Asia Mid-Session Market Update: China achieves trade deal with US after Trump-Xi talks; Investors await key US Retail Sales and CPI reports
US Session Highlights
(US) Fed’s Dudley (voter, dove): Trade protectionism is a dead-end and destructive to US economy; would hurt US exporters, productivity and workers – comments from India
OPEC Apr Monthly Report: Maintains 2017 global oil demand growth at 1.27M bpd; raises 2017 Non-OPEC oil supply growth from 580K bpd to 950K bpd
(US) INITIAL JOBLESS CLAIMS: 236K V 245KE; CONTINUING CLAIMS: 1.92M V 1.98ME
(US) APR IMPORT PRICE INDEX M/M: 0.5% V 0.1%E; Y/Y: 4.1% V 3.6%E; Ex-Food&Energy M/M: 0.4% v 0.2%e; Y/Y: 1.9% v 1.6%e
(US) APR PPI FINAL DEMAND M/M: 0.5% V 0.2%E; Y/Y: 2.5% V 2.2%E
Stocks felt the weight of drops in sales from two of the nation’s largest retailers, Macy’s and Kohl’s. Concerns that consumers were staying away from stores sparked fears the lack of spending may spread to other industries. Financials and consumer discretionary were the laggards on the day, down 0.6% and 0.5% respectively.
US markets on close: Dow -0.1%, S&P500 -0.2%, Nasdaq -0.2%
Best Sector in S&P500: Consumer Staples
Worst Sector in S&P500: Consumer Discretionary
Biggest gainers: NVDA +4.3%; TXT +3.6%; MYL +3.2%
Biggest losers: M -17.0%; FTR -9.1%; KSS -7.8%
At the close: VIX 10.6 (+0.4pts); Treasuries: 2-yr 1.34% (-2bps), 10-yr 2.40% (-1bps), 30-yr 3.03% (-1bps)
US movers afterhours
TTD Reports Q1 $0.11 v $0.01e, R$53.4M v $43.4Me; Guides Q2 R$67M v $59.2Me, adj EBITDA 14.5M; +22.1% afterhours
JWN Reports Q1 $0.37 v $0.27e, R$3.28B v $3.36Be; Affirms FY17 guidance; -4.1% afterhours
VJET Reports Q1 -€0.65 v -€0.84 y/y, Rev €4.5M v €4.9M y/y; Affirms FY17 Gross margin above 40%, EBITDA "neutral to positive", and CAPEX €8-9M; -6.3% afterhours
CYBR Reports Q1 $0.28 v $0.23e, R$59M v $57.8Me; Cuts FY17 $1.18-1.22 v $1.23e; -6.4% afterhours
DAR Reports Q1 $0.04 v $0.07e, R$880.1M v $848Me; -9.1% afterhours
Key economic data
(JP) JAPAN APR M2 MONEY STOCK Y/Y: 4.3% V 4.3%E; M3 MONEY STOCK Y/Y: 3.6% V 3.6%E
(NZ) NEW ZEALAND APR BUSINESS MANUFACTURING PMI: 56.8 V 58.0 PRIOR; First sequential decline in 3 months
(NZ) New Zealand REINZ April House Sales Y/Y: -31% v -10.7% prior; -32% m/m
Asia Session Notable Observations, Speakers and Press
Asian indices mixed going into critical US CPI and Retail Sales data on Friday that could make or break the case for anticipated June Fed hike as US central bank grapples with "transitory" Q1 soft patch and better labor data last month. Political turbulence that followed yesterday’s firing of FBI chief may take a back seat to news of a US-China trade agreement set to expand rade in beef/chicken and also boost access for financial firms. This could further reduce the anxiety over US-China trade war and serve as evidence of a fruitful Trump-Xi bilateral round of talks. China MOFCOM vice min also said the 2 sides will discuss the framework of 1-year economic cooperation plan with US.
Regionally, PBOC confirmed CNY459B MLF operation while also skipping daily OMO. Yuan fix was firmer for 2nd straight day and by a more sizeable margin. FX majors remained in narrow ranges.
China
(CN) China Vice Commerce Min Yu Jianhua: To discuss a 1-year economic cooperation plan with US; Looking to strengthen bilateral economic cooperation and hold further talks this summer – press
(CN) China Apr vehicle sales 2.1M units, -2.2% y/y v +4.0% in Mar; Biggest decline since Aug 2015 – China Association of Automobile Manufacturers (CAAM)
(CN) China Banking Regulator (CBRC) notes risks related to China banks’ support to Belt and Road projects – Chinese press
(CN) US and China reportedly have reached broad agreement on expanding some US exports, including liquefied natural gas – press
Japan
(JP) BOJ exec director Amamiya : Reiterates it is too early to consider ways to withdraw monetary stimulus – press
Australia/New Zealand
(AU) Moody’s: Australia budget supports fiscal strength, but deficit likely wider than gov’t expects
Asian Equity Indices/Futures (01:00ET)
Nikkei -0.6%, Hang Seng +0.1%, Shanghai Composite +0.4%, ASX200 -0.8%, Kospi -0.5%
Equity Futures: S&P500 -0.1%; Nasdaq -0.2%, Dax -0.1%, FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (01:00ET)
EUR 1.0860-1.0875; JPY 113.65-113.95; AUD 0.7370-0.7390; NZD 0.6825-0.6850
June Gold +0.2% at 1,227/oz; June Crude Oil +0.2% at $47.90/brl; July Copper +0.2% at $2.51/lb
(CN) PBOC SETS YUAN MID POINT AT 6.8948 V 6.9051 PRIOR; 2nd straight firmer setting; Biggest margin of strength in the fix since Apr 24th
(CN) PBoC: Confirms CNY459B MLF operation; Offers 6-month MLF at 3.05%; Offers 1-year MLF at 3.2%
(AU) Australia MoF (AOFM) sells A$800M in 3.25% 20 Bonds; avg yield: 2.8033%; bid-to-cover: 3.15x
(NZ) New Zealand sells NZ$100M in 2.50% 2035 inflation indexed bonds; bid to cover 4.71x
Asia equities notable movers
Australia
A2Milk (A2M) -4.9%; CEO share sale
Japan
Nissan (7201) +3.0%; FY result
Panasonic (6752) -2.2%; FY result
Sharp (6753) +3.0%; May apply for TSE 1 tier
Toshiba (6502) -1.8%; Chip unit sale may be delayed
Hong Kong
Hua Hong Semi (1347) +4.4%; Q1 result
Rusal (486) +4.0%; Q1 result
