Asia Mid-Session Market Update: NZD tumbles over 1.5% to 11-month low as RBNZ fails to live up to expectation of more hawkish stance
US Session Highlights
(US) MBA MORTGAGE APPLICATIONS W/E MAY 5TH: +2.4% V -0.1% PRIOR
(US) APR IMPORT PRICE INDEX M/M: 0.5% V 0.1%E; Y/Y: 4.1% V 3.6%E
(US) DOE CRUDE: -5.2M V -1.5ME; GASOLINE: -0.2M V -0.5ME; DISTILLATE: -1.6M V -1ME
Equities opened lower today after news Trump had fired FBI Director Comey, but investors recovered some confidence throughout the session, sending most indices into positive territory, except for the Dow, which lost 32 points. NASDAQ volume was around 14% higher than its 3-month average, while the VIX rose 0.5% to 10. Energy sector was the outperformer on the S&P today on higher oil prices.
US markets on close: Dow -0.2%, S&P500 +0.1%, Nasdaq +0.1%
Best Sector in S&P500: Energy
Worst Sector in S&P500: Industrials
Biggest gainers: NVDA +17.8%; EA +12.7%; COTY +11.9%
Biggest losers: FTR -7.7%; PCLN -4.5%; AGN -3.7%
At the close: VIX 10.2 (+0.2pts); Treasuries: 2-yr 1.36% (+2bps), 10-yr 2.41% (+1bps), 30-yr 3.04% (flat)
US movers afterhours
NTES Reports Q1 $4.75 v $4.25e, R$1.98B v $1.60Be; Acting CFO resigns for personal reasons; raises dividend 6.9% to $1.08 from $1.01 (implied yield 1.5%); +3.6% afterhours
WFM Reports Q2 $0.37 adj v $0.37e, R$3.7B v $3.73Be; appoints five new independent directors, increases dividend 29%; names new CFO; +2.7% afterhours
FOXA Reports Q3 $0.54 adj v $0.48e, R$7.56B v $7.68Be; -3.1% afterhours
CTRP Reports Q1 $0.16 (adj) v -$0.06e, R$891M v $865M; -4.2% afterhours
HOLX Reports Q2 $0.50 v $0.46e, R$715.4M v $685Me; -7.1% afterhours
SYMC Reports Q4 $0.28 v $0.28e, R$1.12B v $1.17Be; Guides Q1 $0.28-0.32 v $0.37e, R$1.19-1.22B v $1.28Be; -7.1% afterhours
SNAP Reports Q1 -$2.31 v -$0.22e, R$149.6M v $150Me; daily active users (DAUs) 166M, +5% q/q, +36% y/y (+9M to 167M expected); -23.1% afterhours
STRP: Verizon said to have won bidding war for Straight Path to acquire company for $3.1B – financial press
Key economic data
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED
(JP) JAPAN MAR BOP CURRENT ACCOUNT TOTAL: ¥2.91B V ¥2.59TE; ADJ CURRENT ACCOUNT TOTAL: ¥1.73T V ¥1.74TE; TRADE BALANCE BOP BASIS: +¥866B V + ¥855BE
(JP) JAPAN APR BANK LENDING (INC TRUSTS) Y/Y: 3.0% V 3.0% PRIOR; BANK LENDING (EX-TRUSTS) Y/Y: 3.0% V 3.0%E
Asia Session Notable Observations, Speakers and Press
Asian equity markets trading mixed, tracking a similar close on Wall St where a rebound in oil prices helped the energy sector outperform. Mainland China market is among the laggards following local press reports of Premier Li maintaining commitment to reducing overcapacity in iron, steel, and coal mining sectors, while Baosteel also cuts its product prices for the first time in months. Nikkei225 is among the best indices amid ongoing JPY pressure in US hours despite the first profit decline for Toyota Motors in years.
FX majors were volatile as RBZN rate decision was decidedly more neutral than anticipated. RBNZ said it was looking past the rising inflation with its neutral stance given the recent cooling in Auckland housing market, and its latest projections only see the next rate hike in late 2019 vs analyst projections of late 2018. NZD/USD fell to 10month lows below 0.6820 on the decision and the commentary by Gov Whleeler. USD/CAD also rose some 70pips to 1.3740 after Moody’s cut its rating on Canada’s top banks.
China
(CN) China Premier Li Keqiang: China will continue phasing out capacity, especially in iron, steel, coal mining, and coal fired power plants to keep up with targets set for the year – State Council meeting
(CN) ANZ economist: China reflation cycle in producer prices has probably peaked and will trend down, dragging H2 economic growth – Chinese press
(CN) China anticipates vegetable prices to continue falling amid rising supply and warm weather – Chinese press
(CN) PBOC said to increase its coordination with financial regulators for banking, securities and insurance on implementing regulations – Chinese press
Japan
(JP) Japan PM Abe may reshuffle cabinet as soon as Aug – Nikkei’
Australia/New Zealand
(AU) Australia PM Turnbull: Treasury officials to meet with bank officials in Sydney on Thursday to discuss details of levy
(NZ) RBNZ Gov Wheeler: Inflation expectations would have to rise for a hike in OCR; Do not expect inflation to move rapidly on US – speaking in parliament
(NZ) RBNZ’s McDermott: Underlying inflation pressure is no different today than in Feb; Not unhappy from NZD decline following RBNZ decision today – press
(NZ) ANZ economist: Today’s RBNZ decision obviously more dovish than expected – NZ press
Asian Equity Indices/Futures (01:00ET)
Nikkei +0.4%, Hang Seng +0.2%, Shanghai Composite -0.4%, ASX200 flat, Kospi +0.9%
Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax flat, FTSE100 flat
FX ranges/Commodities/Fixed Income (01:00ET)
EUR 1.0860-1.0880; JPY 114.10-114.35; AUD 0.7330-0.7365; NZD 0.6820-0.6935
June Gold +0.1% at 1,221/oz; June Crude Oil +0.8% at $47.61/brl; July Copper +0.2% at $2.50/lb
(CN) China said to cut fuel prices, effective May 12th – Oilchem
iShares Silver Trust ETF daily holdings rise to 10,532 tonnes from 10,412 tonnes prior
(JP) Japan MoF sells ¥0.72T v ¥0.8T offered in 30-year 0.8% (0.8% prior) JGBs; Avg yield: 0.819% v 0.795% prior; bid to cover: 3.35x (6-month high) v 3.08x prior
Asia equities notable movers
Australia
JB Hi Fi (JBH) -1.0%; Cut at Citi
CSR (CSR) -4.0%; Cut at Citi
GrainCorp (GNC) +7.8%; H1 result
Myer (MYR) -3.0%; Q3 result
Japan
Toyota (7203) flat; FY16/17 result
Softbank (9984) +1.9%; FY16/17 result
Japan Tobacco (2914) +3.3%; FY16/17 result
China/Hong Kong
Baoshan Iron Steel -2.5%; cuts product prices
Kaisa Group (1639) -0.9%; Apr sales
Greenland HK (337) +0.8%; Apr sales
Semiconductor Manufacturing Int’l (981) -3.3%; Q1 result
