Asia Mid-Session Market Update: China PMI figures continue to signal more pronounced slowdown; USD consolidates post-FOMC gains
US Session Highlights
(US) APR ADP EMPLOYMENT CHANGE: +177K V +175KE (lowest since Oct); March revised lower
(US) APR FINAL MARKIT SERVICES PMI: 53.1 V 52.5E
(US) Puerto Rico reportedly increases offer to general obligation bondholders to as much as 90 cents on the dollar – press
(US) APR ISM NON-MANUFACTURING COMPOSITE: 57.5 V 55.8E; new orders jump to highest since 2005
(US) DOE CRUDE: -0.9M V -2ME; GASOLINE: +0.2M V +0.5ME; DISTILLATE: -0.6M V +0.5ME
FOMC statement cited recent economic data weakness and wouldn’t change current stance on the progression of interest rate increases. The statement also mentioned that the labor market continued to show signs of strength and consumer spending was solid, with inflation close to target. Overall, the reading remains for a further two rate hikes this year.
US markets on close: Dow +0.2%, S&P500 +0.1%, Nasdaq +0.1%
Best Sector in S&P500: Financials
Worst Sector in S&P500: Real Estate
Biggest gainers: FSLR +11.8%; DLPH +10.9%; CTXS +7.1%
Biggest losers: FTR -16.5%; AKAM -15.5%; APC -7.7%
At the close: VIX 10.7 (+0.1pts); Treasuries: 2-yr 1.30% (+4bps), 10-yr 2.31% (+1bps), 30-yr 2.95% (-3bps)
US movers afterhours
TLRD Raises FY17 $1.60-1.90 v $1.66e (prior $1.45-1.75); to wind down partnership with Macy’s; +10.0% afterhours
DATA Reports Q1 -$0.03 v -$0.10e, R$200M v $201Me- Non-GAAP op margin -2.1% v -0.7% y/y – Customer account adds 3.3K, total 57K; +7.3% afterhours
FIT Reports Q1 -$0.15 v -$0.18e, R$298.9M v $277Me- Guides Q2 -$0.17 to -$0.14 v -$0.11e, R$330-350M v $340Me; +7.2% afterhours
SQ Reports Q1 +$0.05 v -$0.08e, R$462M v $451Me- Guides Q2 adj +$0.03-0.05 v -$0.07e; EBITDA$25-28M, adj Rev $223-226M v $532Me; +5.0% afterhours
TSLA Reports Q1 -$1.33 v -$0.55e, R$2.70B v $2.56Be; -2.4% afterhours
FB Reports Q1 $1.04 v $1.10e, R$8.03B v $7.85Be- Monthly active users (MAUs) 1.94B, +17% y/y; -2.5% afterhours
CAR Reports Q1 -$0.94 v -$0.51e, R$1.80B v $1.85Be- Cuts FY17 $2.85-3.50 v $3.16e, Affirms Rev +2-3% y/y, implies $8.8-8.95B v $8.81Be; -6.0% afterhours
CAKE Reports Q1 $0.72 v $0.73e, R$563.4M v $565Me; -7.6% afterhours
Key economic data
(CN) CHINA APR CAIXIN PMI SERVICES: 51.5 V 52.2 PRIOR; 4th month of sequential decline and weakest level since May 2016
(AU) AUSTRALIA MAR TRADE BALANCE (A$): +3.11B V +3.25BE (5th consecutive surplus)
(NZ) NEW ZEALAND APR ANZ JOB ADVERTISEMENTS M/M: 2.8% V 2.0% PRIOR
(NZ) NEW ZEALAND APR ANZ COMMODITY PRICE M/M: -0.2% v 0.4% PRIOR
(SG) SINGAPORE APR PMI COMPOSITE: 52.6 V 52.2 PRIOR; highest since Nov 2016
Asia Session Notable Observations, Speakers and Press
Asia indices are mixed in the wake of modest gains on Wall St, as surprisingly less cautious than anticipated Fed statement in light of disappointing US economic data of late supported expectations for pre-charted FOMC policy course. Australia remains among the worst performers in the region, with mining space hit by another steep decline in iron ore prices while Japan remains closed for holiday. In Hong Kong, defensive Utilities fared better, while autos, banks, and tech shares slumped. In commodities, WTI remains under slight pressure, though Copper prices are off their lows following the steep plunge in US hours.
FX is also more rangebound after US midday volatility saw USD/JPY hit 6-weeks highs just shy of 113 level on higher post-FOMC short-term rates. AUD was dented by softer China Caixin Services/Composite PMIs before erasing its losses on comments from RBA Gov Lowe, who was discussing the risks of record high household debt to income ratio in the context of inevitably tighter policy.
In economic data, China Caixin Services PMI hit an 11-month low with its 4th straight sequential decline, as new order rate of growth slowed, employment growth eased to the weakest level this year, backlogs of work fell, and cost pressures eased across all sectors. Aussie Trade Balance saw its 5th straight month of surplus, with export growth edging higher to 2.0% from 1.5% and imports up 5% v decline of 5% in prior month. Iron ore shipments rose to 3-month highs.
China
(CN) China FX regulator (SAFE) vice chair Zheng Wei: China to manage companies with high FX business risk more strictly – press
(CN) Analyst: China should consider introducing new bond products to raise funds for market-oriented debt-to-equity swaps – CSJ
Australia
(AU) RBA Gov Lowe: Should not expect rates to always be this low, households should be prepared for an increase in interest rates in Australia at some point
(AU) Australia Port Hedland Apr Iron Ore Exports 42.2Mt, +12% y/y
Asian Equity Indices/Futures (00:30ET)
Nikkei closed, Hang Seng -0.5%, Shanghai Composite -0.1%, ASX200 -0.6%, Kospi +0.7%
Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax +0.2%, FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.0880-1.0900; JPY 112.60-112.90; AUD 0.7405-0.7430; NZD 0.6875-0.6895
June Gold -0.6% at 1,241/oz; June Crude Oil -0.2% at $47.72/brl; July Copper +0.8% at $2.54/lb
(CN) PBOC to inject combined CNY50B v CNY200B prior in 7-day, 14-day and 28-day reverse repos
(CN) PBOC SETS YUAN MID POINT AT 6.8957 V 6.8892 PRIOR; Weakest Yuan fix since Apr 11th
Asia equities notable movers
BoCom (3328.HK) -1.2%; Bocom International Holdings unit looking to raise up to HK$2.07B from IPO; May issue USD bond as early as next week – financial press
Galaxy Entertainment (27.HK) -0.8%; Q1 results
NAB (NAB.AU) -0.2%; H1 result
Vocus (VOC.AU); -1.8% In talks to sell data center business
Kathmandu (KMD.AU) +4.5%; Q3 sales
