Asia Mid-Session Market Update: Japan Q1 Final GDP revised lower; China trade surplus undershoots consensus on higher Import growth
US Session Highlights
(US) DOE CRUDE: +3.3M V -3.5ME; GASOLINE: +3.3M V 0ME; DISTILLATE: +4.4M V +0.5ME (first gasoline build since April)
(IR) Iran Revolutionary Guards spokesperson: Saudi Arabia was behind terrorist attacks in Tehran today – press
Despite tomorrow’s super Thursday – UK elections, Comey testimony, ECB meeting and a possible result from Brazilian courts on Temer – stocks managed to post small gains across the board. Political risk in the US, however, seemed to be subsiding after former Dir Comey’s opening statement for his congressional testimony tomorrow was posted online. The S&P Energy sector posted large losses, down 1.6% on the day as crude oil prices dropped 5%.
US markets on close: Dow +0.2%, S&P500 +0.2%, Nasdaq +0.4%
Best Sector in S&P500: Financials
Worst Sector in S&P500: Energy
Biggest gainers: SIG +4.0%; ICE +3.4%; GGP +3.1%
Biggest losers: NFX -7.0%; TAP -6.5%; HP -6.0%
At the close: VIX 10.4 (-0.1pts); Treasuries: 2-yr 1.31% (+1bps), 10-yr 2.18% (+3bp), 30-yr 2.84% (+3bps)
US movers afterhours
VSTM To present long-term follow-up data from DYNAMO study at 14th International Conference on Malignant Lymphoma ; +11.3% afterhours
OKTA Reports Q1 -$0.50 v -$0.61e, Rev $53.0M v $48.5Me; Guides Q2 -$0.26 to -$0.25 v -$0.25e, Rev $55-56M v $54.0Me ; +7.4% afterhours
AGX Reports Q1 $1.31 v $0.81 y/y, Rev $230.5M v $130.3M y/y; EBITDA $32.5M v $20.2M y/y; +4.2% afterhours
GEF Reports Q2 $0.67 v $0.71e, Rev $887.4M v $899M; Narrows FY17 adj Class A EPS $2.84-3.02 v $2.92e; -8.7% afterhours
DTEA Reports Q1 -C$0.04 v +C$0.06 y/y, Rev C$48.7M v C$44.5M y/y; CFO resigns; -8.9% afterhours
Politics
(UK) According to Survation poll, Conservative party lead over Labour stands at 41.3% v 40.4%; 1-pt margin is similar to prior; BMG poll has Conservatives ahead of Labour by 46% to 33% margin.
(US) House Speaker Ryan: Obviously not appropriate for Pres Trump to have asked for former FBI director Comey’s loyalty – press
Key economic data
(CN) CHINA MAY TRADE BALANCE: $40.8B V $47.8BE; (CNY): 281.6B V 324.1BE
(JP) JAPAN Q1 FINAL GDP Q/Q: 0.3% V 0.6%E; ANNUALIZED GDP: 1.0% (3-quarter low) V 2.4%E
(AU) AUSTRALIA APR TRADE BALANCE (A$): +0.56B V +2.00BE (6th consecutive surplus, smallest surplus in 6 months)
(CN) China Passenger Car Association (PCA): May vehicle sales 1.78M units, +1.2% y/y; YTD sales 9.05M units, -0.9% y/y
Asia Session Notable Observations
Asian equity markets are mixed with modest upward bias as traders look ahead to Super Thursday with some relief. Ahead of his testimony in Congress, the statement of former FBI director Comey indicated he has expressed to Pres Trump that he is not under investigation about alleged Russia campaign meddling, though it did confirm Trump tried to get Comey to ease up on National Security Advisor Flynn. ECB decision will be closely watched for any further discussion of tapering QE, while the UK polls show wide variability of Conservatives lead from 1pt to double-digits.
