>>> Asian Update

Asian Mid-session Market Update: Japan officials reluctant to adopt more aggressive stance on FX volatility


***Economic Data***
- (NZ) NEW ZEALAND JUNE ANZ CONSUMER CONFIDENCE INDEX: 118.9 V 116.2 PRIOR; M/M: +2.3% (biggest increase in 5 months) V -3.2% PRIOR
- (NZ) NEW ZEALAND MAY MANUFACTURING PMI: 57.1 v 56.6 PRIOR; 4-month high
- (SG) SINGAPORE MAY ELECTRONIC EXPORTS Y/Y: -6.0% V -1.4%E; NON-OIL DOMESTIC EXPORTS M/M: 16.8% V 2.0%E; Y/Y: 11.6% V -1.6%E
- (CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 3.50%; AS EXPECTED

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +1.7%, S&P/ASX +0.2%, Kospi +0.4%, Shanghai Composite +0.7%, Hang Seng +0.8%, Sep S&P500 +0.1% at 2,072

***Commodities/Fixed Income***
- Aug gold -0.9% at $1,287/oz, Jul crude oil +0.9% at $46.61/brl, Jul copper +0.9% at $2.07/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 1.7 tonnes to 902.5 tonnes; highest since Oct 2013
- (CN) PBOC SETS YUAN MID POINT AT 6.5795 V 6.5739 PRIOR
- (CN) PBoC to inject CNY40B in 7-day reverse repos; For the week, injects CNY105B v net drain of CNY175B in prior week
- (AU) Australia MoF (AOFM) sells A$1.0B in 2.75% Nov 2027 bonds; avg yield 2.1691%; bid-to-cover 2.06x

***Market Focal Points/FX***
- Asian equity markets have taken cue from the midday turnaround on Wall St to rally heading into the weekend. The inflection during the US hours was attributed to the reports of a tragic killing of a liberal Yorkshire MP Jo Cox who was vocally a Stay vote in Brexit referendum next week. Campaign events for both camps have been suspended in the wake of the murder, though markets perceive this as a factor in mobilizing the undecided to vote against the Brexit and thus lifting a cloud of protectionism and anti-integration movement in Europe. Some of the risk-off positions were unwound, as gold retreated by over $25 to $1,280 and S&P futures rose as much as 20pts above 2,070. In FX majors, USD/JPY was volatile, rising as much as 60pips to 104.80 on risk-off flows and speculation of more concrete measures curbing yen strength by the govt. GBP/USD saw a suspicious spike of some 70pips just after Tokyo open toward $1.43, but corrected about half of that move. AUD/USD and NZD/USD were up about 40pips and 30pips from Asia session lows above 0.74 and 0.7060 respectively but also reversed those flows in the afternoon hours.

- The possibility of Japan Fin Min intervention in FX space has risen since yesterday's BOJ decision to keep its policy settings unchanged while also upgrading views on certain segments of the economy despite the downgrade in the outlook for inflation. This signaled that the BOJ is either tolerant of economic headwinds or that the bar for further easing in negative rates / asset purchases is particularly high. Thus, govt commentary on FX becomes more likely to produce market impact, and today's reports of a meeting of MOF/BOJ/FSA officials spurred a 50pip move in USD/JPY to 104.80. Subsequent remarks from officials suggest that discussions toward an intervention are preliminary at best - Fin Min Aso reiterated that abrupt moves are not desirable and have been speculative recently, while currency chief Asakawa only acknowledged rising volatility in financial markets. USD/JPY retreated back to 104.20s in the afternoon session. Separately a Cabinet Office report from Japan maintained the assessment that economy is in a moderate recovery, cutting the view on corporate profits to "pausing improvement" while also noting CPI rising at a slower tempo.

- In China, Commerce Ministry's Shen noted research suggests that ODI is pressuring FX reserves, forcing some consideration on whether regulation of those outflows was needed. Shen added that China and US are looking to speed up investment treaty talks. Also of note, China-Japan tensions were magnified overnight after reports that a Chinese warship sailed into Japanese territorial waters for 1st time in over decade, prompting some tough rhetoric from Japan's foreign min Kishida. In Chinese press, a report noted a 2.8% q/q rise in equity financing in China in Q2.

