US Session Highlights
(US) INITIAL JOBLESS CLAIMS: 232K V 240KE; CONTINUING CLAIMS: 1.90M V 1.95ME
(US) MAY PHILADELPHIA FED BUSINESS OUTLOOK: 38.8 V 18.5E; new orders remain strong
(US) Treasury Sec Mnuchin: affirms 3% or higher GDP growth is achievable if we reform taxes and regulation; reiterates plan to provide middle-class tax relief; we’ve had no talks about a national sales tax; on Glass-Steagall, Treasury does not support separation of banks from investment banks
(US) APR LEADING INDEX: 0.3% V 0.4%E
(US) March Factory Orders revised higher to +0.5% from +0.2%, Durables Orders revised higher to +1.7% from +0.9%
All major stock indices recovered some lost ground as investors regained confidence in the markets as an independent counselor was appointed by the Justice Department to investigate the claims of Russian contacts with the Trump campaign. Stocks were also helped by strong data and higher energy prices. The US dollar regained some lost ground against most Majors and the 10-year Treasury yield stabilized at 2.23%.
US markets on close: Dow +0.3%, S&P500 +0.4%, Nasdaq +0.7%
Best Sector in S&P500: Telecom
Worst Sector in S&P500: Energy
Biggest gainers: INCY +6.9%; KMX +6.2%; NVDA +5.4%
Biggest losers: CSCO -7.2%; MNK -3.5%; PRGO -3.5%
At the close: VIX 15.7 (-0.9pts); Treasuries: 2-yr 1.28% (+2bps), 10-yr 2.23% (+2bps), 30-yr 2.91% (+1bps)
US movers afterhours
ADSK: Reports Q1 -$0.16 v -$0.23e, R$486M v $473Me- Guides Q2 -$0.18 to -$0.14 v -$0.15e, R$488-500M v $489Me ; +10.1% afterhours
SPWH: Reports Q1 -$0.08 v -$0.07e, R$156.9M v $151Me- Guides Q2 $0.12-0.14 v $0.13e, R$189-194M v $189Me, SSS +8% to +10% ; +9.9% afterhours
MCK: Reports Q4 $3.42 v $3.04e, R$48.7B v $49.8Be- Guides initial FY18 adj EPS $11.75-12.45 v $11.51e ; +8.2% afterhours
SB: Reports Q1 -$0.07 v -$0.09e, R$33.3M v $28.5Me; +7.8% afterhours
ROST: Reports Q1 $0.82 v $0.79e, R$3.31B v $3.27Be; +4.2% afterhours
GPS: Reports Q1 $0.36 v $0.29e, R$3.44B v $3.41Be; affirms FY17 $1.95-2.05 v $1.98e (prior $1.95-2.05); +4.1% afterhours
CRM: Reports Q1 $0.28 v $0.26e, R$2.39B v $2.35Be; +1.4% afterhours
Key economic data
(NZ) NEW ZEALAND APR CREDIT CARD SPENDING M/M: 0.9% V 0.8% PRIOR; Y/Y: 6.4% V 7.1% PRIOR
(NZ) New Zealand Mar Net Migration: 5.8K v 6.1K prior; Annual net migration 71.9K v 68.1K y/y
(CL) CHILE CENTRAL BANK (BCCH) CUTS OVERNIGHT RATE TARGET BY 25BPS TO 2.50%; NOT EXPECTED
(MY) Malaysia Q1 GDP Q/Q: 1.8% v 1.2%e v 1.4% prior; Y/Y: 5.6% v 4.8%e
Asia Session Notable Observations, Speakers and Press
Asian indices are mixed, tracking a day of stabilization on Wall St where equities recovered, treasury yields found support, Gold returned below $1,250, and Fed Funds futures outlook for June hike was back above 70%. Investors noted a big beat in the Philly Fed index and a slide in weekly jobless claims as evidence the political turmoil may not overshadow economic recovery that follows a soft Q1. Pres Trump was also largely quiet aside from overnight tweets claiming extreme press bias against his administration as he prepared to travel to Israel on Friday for his first official out-of-state visit. Trump’s 9-day trip will also take him to Saudi Arabia and Brussels to discuss the NATO treaty with European leaders. In FX, USD/JPY was the most volatile among the majors, slipping some 50pips from the early highs around 111.10, while AUD and NZD traded within 25pip ranges against USD. Momentum in Oil Price bounce also remained, with WTI rising above 49.80 for a 4-week high.