China Trade surplus was below expectations in both USD and CNY term, but components were more constructive as annual growth in Exports and Imports topped consensus in both currencies. In CNY, Import growth was especially impressive at 22.1% v 8.3%e, with shipments of Iron Ore rising double digits and Oil up over 8% at the highest volume on record.
USD majors were little changed with the exception of a sharp rise in JPY following a press report citing BOJ sources that the central bank is considering ways of communicating it is discussing the shape of Japan’s QE exit without signalling it is any closer to doing so. USD/JPY pair fell some 50pips below 109.50 on the report. Timing of the discussion is especially questionable after Japan’s Q1 final GDP was revised lower to just 1% annualized from over 2% prelim due to downward revisions in residential investment and consumption.
Speakers and Press
China
(CN) China State Council meeting chaired by Premier Li approves plan to cut corporate taxes by CNY1.0T – Chinese press
(CN) According to China Bank of Communications (BoCom) and Nielsen study, China Wealth Index fell to 135 in May from 138 in Mar – Shanghai Daily
Japan
(JP) BOJ reportedly to re-calibrate communications to acknowledge it is considering how to communicate exit from QE and also convey it will not be on agenda any time soon – financial press citing BOJ sources
(JP) Japan’s FSA said to seek to limit regional banks exposure to bonds – Japanese press
(JP) BOJ’s Iwata: BOJ easing not intended to support govt funding – press
(JP) BOJ’s Amamiya: Reiterates view that Japan is still halfway to achieving its 2% price target – press
(JP) Japan Cabinet official: Govt’s view that economy remains in "moderate recovery" remains unchanged following today’s GDP data – press
Australia/New Zealand
(AU) Australia signs multilateral convention to prevent tax avoidance
(NZ) RBNZ: May see significant benefits from Debt to Income instrument – press
Korea
(KR) North Korea said to have been confirmed to fire several projectiles now assumed to be missiles today – Korean press citing joint chiefs of staff
(KR) South Korea govt think tank (KDI) monthly report: Reiterates economy is on modest recovery track – Korean press
Asian Equity Indices/Futures (00:30ET)
Nikkei flat, Hang Seng +0.2%, Shanghai Composite +0.1%, ASX200 +0.1%, Kospi -0.3%
Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax +0.1%, FTSE100 flat
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1245-1.1265; JPY 109.70-110.00; AUD 0.7525-0.7550; NZD 0.7185-0.7210
Aug Gold -0.5% at 1,287/oz; July Crude Oil +0.3% at $45.99/brl; July Copper +0.6% at $2.57/lb
SPDR Gold Trust ETF daily holdings rise 9.8 tonnes to at 864.9 tonne (3rd consecutive increase)
(CN) PBOC SETS YUAN MID POINT AT 6.7930 V 6.7858 PRIOR; first weaker Yuan fix in 7 sessions
(CN) PBOC injects CNY150B v CNY180B prior in combined 7-day, 14-day and 28-day reverse repos
(JP) Japan MoF sells ¥1.99T in 0.1% 5-year JGB bonds; avg yield -0..65% v -0.117% prior; bid-to-cover: 4.71x v 3.59x prior
Asia equities notable movers
Australia
Goodman Group (GMG) -1.1%; Cut at JPMorgan
BHP (BHP) +0.4%; Raised at UBS
Woodside Petroleum (WPL) -2.2%; Oil price down; Informed that Far will not support the Senegal Development project
Japan
Toshiba (6502) +4.8%; Broadcom said to be close to being named the preferred bidder for chip unit – Asahi
Dentsu (4324) -2.6%; Reports May non-consolidated sales -6.8% y/y
Japan Display (6740) -4.2%; Delays investment in JOLED until at least 2018, with the purchase date yet to be determined
Hong Kong
Cathay Pacific (293) +6.3%; Said to cut about 400 jobs today – HK press
Sino-Ocean Group (3377) -0.8%; May contracted sales
