US Session Highlights
(US) JUN EMPIRE MANUFACTURING: 19.8 V 5.0E; new orders: +18.1 v -4.4 prior
(US) JUN PHILADELPHIA FED BUSINESS OUTLOOK: 27.6 V 24.9E
(US) MAY IMPORT PRICE INDEX M/M: -0.3% V -0.1%E; Y/Y: 2.1% V 2.9%
(US) INITIAL JOBLESS CLAIMS: 237K V 241KE; CONTINUING CLAIMS: 1.94M V 1.92ME
(US) JUN NAHB HOUSING MARKET INDEX: 67 V 70E
(US) MAY INDUSTRIAL PRODUCTION M/M: 0.0% V 0.2%E; CAPACITY UTILIZATION: 76.6% V 76.8%E
The recent sell-off in tech stocks continued today, dragging the broader market lower. The morning saw most stock markets open down on the day as concerns about Pres Trump’s ongoing investigations and more likely Fed hikes to come sank in. After economic data releases, investors gained more confidence, sending most indices higher, but just lower than yesterday’s close.
US markets on close: Dow -0.1%, S&P500 -0.2%, Nasdaq -0.5%
Best Sector in S&P500: Utilities
Worst Sector in S&P500: Materials
Biggest gainers: FTR +3.2%; HRB +3.0%; HOG +2.9%
Biggest losers: KR -18.9%; NUE -7.6%; WFM -6.7%
At the close: VIX 10.9 (+0.3pts); Treasuries: 2-yr 1.36% (flat), 10-yr 2.16% (+2bps), 30-yr 2.78% (flat)
US movers afterhours
HOS: Announces new credit facility; +22.8% afterhours
FNSR: Reports Q4 $0.52 v $0.50e, R$358M v $362Me; +7.8% afterhours
BAH: Discloses civil and criminal investigation by Dept of Justice into cost accounting practices – filing; -13.3% afterhours
STLD: Guides Q2 $0.60-0.64 v $0.84e, cites higher costs and lower value-added shipments on plant upgrade and certain quality issues
Politics
(US) Vice President Pence has reportedly hired outside counsel to assist with ongoing Russian investigation – Wash Post
(US) Special counsel Mueller said to probe business dealings of Jared Kushner as part of probe into Russia interference in elections – press
Key economic data
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; Keeps Economic Assessment unchanged
(NZ) NEW ZEALAND MAY BUSINESS MANUFACTURING PMI: 58.5 V 56.9 PRIOR (16-month high)
(CL) CHILE CENTRAL BANK (BCCH) LEAVES OVERNIGHT RATE TARGET UNCHANGED AT 2.50%; AS EXPECTED
Notes and Observations
Indices mixed as investors digest the widely anticipated FOMC rate hike yesterday, even as some analysts warn about the rising risks of "policy error" at the Fed on expectations of low inflation being transitory.
USD majors in narrow ranges; USD/JPY extending gains to 111.20, a 2-week high. BOJ lefts its policy settings unchanged with -0.1% IOER and 0.0% target for 10-yr JGB yield as part of YCC policy. BOJ maintained its overall economic assessment as "economy has been turning towards a moderate expansion" and raised its Consumption view to one of "increased resilience." No references to tapering plans are made, as speculated by local press earlier this month.
PBOC nearly doubled its reverse repo operations to CNY290B and set Yuan fix at 2-week low as part of policy response to the latest Fed decision.
Speakers and Press
China
(CN) China insurance regulator CIRC: Illegal sales of Hong Kong insurance products led to asset outflows and money laundering – press
(CN) China Iron and Steel Association (CISA): Iron ore prices are rational given the high inventories – press
(CN) China urged to closely monitor Fed’s balance sheet plans – Chinese press
Japan
(JP) Japan Gov’t Advisory Member Ito: Not surprising that BoJ bond purchases are dropping, central bank will purchase what’s needed to keep yield near zero target
Korea
(KR) South Korea Vice Finance Min: June exports are expected to rise; Conditions may be difficult in H2 – press
(KR) South Korea Finance Minister: To use dialogue with China to hopefully ease row over THAAD
Asian Equity Indices/Futures (23:30ET)
Nikkei +0.5%, Hang Seng +0.4%, Shanghai Composite -0.2%, ASX200 +0.3%, Kospi -0.1%
Equity Futures: S&P500 +0.1%; Nasdaq +0.2%, Dax +0.2%, FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (23:30ET)
EUR 1.1140-1.1155; JPY 110.85-111.25; AUD 0.7575-0.7600; NZD 0.7200-0.7215
Aug Gold flat at 1,254/oz; July Crude Oil flat at $44.45/brl; July Copper flat at $2.57/lb
SPDR Gold Trust ETF daily holdings fall 1.2 tonnes to 853.7 tonnes; 2nd straight decline
(CN) PBOC to inject combined CNY290B v CNY150B prior in 7-day, 14-day and 28-day reverse repos
(CN) PBOC SETS YUAN MID POINT AT 6.7995 V 6.7852 PRIOR; weakest Yuan fix since June 2nd
(CN) China MoF sells 30-yr bonds, avg yield 3.9763%, bid-to-cover 1.57x
(AU) Australia Finance Ministry (AOFM) sells A$800M in 2.25% 2028 bonds; avg yield 2.4988%; bid-to-cover 3.26x
Asia equities notable movers
Australia
A2 Milk (ATM.NZ) +7.9%; Raises FY17 Rev NZ$545M (prior NZ$525M)
AMP Ltd (AMP) +1.5%; considering sale of life insurance unit – Australia press
BHP (BHP) +0.1%; Mackenzie confirmed to succeed Nasser as Chairman
Japan
Shiseido (4911) +3.3%; Raised at Goldman Sachs
Toshiba (6502) +1.3%; Hynix-led team said to emerge as a favorite to acquire chip unit – Japan press
Hong Kong
Cowell E Holdings Inc (1415) +5.5; Profit Alert: Guides H1 to record a significant improvement y/y
KWG Property Holdings (1813) +0.9%; Reports May pre-sales CNY3.88B
Ngai Shun Holdings (1246) -6.7%; Issues FY16/17 profit warning