Economic data were limited to New Zealand, where card spending continued to rise and net migration hit new record highs. Earlier, both Chile and Mexico central banks surprised with a 25bp rate cut against anticipated hold, citing external challenges.
Among notable corporates, Takata was limit-up after reports of a settlement with top automakers. Toshiba also traded higher as Broadcom/KKR and Bain/Hynix partnerships battled out for the chip stake.
China
(CN) Two China fighter jets flew within 150 feet of a USAF jet while it was flying in international air space over Yellow Sea – US press
(CN) Fitch: China hard landing risks are receding; Geopolitical risks on the rise
(CN) China financial companies said to have issued CNY168T in wealth management products (WMPs) in 2016 – Chinese press
(CN) China may add to pension fund by using state capital – Chinese Press
Korea
(KR) China Pres Xi said to have told South Korea envoy he is willing to work to put bilateral relations on normal track – press
(KR) US Navy said to have moved a 2nd aircraft carrier near North Korea – US press
Asian Equity Indices/Futures (23:30ET)
Nikkei -0.2%, Hang Seng +0.3%, Shanghai Composite -0.1%, ASX200 -0.3%, Kospi +0.1%
Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.1%, FTSE100 flat
FX ranges/Commodities/Fixed Income (23:30ET)
EUR 1.1095-1.1115; JPY 111.10-111.60; AUD 0.7405-0.7430; NZD 0.6880-0.6900
June Gold -0.3% at 1,250/oz; June Crude Oil +0.8% at $49.73/brl; July Copper +0.1% at $2.54/lb
SPDR Gold Trust ETF daily holdings fall 1.2 tonns to at 851.9 tonnes; 5th straight decline
iShares Silver Trust ETF daily holdings rise to 10,693 tonnes from 10,660 tonnes prior (4th straight increase)
(CN) China Finance Ministry sells 50-yr bonds at 4.08%, bid-to-cover 1.89x
(CN) PBOC SETS YUAN MID POINT AT 6.8786 V 6.8612 PRIOR; first weaker Yuan fix in 7 sessions; biggest margin of weakness since Feb 20th
(CN) PBOC to skip open market opeations v CNY80B prior injected; Sees banking liquidity at appropriate level
(AU) Australia MoF (AOFM) sells A$900M in 2.0% 2021 Bonds; avg yield: 1.980% v 2.044% prior; bid-to-cover: 3.48x v 4.96x prior
Asia equities notable movers
Australia
Fairfax Media (FXJ) -0.2%; TPG Capital and Hellman & Friedman have each asked for 4-5 weeks to perform due diligence on Fairfax; Bids unlikely to firm until FY17/18 – AFR
Ooh!Media (OML) -0.7%; Confirms termination of APN deal on regulatory concerns
Japan
Takata (7312) +20.0%; Trades limit-up 20% following $553M settlement with automakers
Toshiba (6502) +3.1%; Broadcom/KKR partnership said to be the leading bidder for chip unit, offering ¥2.2T
Renesas (6723) +2.7%; Strength attributed to announcement of plan by INCJ to sell shares in Renesas
Kobe Steel (5406) +1.5%; Began production of aluminum sheet for cars in China – Nikkei
SKY Perfect JSAT (9412) -4.2%; Reports FY16/17
Hong Kong
Evergrande (3333) +9.7%; S&P raises rating to B from B-; Outlook Stable
Global Tech (143) +3.8%; H1 result
Cogobuy Group (400) -5.1%; Q1 result
