Asia Mid-Session Market Update: China Services PMI soothes soft manufacturing data; World Bank maintains global outlook; Oil rallies on Saudi Arabia-Qatar row
Friday US Session Highlights
(US) MAY UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest since May 2001)
(US) MAY CHANGE IN NONFARM PAYROLLS: +138K V +182KE; (birth/death adjustment +230)
(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE WEEKLY HOURS: 34.4 V 34.4E
(US) White House econ adviser Cohn: not worried about slowing job growth; we must create a better US jobs market
(US) Atlanta Fed cuts Q2 GDP to 3.4% from 4.0% on 6/1
Weekend corporate activity
HLF: Cuts Q2 guidance $0.75-0.95 v $1.00e (prior $0.88-1.08); Volume -8% to -4% y/y (prior -5% to -1%); Cuts FY17 $4.10-4.50 v $4.50e (prior $4.25-4.65); Volume -1% to +2% y/y (prior 2-5%)
P: Verizon may be interested in making a $100M investment in Pandora if it fails to reach sale to SiriusXM this week – NY Post
Politics
(RU) Russia President Putin denies knowledge of any attempts to set up back-channel discussions with Trump administration officials – US press
(US) White House not planning to give Congress a detailed tax reform draft until the August recess – Politico
(JP) Survey from Japan national broadcaster TBS saw PM Abe’s cabinet approval rating fall 8.9 to 54.4%; lowest in over a year – press
(MX) MXN rallies from 18.82 to 18.72 on projections of a narrow win for ruling party in Mexico’s key governor race – press
(UK) Survation/Mail poll on Parliamentary elections: Support for UK Conservatives at 40% (-6 ppt); Labour at 39% (+5 ppt)
Key economic data:
(CN) CHINA MAY CAIXIN PMI SERVICES: 52.8 V 51.5 PRIOR (4 month high); COMPOSITE: 51.5 V 51.2 PRIOR
(HK) HONG KONG MAY COMPOSITE PMI: 50.5 V 51.1 PRIOR (2nd straight expansion)
(AU) AUSTRALIA Q1 COMPANY OPERATING PROFIT Q/Q: 6.0% (4th straight quarter of increase) V 5.0%E; INVENTORIES Q/Q: 1.2% V 0.5%E
(AU) AUSTRALIA MAY ANZ JOB ADVERTISEMENTS M/M: 0.4% V 1.5% PRIOR (3rd straight increase)
(AU) AUSTRALIA MAY MELBOURNE INSTITUTE INFLATION M/M: 0.0% (3-month low) V 0.5% PRIOR; Y/Y: 2.8% V 2.6% PRIOR
(AU) AUSTRALIA MAY AIG PERF OF SERVICES INDEX: 51.5 V 53.0 PRIOR (3rd consecutive expansion. 3-month low
(SG) SINGAPORE MAY PMI COMPOSITE: 51.4 V 52.6 PRIOR
Asia Session Notable Observations
Asian indices slide despite the gains on Wall St as investors digest mixed US employment data on Friday. Outlook for June hike remains above 90%, though the case for 3 hikes total in 2017 stands more damaged by slow wage growth.
GBP down slightly in the wake of another terror attack in London that left 7 people dead; UK polls ahead of June 8th elections also continue to tighten.
China May Caixin Services PMI hits a 4-month high and Composite rises slightly. Among Services components, expansion in new orders was the most marked in the year-to-date, employment continued to increase but at slower pace, and input price inflation picked up from 6-month lows.
China Shenhua (China’s largest coal miner) speculated to merge with GD Power Development; Both halted on A-shares.
World Bank maintained 2017 global GDP growth forecast at 2.7% and 2018 at 2.9%; WB also cut US by 0.1pt, Affirmed China at 6.5%, and raised EU and Japan by 0.2pts and 0.6pts respectively, citing recovery in industrial and a pick-up in global trade.