***Equities***
US equities / ADRs:
- RDEN: Acquired by Revlon for $14/shr in all-cash transaction with enterprise value of ~$870M; +48.3% afterhours
- LL: Wins court lawsuit; Agrees to not resume sales of inventory of Chinese-made laminate flooring, testing to continue; +12.2% afterhours
- FNSR: Reports Q4 $0.29 v $0.25e, R$319M v $318Me; +10.2% afterhours
- SWHC: Reports Q4 $0.66 (adj) v $0.54e, R$221.1M v $215Me; +7.6% afterhours
- LOCK: Elliott Associates discloses 8.8% stake; has initiated dialogue with management and board - 13D filing; +3.9% afterhours
- MGM: Raises FY17 target adj EBITDA $400M (prior $300M); +3.3% afterhours
- ORCL: Reports Q4 $0.81 v $0.82e, R$10.6B v $10.5Be; Guides Q1 $0.56-0.60 v $0.59e (constant currency), Rev +2-5% y/y v +2%e (implies R$8.62-8.87B v $8.62Be); +2.0% afterhours

Notable movers:
- 600005.CN Wuhan Iron & Steel: Chairman: To cut 400K tons of capacity - Chinese press; +0.7%
- 1171.HK Yanzhou Coal CNY6B private placement; +4.5%
- St Barbara Ltd SBM.AU -9.3%; Evolution Mining Ltd EVN.AU -3.9% (lower gold prices)
- Sumitomo Forestry 1911.JP +3.7% (Daiwa upgrade)
- Stella International Holdings 1836.HK -10.9% (profit warning)
- AV Concept Holdings +2.8% (positive profit alert)

>>> US Close Dow +0.53% S&P +0.31% Nasdaq +0.21% Russell -0.10%

Closing Market Summary: Stocks Rebound, Snapping a 5-Day Losing Streak

The stock market ended the Thursday affair on a higher note as the major averages erased opening losses. Factors impacting today's reversal included softening in the dollar, resiliency in the broader market, and rebounds in the heavily-weighted health care (+0.4%), consumer discretionary (+0.4%), and financial (+0.3%) sectors. The Dow Jones Industrial Average (+0.5%) ended ahead of the S&P 500 (+0.3%) and the Nasdaq Composite (+0.2%). The S&P 500 avoided its sixth consecutive decline. 

Equity indices began the day under pressure as investors weighed a continued sell-off in global bourses. The latest bout of selling followed decisions by the Fed, Bank of Japan, and Bank of England to maintain their respective monetary policy positions. However, participants were apprehensive of the moves, eyeing global economic concerns and the upcoming Brexit vote. The major averages fell through the morning with the S&P 500 eventually finding support near the 2050 area.

The benchmark index trimmed its loss through the late morning, retaking its first level of technical support at 2062/2064. The rebound accelerated when British Prime Minister David Cameron voiced his support for suspending Brexit campaigning for the day. Both sides agreed to the halt in official campaigning after lawmaker Jo Cox was attacked and killed earlier in the day. On a side note, investors likely began today's session with heavy short-positioning and needed to make adjustments given the sharp reversal in the broader market. 

The major averages finished near their highs as nine sectors settled in the green. In front of the pack, telecom services (+0.8%), utilities (+0.7%), and consumer staples (+0.6%) led while heavily-weighted health care (+0.4%), consumer discretionary (+0.4%), and financials (+0.3%) each staged meaningful rebounds.

The countercyclical health care space (+0.4%) demonstrated relative strength as Dow component Merck (MRK 57.50, +1.41) jumped 2.5%. The stock topped the price-weighted index after reporting positive endpoint results for its KEYNOTE-024 trial. Elsewhere, health care plan names outperformed as Anthem (ANTM 132.28, +1.67) and CIGNA (CI 128.69, +2.13) gained 1.3% and 1.7%, respectively.

The economically-sensitive financial sector (+0.3%) rebounded from a 1.3% loss as investors eyed a downtick in Treasuries and a rebound in European banks. On that note, Deutsche Bank (DB 14.90, +0.08) ended higher by 0.5% after notching a fresh all-time low ($14.13) earlier in the session. Elsewhere, rate-sensitive real estate investment trusts outperformed as the likelihood of future rate hikes declined.

In the consumer discretionary space (+0.4%), Viacom (VIAB 45.05, +2.85) rallied 6.8% after reports indicated that five directors of the company were ousted from the Board of Directors. In response, the stock received an upgrade to "Buy" at BTIG Research. Separately, large cap Priceline (PCLN 1323.89, +18.31) and Lowe's (LOW 78.17, +1.13) gained 1.4% and 1.5%, respectively.

The U.S. Dollar Index (94.56, -0.05) ended its day flat as the euro and the pound made up ground against the buck. The euro ended lower by 0.2% against the dollar (1.1238) while the pound/dollar finished higher by 0.1% (1.4214). The currency pair reversed off the 1.4010 price level earlier in the session.

