Friday US Session Highlights
(US) MAY HOUSING STARTS: 1.09M V 1.22ME (lowest since Sept); BUILDING PERMITS: 1.17M V 1.25ME (lowest since Aug)
Amazon to acquire Whole Foods Market for $42/shr in cash in $13.7B deal
(US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.5 V 97.0E
(US) May Labor Market Conditions Index Change: 2.3 v 3.0e
Politics
(JP) Japan PM Abe intends to refresh his cabinet in Aug/Sept amid approval rating decline but expected to keep Fin Min Aso and top spokesman Suga – Nikkei
(JP) Japan PM Abe’s cabinet approval rating declines by 12 pct points to 49%; First time below 50% in over a year – Yomiuri; Support also declines in polls from Mainichi, Nikkei and Asahi’
(AU) Australia’s opposition Labor party leads ruling Coalition by 53% to 47% margin in the latest survey – Australian press
(FR) President Macron’s "En Marche" party (with centrist ally) said to take 361 out of the 577 seats in the National Assembly following 2nd round of parliamentary elections – Ipsos Sopra-Steria
Key economic data:
(CN) CHINA MAY PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 58 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 69 PRIOR
(JP) JAPAN MAY TRADE BALANCE: – ¥203B (first deficit in 4 months) V + ¥43BE; ADJ TRADE BALANCE: ¥134B V ¥346BE
(NZ) NEW ZEALAND MAY PERFORMANCE OF SERVICES INDEX: 58.8 V 53.2 PRIOR
(NZ) NEW ZEALAND Q2 WESTPAC CONSUMER CONFIDENCE: 113.4 V 111.9 PRIOR; 8-month high
(KR) SOUTH KOREA MAY PPI M/M: -0.2% V -0.2% PRIOR; Y/Y: 3.5% V 3.8% PRIOR
Asia Session Notable Observations
Weekend activity quiet as investors continue to process last week’s FOMC hike and reconcile Fed’s expectations of transitory nature of inflation retreat against the less rosy market-based view.
Key political developments include the 2nd round of French parliamentary elections, giving Macron’s En Marche party a comfortable margin to govern with absolute majority. In Japan, approval ratings for PM Abe’s cabinet dipped below 50% for the first time in over a year on allegations of favoritism over plans to establish a veterinary school in a government-designated special zone for deregulation. Cabinet officials indicated Abe is willing to reshuffle his cabinet, but likely to retain Fin Min Aso and Spokesperson Suga.
In economic data, Japan May Trade fell into deficit for the first time in 4 months – export growth at 15% was below 16% consensus, while Import grew by 18% – higher than 15% expected. Shipments to Asia, China, US, and Europe were all up double digits. In China, annualized property price growth continued to slow to 10.4% across top 70 cities vs 10.7% prior.
Speakers and Press
China
(CN) S&P: China property sector may see a cyclical downturn in H2 of this year
(CN) China regulators said to have loosened trade zone restrictions – Chinese press
(CN) China National Development and Reform Commission (NDRC) wants banks in Beijing to cancel the interest rate floor for corporate loans, lowering loan costs – financial press
(CN) China’s National Development and Reform Commission (NDRC) to allow some coal miners to increase capacity – financial press
(CN) China may cancel restrictions on futures investment by financial companies – Chinese Press
Japan
(JP) Japan PM Abe’s cabinet approval rating declines by 12 pct points to 49%; First time below 50% in over a year – Yomiuri; Support also declines in polls from Mainichi, Nikkei and Asahi
(JP) Japan cabinet spokesperson Suga: Not swayed by movements in opinion polls; PMs have the right to reshuffle cabinets – press
Australia / New Zealand
(AU) RBA Gov Lowe: Economy is capable of stronger growth and Australia will fall behind without sharp focus on reforms
Korea
(KR) South Korea’s FTC to push for a meeting with top four conglomerates – press
(KR) South Korea President Moon reiterates plan to phase out nuclear power
(KR) South Korea to limit mortgage limits to 60% (current 70%) of mortgage value in Seoul and cities showing heavy buying; effective July 3rd
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.7%, Hang Seng +0.9%, Shanghai +0.7%, ASX200 +0.3%, Kospi +0.4%
Equity Futures: S&P500 +0.2%; Nasdaq +0.4%, Dax +0.2%, FTSE100 +0.2%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1190-1.1210; JPY 110.75-111.15; AUD 0.7615-0.7630; NZD 0.7250-0.7300; GBP 1.2760-1.2780
Aug Gold -0.2% at 1,255/oz; July Crude Oil -0.3% at $44.83/brl; July Copper +0.1% at $2.57/lb
(US) Weekly Baker Hughes US Rig Count: 933 v 927 w/w (+0.6%) (22nd straight weekly rise)
(CN) PBOC SETS YUAN MID POINT AT 6.7972 V 6.7995 PRIOR
(CN) PBOC to inject combined CNY120B v CNY290B prior in 7-day, 14-day and 28-day reverse repos
(AU) Australia sells A$400M in 3.75% 2037 bonds; avg yield 3.0158%; bid-to-cover 2.96x
(KR) South Korea MOF sells 10-yr bonds; avg yield 2.170%
Asia equities/Notables/movers
Hong Kong
Chevalier International Holdings (25) +3.6%; Issues positive profit alert for FY17
Yuan Heng (332) -1.5%; Issues profit warning, citing stiff market competition
Man Wah (1999) -2.6%; Comments on Muddy Waters report, says it stands by the 2017 annual report
Wanjia (401) -2.9%; Reports FY17 Net loss HK$25.8M v loss HK$13.8M y/y, Rev HK$985.9M v HK$1.32B y/y
Australia
AWE Lted (AWE) +9.6%; Reports primary and secondary targets were intersected at Waitsia
Australian Finance Group (AFG) +7.9%; Guides FY17 Net A$37.0-37.8M v A$26Me
ANZ (ANZ) +0.8%; Said to value its Wealth unit at about A$5B – Australian press
Japan
Toshiba (6502) +2.7%; Expected to finalize sale of chip unit to Bain-led group – Japanese Press
NEC (6701) +2.1%; Guides Q1 Op profit ¥100B v loss ¥29.9B y/y – Japanese Press
