>>> Asian Update

Asian Mid-session Market Update: Sentiment still subject to Brexit speculation

***Economic Data***
- (AU) AUSTRALIA Q1 HOUSE PRICE INDEX Q/Q: -0.2% (1st decline since Sept 2012) V 0.8%E; Y/Y: 6.8% V 7.5%E
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 118.8 v 116.4 prior

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.1%, Kospi -0.2%, Shanghai Composite +0.3%, Hang Seng +0.5%, Sep S&P500 +0.3% at 2,080

***Commodities/Fixed Income***
- Aug gold -0.2% at $1,289/oz, Aug crude oil -0.4% at $49.78/brl, Jul copper -0.2% at $2.08/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 0.9 tonnes to 908.8 tonnes; highest since Oct 2013
- SLV: iShares Silver Trust ETF daily holdings fall to 10,403 tonnes from 10,492 tonnes prior; lowest since Apr 20
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5656 V 6.5708 PRIOR; strongest Yuan setting since June 8th
- (CN) PBOC to inject CNY110B in 7-day reverse repos

***Market Focal Points/FX***
- Asian equity markets are mixed with little outside of the Brexit waiting game to drive sentiment. Just after the US close, another poll by ORB/Telegraph saw the Stay camp momentum building with a 53% for remain, 46% for leave breakdown vs 48% to remain, 49% to leave last week. GBP/USD hit a 3-week high above 1.47, though minutes later, a YouGov poll saw a 44% to 42% preference for the Leave camp, sending GBP/USD below 1.4640. The pair traded in sideways range for the balance of the Asia session, supported by 1.4640 level. Famed investor George Soros remarked that if Brexit vote succeeds, there will be an immediate GBP drop of at least 15% and possibly 20% below $1.15, cautioning that voters are "grossly underestimating" the true costs of the exit. In other USD majors, AUD/USD was up over 30pips above $0.7480 following the release of fairly neutral RBA meeting minutes, while USD/JPY traded up about 50pips from the lows above 104.10 in spite of non-committal rhetoric from Fin Min Aso.

- Japan's Aso said that even though FX stability is critical and rapid fx moves are undesirable, the threshold for an intervention by the finance ministry would be high. Aso added the govt is still targeting a balanced budget, but also expressed concern about the risks of a Brexit. Recall last week BOJ officials hinted of opening up dollar funding swaps with 5 other central banks if markets get too turbulent from Brexit vote. Earlier in the day, USD/JPY came in by about 30pips below 104 after a Nikkei report speculated that Japan exporters have begun curbing yen purchases due to recent appreciation, adding that the resulting pent-up demand will prevent the yen's weakening down the road.

- China's former PBoC adviser Li Daokui offered more of his downbeat projections, stating economy likely has not seen bottom yet as import/export decline may not subside until H2 of next year. China Daily also speculated that the much awaited SOE restructuring guidance is close to being published.

- Down under, RBA June policy meeting minutes remarked that the hold was consistent with sustainable growth, and that recent data on domestic economy has been generally positive where GDP in March quarter exceeded expectations. AUD rallied on those remarks even though the minutes warned that inflation is expected to remain low for some time.

***Equities***
US equities / ADRs:
- IMPV: Reportedly activist Elliott Management is building a new stake in IMPV - press; +8.3% afterhours; +9.6% afterhours
- WERN: Guides Q2 EPS $0.21-0.25 v $0.39e; sees negative effects on earnings; trading halted afterhours; -10.9% afterhours

Notable movers by sector:
- Consumer discretionary: Bega Cheese BGA.AU +0.9% (cuts FY16/17 farm gate milk price); Asahi Co 3333.JP +5.1% (Q1 result); Panasonic Corporation 6752.JP +1.0% (acquisition)
- Financials: Shanghai Jinqiao Export Processing Zone Development Co 600639.CN +10.0% (reportedly a frontrunner for Tesla production site)
- Industrials: Daiwa House Industry Co. 1925.JP +0.3% (guidance); Japan Steel Works 5631.JP -6.1% (Morgan Stanley cut); Harmonic Drive Systems 6324.JP +5.2% (added to Goldman conviction buy list)
- Technology: Samsung SDS Co 018260.KR -2.6% (not consider share buyback or interim dividend); Samsung SDI Co 006400.KR -2.7% (fail to win battery certification in China); Cowell e Holdings Inc 1415.HK -9.5% (profit warning)
- Materials: BHP Billiton BHP.AU -0.8% (business update)
- Healthcare: Daiichi Sankyo Co 4568.JP +8.3% (share buyback)