The Treasury complex ended on a mixed note with the yield on the 10-yr note finishing flat at 1.57%.

Today's participation was above the recent average as more than 865 million shares changed hands on the NYSE floor. 

Today's economic data included the CPI Report for May, weekly initial claims, the Philadelphia Fed Survey for June, first quarter Current Account Balance, and the June NAHB Housing Market Index: 

  • The Consumer Price Index for May didn't generate any negative headline surprises. The all items index was up 0.2% (consensus +0.3%) while the index for all items less food and energy also increased 0.2%, as expected.
    • A 0.4% increase in the shelter index and a 0.5% jump in the medical care services index drove core CPI higher, as they helped offset a 1.3% decline in the used cars and trucks index and a 0.1% decline in the new vehicles index.
    • A 0.2% decline in the food index helped tamp down total CPI, which moved up for the month on the back of a 1.2% increase in the energy index. The latter was led by a 2.3% jump in the gasoline index.
  • On an unadjusted basis, total CPI is up 1.0% over the last 12 months, versus a 1.1% increase for the 12 months ending in April.
  • Core CPI is up 2.2% versus up 2.1% for the 12 months ending in April.
    • The uptick in core CPI might catch the Fed's eye, yet that's no sure thing knowing the Fed didn't raise rates in March when core CPI was up 2.3% year-over-year.
  • The initial claims report was pretty status quo. It showed claims increasing 13,000 for the week ending June 11 to 277,000 (consensus 269,000).
    • The status quo element there was that claims remained below 300,000 for the 67th straight week.
    • There were no special factors influencing the initial claims reading, which lowered the four-week moving average by 250 to 269,250.
  • Continuing claims for the week ending June 4 increased by 45,000 to 2.157 million.
    • The four-week moving average for this series, though, edged up by only 1,000 to 2.150 million.
  • The Philadelphia Fed Index jumped almost seven points to 4.7 in June (consensus estimate of 0.7)
    • In doing so, it bumped the index out of contraction mode, evidenced by negative readings in April and May.
    • This regional manufacturing report follows on the heels of the Empire Manufacturing Survey for June, which also saw a nice uptick (to 6.0 from -9.0) that tipped things back into an expansion mode.
    • For the Philadelphia Fed Index, the headline isn't quite as encouraging as it looks.
    • That's because the main driver was the prices paid index, which moved from 15.7 to 23.0, and the delivery times index, which improved from -14.6 to -8.3.
    • Notably, the new orders index worsened, slipping from -1.9 to -3.0, as did the shipments index, which dropped from -0.5 to -2.1, and the unfilled orders index, which fell from -8.8 to -12.6.
    • In turn, the survey's future indicators decreased for the second consecutive month, with the diffusion index for future general activity dipping from 36.1 to 29.8.
  • The current account deficit for the first quarter totaled $124.7 billion while the consensus expected the deficit to hit $125.4 billion. The fourth quarter deficit was revised to $113.4 billion from $125.3 billion.
  • The NAHB Housing Market Index for June came in at 60 from an unrevised 58 in May while the consensus expected the reading to come in at 59.0.

Tomorrow's data will be limited to Housing Starts (consensus 1,150k) and Building Permits (consensus 1,150k) for May, which will be released at 8:30 ET.  

  • Nasdaq Composite -3.3% YTD 
  • Dow Jones +1.8% YTD
  • S&P 500 +1.7% YTD
  • Russell 2000 +0.9% YTD

>>> Reuters : Wirecard / Chinese interest

Google translate

Munich, 16 Jun (Reuters) - The alleged targeting of buyers from China guessed payment processor WirecardWDIG.DE confirmed a growing interest from investors. "Our business model has certainly led to greater attention from grand strategist", CEO Markus Braun said on Thursday at the meeting in Munich. "In sum, we meet a very interested market."

Wirecard is open to discussion, however, need for the expansion of his business no anchor investor, reiterated Brown. "The Group's operations out I do not see the need." For each market speculation he would not comment. The CEO is a share of seven percent the largest single shareholder.

In the past, various rumors about Wirecard had repeatedly moved the share price. In the past week, speculation about alleged takeover interest from China pushed the title on top of the technology index TecDax.TECDAX. In February, the price had crashed after anonymous fraud and money laundering charges against the company had been raised on the Internet. On Thursday reported Management Board and Supervisory these accusations again an attempt back to influence the share price.

Wirecard developed world from for traders, travel agencies and other companies payment transactions on the Internet, benefiting particularly in Asia from the trend to pay with your mobile phone. The company from Aschheim near Munich looks forward to continuing its strong growth, as Brown reaffirmed at the AGM.