Oil rises nearly 1.5% on Saudi-Qatar spat. Saudi Arabia, Bahrain, and Egypt reportedly cut diplomatic relations after leaked tape where Qatari Emir Tamim bin Hamad al-Thani criticized Gulf rhetoric against Iran. Qatar also alleged to have provided assistance to terrorist organizations.
Speakers and Press
China
(CN) China Securities Regulatory Commission (CSRC) rejected IPO application from 9 out of 64 companies in May – Chinese press
(CN) China Securities Regulatory Commission (CSRC) announced new rules to curb disorderly stock sales
(CN) China Securities Regulatory Commission (CSRC) announced new rules to curb disorderly stock sales
(CN) China to accelerate approvals for green car subsidies, approving ~300 more green energy vehicle models to receive subsidies – Chinese press
(CN) China plans to continue its restructuring of SOEs in the coal power and steel sectors – Chinese Press
Japan
(JP) BoJ approx doubles ETF holdings in 1 year to ¥15.9T v ¥8.83T y/y – Nikkei
Australia/New Zealand
(AU) Australia’s Queensland has commissioned an energy security taskforce to ensure state’s power system is secure during peak demand over 2017-18 and 2018-19 summers
Asian Equity Indices/Futures (00:30ET)
Nikkei flat, Hang Seng -0.3%, Shanghai -0.5%, ASX200 -0.7%, Kospi +0.1%
Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax closed, FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1265-1.1285; JPY 110.30-110.65; AUD 0.7420-0.7460; NZD 0.7115-0.7145; GBP 1.2855-1.2875
June Gold +0.3% at 1,284/oz; July Crude Oil +1.3% at $48.26/brl; July Copper -0.5% at $2.56/lb
SPDR Gold Trust ETF daily holdings rise 3.5 tonnes to at 851 tonnes; first rise since May 22nd
iShares Silver Trust ETF daily holdings fall to 10,601 tonnes from 10,605 tonnes prior; 3rd straight decline
(SA) Saudi Arabia, Bahrain, and Egypt said to have cut diplomatic relations with Qatar after leaked tape where Qatari Emir Tamim bin Hamad al-Thani criticized Gulf rhetoric against Iran; July WTI crude oil rises 1.5% above $48.35/brl
(US) Weekly Baker Hughes US Rig Count: 916 v 908 w/w (+0.9%) (20th straight weekly rise)
(CN) PBOC SETS YUAN MID POINT AT 6.7935 V 6.8070 PRIOR; 4th straight firmer Yuan fix; Strongest Yuan fix since Nov 10th
(CN) PBOC to inject combined CNY70B v CNY50B prior
(AU) Australia Finance Ministry (AOFM) sells A$400M in 3.25% 2029 bonds; avg yield 2.5171%; bid-to-cover 4.16x
(KR) South Korea sells 3-yr Govt bonds; avg yield 1.65%
Asia equities/Notables / movers
Australia
Fortescue (FMG) +0.3%; CEO: China steel demand remains strong
Tatts (TTS) -0.7%; ACCC not satisfied Tabcorp/Tatts merger is in best interest of public – AFR
Sirtex (SRX) -2.3%; Presents Phase 3 data from SIRVENIB study
Hong Kong
China Gas Holdings (384) +2.4%; Guides FY17
Guangzhou R&F Properties (2777) +0.5%; May sales
China Vanke (2202) -0.7%; May sales
IPE Group Limited (929) -1.5%; Guides Jan-Apr
Japan
Eisai (4523) +1.9%; Further Study of Combination of Eisai’s Lenvatinib and Merck’s Pembrolizumab in Previously Treated Patients with Metastatic Endometrial Cancer Supported by Interim Analysis of Ongoing Phase1b/2 Trial
ANA (9202) +0.3%; ANA and JAL to cut international route fuel surcharges by 50% in Aug – Japanese Press
Toshiba (6502) -0.6%; Foxconn Chairman: We have backing from Apple and Amazon in bid for Toshiba’s memory chip unit – Nikkei
