Asia Mid-Session Market Update: China CPI rises to 3-month highs while PPI growth slows; Australia banks pare losses after 6bps budget levy
US Session Highlights
(US) Apr NFIB Small Business Optimism: 104.5 v 104.0e
(US) Goldman Economist Chain Store Sales w/e May 6th w/w: -0.7%; Y/Y: +0.7%
(US) MAR JOLTS JOB OPENINGS: 5.74M V 5.73ME
(US) May IBD/TIPP Economic Optimism: 51.3 v 51.7 prior
(US) Fed’s George (hawk, non-voter): supports gradual interest rate increases; Fed should start reducing balance sheet this year
US stock market euphoria died down today as investors began to evaluate geopolitical risk again in the Korean peninsula. Major indices closed nearly flat, with the exception being NASDAQ showing a small gain. Global stocks continued to rally as the French election extended the course of bullish sentiment. The DAX reached a new all-time high at 12,783 before closing slightly lower.
US markets on close: Dow -0.2%, S&P500 -0.1%, Nasdaq +0.3%
Best Sector in S&P500: Consumer Discretionary
Worst Sector in S&P500: Energy/Utilities
Biggest gainers: MAR +6.4%; UAL +4.8%; AAL +4.8%
Biggest losers: SEE -8.7%; TGNA -6.8%; FTR -6.5%
At the close: VIX 10.0 (+0.2pts); Treasuries: 2-yr 1.34% (+1bps), 10-yr 2.41% (+3bps), 30-yr 3.04% (+3bps)
US movers afterhours
NVDA Reports Q1 $0.85 v $0.67e, R$1.94B v $1.91Be- Guides Q2 Rev $1.91-1.99B v $1.89Be; +10.5% afterhours
COHR Reports Q2 $2.91 v $2.55e, R$422.8M v $404Me; +8.7% afterhours
EA Reports Q4 $1.81 v $0.75e (unclear if comp), R$1.53B v $1.09Be; +7.3% afterhours
TRIP Reports Q1 $0.24 v $0.28e, R$372M v $379Me; +6.0% afterhours
DIS Reports Q2 $1.50 v $1.45e, R$13.3B v $13.5Be; Media networks rev +3% y/y (cable networks rev +3%, operating income -3% y/y); -2.6% afterhours
PCLN Reports Q1 $9.88 v $8.83e, R$2.42B v $2.43Be; -3.5% afterhours
ACIA Reports Q1 $0.86 v $0.66e, R$114.7M v $112Me; Guides Q2 $0.22-0.35 v $0.76e, R$85-95M v $134Me; -15.0% afterhours
FOSL Reports Q1 -$1.00 v -$0.21e, R$582M v $596Me; Guides Q2 GAAP -$0.40 to +$0.30 v -$0.06e; -21.5% afterhours
YELP Reports Q1 +$0.19 v -$0.08e (unclear if comp), R$197.3M v $198Me; Guides Q2 adj EBITDA $32-35M, Rev $202-206M v $215Me; -28.3% afterhours
ANF: Said to field takeover interest from other retailers – financial press
WSTC: To be Acquired by Certain Funds Affiliated With Apollo Global Management for $23.50/shr cash, enterprise value $5.1B
Key economic data
(CN) CHINA APR PPI Y/Y: 6.4% V 6.7%E; 8th consecutive y/y increase; slowest increase in 4-months
(CN) CHINA APR CPI M/M: +0.1% V -0.3% PRIOR; Y/Y: 1.2% V 1.1%E (both readings at 3-month highs)
Asia Session Notable Observations, Speakers and Press
Asian equity markets are marginally positive despite the declines in US indices, with Hang Seng among the best performers and Korea’s Kospi lagging on the first day of trade after presidential elections. Australia opened lower following overnight release of FY17/18 budget that featured a 6bp levy on bank client deposits but then bounced on fiscal stimulus expectations of govt projections. In FX, AUD and NZD are slightly higher in late session, while USD/JPY is rangebound.
China inflation data has also propped up sentiment, with CPI rising to 3-month highs and beating expectations on m/m and y/y basis thanks to smaller decline in the food component. PPI was positive for the 8th straight month, but the rate of increase was smallest in 4 months as the recent freefall in metals is reflected in the results.
Among notable speakers, South Korea’s new president Moon said he will focus on security in the region and allowed for possibility of his trip North if it complies with conditions. BOJ Gov Kuroda also spoke extensively, reiterating the need to continue current easing policy while also acknowledging recent improvement in exports. Kuroda also said the recent headwinds in CPI were in part attributed to lower telecom prices.
China
(CN) China regulators may publish Bitcoin regulations in June – Chinese press
(CN) Moody’s: Credit profiles of China non-property companies improving moderately – press
Japan
(JP) BoJ Gov Kuroda: Reiterates there’s still distance to hit 2% inflation; Pace of JGB buys is now around ¥60T
(JP) Former BoJ official/ President of currency think tank Institute for International Monetary Affairs (IIMA) Watanabe: Markets concerned over trade issues – press
Australia/New Zealand
(AU) Australia Govt to impose major bank levy on ADIs with licensed entity liabilities of at least A$100B as part of new budget
Korea
(KR) New president Moon: Plan to address security issues immediately; Will go to N Korea when preconditions are met – press
(KR) Moody’s: Possibility of conflict on Korea peninsula is a credit negative for South Korea Govt
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.2%, Hang Seng +0.8%, Shanghai Composite +0.3%, ASX200 +0.5%, Kospi -1.0%
Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.1%, FTSE100 flat
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.0870-1.0900; JPY 113.60-114.00; AUD 0.7335-0.7370; NZD 0.6890-0.6910
June Gold +0.6% at 1,223/oz; June Crude Oil +0.8% at $46.25/brl; July Copper +0.2% at $2.50/lb
(US) Weekly API Oil Inventories: Crude: -5.8M v -4.2M prior; 2nd straight draw and largest draw since Jan 4th
(SA) Saudi Arabia said to supply full contractual amount of crude oil to one Asia buyer in June, which is also steady from May levels – press
(CN) PBOC SETS YUAN MID POINT AT 6.9066 V 6.9037 PRIOR; 3rd straight weaker fix and weakest level since Mar 21st
(CN) PBOC to inject combined CNY110B v skipped prior
(CN) China MoF sells 5-yr bonds; avg yield 3.6602% v 3.60%e; bid-to-cover 1.83x
(AU) Australia MoF (AOFM) sells A$600M in 4.5% 2020 Bonds; avg yield: 1.8406%; bid-to-cover: 4.84x
Asia equities notable movers
Australia
CSR Ltd (CSR) -11.7%; FY 17 result
South32 (S32) -2.9%; FY17 production guidance cut
Fairfax Media (FXJ) +1.1%; Fairfax board urging TPG to raise offer and bid for entire company – The Australian
Japan
Isetan Mitsukoshi Holdings (3099) -6.0%; FY16 results
Toray (3402) -3.5%; FY16 result
Hong Kong
HKEX (388) +1.4%; Q1 result
Skyworth Digital (751) -2.7%; profit warning
Sun Art (6808) -3.6%; Q1 result
