10.2%, NLST +9.6%, NXTD +3%

Companies trading higher in after hours in reaction to news: TENX +26.4% (FDA requested submission of additional information from published cross study analyses following meeting), NAO +6.8% (Executive Chairman, Herbjorn Hansson files 13D), BDSI +5.1% (upgraded to Overweight from Neutral at Cantor), GNC +4.7% (interim CEO disclosed purchase of 300K shares worth total of $2 mln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ACXM -4.3%,

Companies trading lower in after hours in reaction to news: AMD -3.9% (under pressure in after hours with ongoing Financial Analyst Day), AAWW -3.3% (to offer $250 million aggregate principal amount of its convertible senior notes due 2024; files mixed securities shelf offering), RP -2.9% (ticking lower; commences $300 mln private offering of Convertible Senior Notes due 2022), ABDC -2.7% (commenced primary offering of 808,161 shares of common stock and concurrent secondary offering of 1,691,839 shares on behalf of Alcentra and another selling stockholder), ATNM -2.2% (light volume; CEO Kaushik J. Dave, Chief Technology Officer Dragan Cicic resign)

>>> US Close Dow -0.01% S&P -0.07% Nasdaq +0.33% Russell +0.05%

Closing Market Summary: Averages Settle Tuesday Mixed

Top-tech names like Microsoft (MSFT 69.41, +1.37), Amazon (AMZN 966.07, +8.10), and NVIDIA (NVDA 136.81, +2.50) boosted the Nasdaq (+0.3%) to another record high on Tuesday while the Dow (unch) and the S&P 500 (-0.1%) settled just a tick below their unchanged marks. Trading activity was pretty flat throughout the session, as the S&P 500 drifted within a ten-point range.

Only the top-weighted technology (+0.5%) and financials (+0.2%) sectors ended the day in positive territory. As mentioned above, large-cap tech names underpinned the tech group. In addition, chipmakers showed broad strength, pushing the PHLX Semiconductor Index higher by 1.5%. With today's advance, the SOX index is up 7.1% so far in May. Meanwhile, Citigroup (C 62.49, +1.07) carried the financial sector, adding 1.7%. 

On the flip side, the health care sector (-0.4%) struggled from the opening bell as some of its most influential components weighed; Pfizer (PFE 32.60, -0.52), UnitedHealth (UNH 168.12, -3.41), and Bristol-Myers (BMY 54.39, -0.71) ended with losses between 1.3% and 2.0%. PFE shares were downgraded to 'Sell' from 'Neutral' at Citigroup on Tuesday morning. However, strength within the biotech industry helped cap the sector's loss. The iShares Nasdaq Biotechnology ETF (IBB 295.30, +1.18) added 0.4%.

The energy sector (-0.4%) also underperformed as crude oil dropped 0.5% to $48.64/bbl following yesterday's 2.1% rally, and ahead of this afternoon's API inventory report, which will be released at 16:30 ET. Meanwhile, retailers weighed on the consumer discretionary space (-0.3%) following the latest batch of earnings reports.

TJX (TJX 73.76, -3.14) and Dick's Sporting Goods (DKS 41.04, -6.53) lost 4.1% and 13.7%, respectively, in reaction to their quarterly results. TJX missed top-line estimates and issued disappointing earnings guidance for the second quarter while DKS reported weak comparable store sales. However, the results weren't all bad with Home Depot (HD 158.26, +0.93) adding 0.6% on better than expected earnings and a 5.5% increase in comparable store sales. The SPDR S&P Retail ETF (XRT 41.74, -0.33) ended lower for the fourth consecutive time, losing 0.8%.

The XRT has dropped 5.4% since last Thursday when Macy's (M 22.82, -0.39) kicked off what has largely been a poor earnings season for retailers thus far. However, there are still a couple of opportunities for redemption for the retail industry with Target (TGT 54.53, -0.82) stepping up to the plate tomorrow morning and Wal-Mart (WMT 75.11, -1.18) delivering its quarterly results on Thursday. 

In the bond market, U.S. Treasuries settled with modest gains across the board, leaving the benchmark 10-yr yield two basis points lower at 2.32%. Conversely, the U.S. Dollar Index (98.04, -0.77) slipped to its lowest level since the U.S. presidential election on November 8. The greenback lost 1.0% against the euro (1.1088) after eurozone GDP increased an in-line 0.5% quarter-over-quarter.

On the data front, investors received April Housing Starts and April Industrial Production on Tuesday:

  • Housing starts decreased to a seasonally adjusted annualized rate of 1.172 million units in April, down from a revised 1.203 million units in March (from 1.215 million). The  consensus expected starts to increase to 1.255 million units. Building permits decreased to a seasonally adjusted 1.229 million in April from an unrevised 1.260 million for March. The consensus expected a reading of 1.270 million.
    • The key takeaway from the report stems from the drop in single-family permits, which suggests there will be continued supply shortages and affordability constraints in the new home market.
  • Industrial Production increased 1.0% in April ( consensus 0.3%) while Capacity Utilization rose to 76.7% (consensus 76.2%) from an unrevised reading of 76.1% in March. The Industrial Production reading for March was revised to 0.4% from 0.5%.
    • The key takeaway from the report is that total industrial production saw its largest gain since February 2014, bolstered by a healthy 1.0% increase in manufacturing output, which was also the largest gain since February 2014.

Tomorrow, investors will receive the weekly MBA Mortgage Applications Index at 7:00 ET. 

  • Nasdaq Composite +14.6% YTD
  • S&P 500 +7.2% YTD
  • Dow Jones Industrial Average +6.2% YTD
  • Russell 2000 +2.8% YTD

>>> CVC to Sell 17% of Ahlsell in Bookbuild

CVC to Sell 17% of Ahlsell in Bookbuild

CVC unit to sell about 75m shares in Ahlsell AB, representing about approximately 17.2% of the share capital, through a placing to institutional investors.
  • Accelerated bookbuild will be launched immediately
  • Carnegie Investment Bank, Goldman Sachs, Nordea Bank are acting as Joint Bookrunners
  • CVC funds had 60.37% Ahlsell AB before planned sale, according to Bloomberg data