>>> US After Hours Summary: IMPV +9% after Elliott Associates enter in


After Hours Summary: IMPV +9% after Elliott Associates enter into discussions with Co; WERN -9% on weak guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to news: IMPV +8.9% (Elliott Associates confirmed 9.8% active stake; enters into discussions with the company), OPK +3.9% (Co's Rayaldee appears on the FDA's approved drug list), GEVO +2.1% (Intracoastal Capital discloses 3.1% passive stake)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: WERN -9.1%

Companies trading lower in after hours in reaction to news: SCYX -14.7% (Announces launch of public offering of common stock and warrants), CSAL -4.9% (former parent co Windstream (WIN) enters into debt-for-equity exchange with certain creditors in connection with the disposition of its remaining stake), PRTK -2.1% (commences underwritten public offering of 3.75 mln shares of its common

>>> US Close Dow +0.73% S&P +0.58% Nasdaq +0.77% Russell +1.14%

Closing Market Summary: Indices Rally on Diminished Brexit Concerns

The stock market began its week on a higher note as investors eyed a rally in global equities following a reversal in Brexit polls. However, the equity indices finished off their highs due to a sell off in the final hour. Focal points for today's trade included a bid in risk assets, softening in the dollar, a rebound in oil, and relative strength in the heavily-weighted industrial (+0.9%) and consumer discretionary (+0.9%) sectors. The Nasdaq Composite (+0.8%) finished ahead of the Dow Jones Industrial Average (+0.7%) and the benchmark index (+0.6%).

Global investors shed their risk-off posture overnight as participants eyed a shift towards the "Remain" camp in the latest round of Brexit polling. In response, the major U.S. indices gapped higher at the start of the session with the S&P 500 (+0.6%) rallying to the 2100 area within the first hour of trade. The benchmark index failed to clear resistance at that psychological level, and ticked lower through the remainder of the session. However, it is worth mentioning that the broader market lost momentum in the late morning, which corresponded with the close of European markets.

Equities continued to slip through the afternoon with the benchmark index failing to maintain support near the 2092/2093 price level. The fading conviction in the final hour of trade was likely related to concerns that there could be another shift in Brexit polling overnight, as well as the recognition that Fed Chair Yellen will be providing the first day of her semiannual monetary policy testimony on Tuesday in front of the Senate Banking Committee.

Nine sectors ended in the green with energy (+0.9%), industrials (+0.9%), and consumer discretionary, (+0.9%) leading the pack. On the flipside, the countercyclical utilities sector (-0.4%) ended with the only loss while telecom services (+0.2%) finished with the slimmest gain.

The Dow Jones Transportation Average (+1.1%) demonstrated relative strength as rail names and logistic companies outperformed. On that note, CSX (CSX 27.01, +0.26) and Kansas City Southern (KSU 89.33, +1.32) gained 1.0% and 1.5%, respectively. Airline names rebounded as the U.S. Global Jets ETF (JETS 21.83, +0.29) rebounded 1.4% after declining 6.6% last week.

Separately, Dow component Boeing (BA 132.75, +2.93) ended at the top of the price-weighted average.

The high-beta chipmakers outperformed in the technology sector (+0.5%), evidenced by the 1.2% gain in the PHLX Semiconductor Index. NVIDIA (NVDA 47.56, +0.84) gained 1.8% after announcing that it launched its latest graphics processor unit for data centers. On a side note, the name notched a new all-time high ($48.17) earlier in the session.

In the consumer discretionary space (+0.9%), travel companies outperformed after Expedia (EXPE 107.19) received an upgrade to "Buy" at Atlantic Equities. Priceline (PCLN 1341.96, +32.72) and TripAdvisor (TRIP 64.66, +1.58) gained 2.5% apiece.

The U.S Dollar Index (93.65, -0.56) ended lower by 0.6% as the euro, commodity currencies, and the pound sterling rebounded against the dollar. The euro/dollar pair ended higher by 0.3% (1.1308) while the pound rallied 2.3% against the buck (1.4685). Finally, the dollar lost 0.6% against the Canadian dollar (1.2811).  Oil prices benefited from the dollar's weakness and improved market sentiment, jumping 2.9% ($49.40/bbl; +$1.38) for the session.

The Treasury complex settled near its lows.  The yield on the 10-yr note rose six basis points to 1.67% as some of last week's safe-haven positioning trades were unwound.

There was no economic data of note released today.

Tomorrow's economic calendar is again noticeably light, but Fed Chair Yellen is scheduled to begin her biannual testimony before Congress at 10:00 ET.  Ms. Yellen will be addressing the Senate Banking Committee and the House Financial Services Committee on Tuesday and Wednesday, respectively.

FT : Euronext chief eyes assets as exchange industry consolidates

Euronext chief eyes assets as exchange industry consolidates

Stéphane Boujnah sees opportunities in planned tie-up of Deutsche Börse and London Stock Exchange

Stéphane Boujnah, the chief executive of pan-European exchange Euronext, refuses to be left out of the consolidation that is shaking up his industry.
In the middle of a proposed $30bn mega-merger between London Stock Exchange Group and Deutsche Börse to create an European exchange group to rival those in the US and Asia, he has his own card to play.

With strong cash generation and low debt “we will be able to move very quickly for very significant [acquisition] targets if opportunities come up”, he says, in an interview from his office in Paris’s La Defence business district.
“There are independent exchanges in the eurozone that may want to reconsider their future,” says the 52-year-old former Santander banker who took over the job at Euronext last November. “They may want to be part of a pan-European exchange group where they can still keep their identity but grow at the same time.”
Euronext, which was spun off from US group Intercontinental Exchange in an initial public offering in 2014, runs the Paris, Amsterdam, Brussels, and Lisbon exchanges. Independent exchanges in Europe include Madrid, Luxembourg and Vienna.
He says others assets that could be bought over the coming years include those that might be sold off to win regulatory approval for the LSE-Deutsche Börse deal, which is expected to close at the start of next year.
“Some assets might be sold [as part of the deal], and some of those assets might be interesting to look at,” he says.
Analysts say the LSE may, for example, have to sell down its 57 per cent stake in LCH.Clearnet, a clearing house for derivative and bond trades. Deutsche Börse owns Clearstream, one of Europe’s biggest settlement houses.
Large deals are not the core of the group’s three-year strategy, however. The exchange’s official plan, outlined in May, is to grow “quasi-organically”, investing €100m-€150m by 2019 to diversify away from core equity strength. The group wants to grow in areas such as data analytics, exchange traded funds, open-source indices and commodities.
The company plans to increase revenue by about 5 per cent a year and increase group operating margins from 57 per cent today — already one of the highest in Europe — to between 61 and 63 per cent by 2019.

But Mr Boujnah says the group cannot just be “more efficient”, however. “When you are small, you can be agile, and you must be agile . . . The conditions are there for us to be able to use our balance sheet to react very quickly.”
The interest in larger deals comes in part because Euronext, with a market value of about €2.4bn, is already about four times smaller than rivals LSE and Deutsche Börse. A merger between these two exchanges would make Euronext a minnow in Europe.
Mr Boujnah is keen to stress that the LSE-Deutsche Börse deal is far from done, however. “All I can say is that the last 20 years show that these transformational deals always take a lot longer than expected and never turn out as initially anticipated.”
He highlights some of the potential hurdles. “The Deutsche Börse shareholders, the LSE shareholders, the European Commission, the prudential supervisors and various other regulators in Germany all need to sign off on this. Anything can happen.”
Careful not to criticise the deal itself, he says there could be competition issues creating a trading group that will be roughly 10 times the size of Euronext, its next largest competitor in Europe.
He says that the combination of LCH and Eurex Clearing “is essentially combining two banks” and could raise “too big to fail issues”.
Mr Boujnah adds that there is also a risk of the value of the two companies changing, particularly following this week’s referendum on whether or not the UK will remain in the European Union.
“It is always difficult to deliver any paper deal a year from closing, let alone with Brexit in the middle.”
His carefully chosen words belie the intense lobbying that is going on in France against the British-German deal.
Michel Sapin, French finance minister, said in May that he wanted to “express the concern of the French government on this tie-up . . . We have doubts about the consequences this could have for the financing of the real economy in France and Europe”.
Mr Boujnah says that if the LSE-Deutsche Börse deal does go ahead, it will not change the core strategy for Euronext. “They [Deutsche Börse and LSE] will focus on being a global player in indices, derivatives and post trade,” he says.
The goal of Euronext is to concentrate on profitability, strengthening the core business, and “focus on financing the real economy in Europe”, he says.