Asia Mid-Session Market Update: China A-Shares included in MSCI; Toshiba finalizes preferred bidder selection for chip unit
US Session Highlights
(US) Treasury Sec Mnuchin: Confirms Tax receipts are running little lower than expected – CNBC
(US) Fed’s Rosengren (moderate, non-voter): Low rate environment likely to persist into the future; likely to make fighting recessions tougher – comments from Amsterdam
(US) Q1 CURRENT ACCOUNT: -$116.8B V -$123.6BE
(US) May Philadelphia Fed Non-Manufacturing General Regional Business Conditions: 33.6 v 25.6 prior
Lower energy prices took their toll on stocks as the main indices all but wiped out yesterday’s gains. More hawkish comments from various Fed officials also gave investors less confidence in pushing prices higher. Today’s worst performer in S&P was Energy, down 1.3%, best sector was Health Care gaining 0.3%
US markets on close: Dow -0.3%, S&P500 -0.7%, Nasdaq -0.8%
Best Sector in S&P500: Health Care
Worst Sector in S&P500: Energy / Consumer Discretionary
Biggest gainers: REGN +5.0%; ALXN +2.5%; LEN +2.1%
Biggest losers: FTR -7.6%; CMG -7.3%; OKE -5.4%
At the close: VIX 10.9 (+0.5pts); Treasuries: 2-yr 1.35% (+1bps), 10-yr 2.15% (-4bps), 30-yr 2.74% (-5bps)
US movers afterhours
LZB Reports Q4 $0.57 v $0.46e, Rev $412.7M v $401Me; authorizes share repurchase for up to 6M shares (12.3% of shares outstanding); +12.6% afterhours
RHT Reports Q1 $0.56 v $0.52e, Rev $676.8M v $647Me; Guides Q2 ~$0.67 v $0.65e, Rev $695-702M v $677Me ; +10.1% afterhours
ADBE Reports Q2 $1.02 v $0.94e, Rev $1.77B v $1.73Be; Guides Q3 ~$1.00 v $0.95e, R$1.82B v $1.8Be; +3.6% afterhours
Politics
(US) Republican candidate Karen Handel to win special congressional House election in Georgia 6th district, allowing Republic part to keep its seat
(BR) Brazil federal police said to have found evidence that President Temer received bribes – press
Key economic data
(AU) AUSTRALIA MAY SKILLED VACANCIES M/M: 1.2% V +0.9% PRIOR
(AU) AUSTRALIA MAY WESTPAC LEADING INDEX M/M: 0.0% V -0.1% PRIOR
(JP) Japan Apr All Industry Activity Index M/M: 2.1% v 1.6%e
Speakers and Press
China
(CN) MSCI plans to add 222 China A Large Cap stocks, representing on a pro forma basis approximately 0.73% of the weight of the MSCI Emerging Markets Index at a 5% partial Inclusion Factor.
(CN) MSCI CEO: Expects initial inflows from China A-share inclusion to be $17-18B
(CN) S&P Global chief ratings officer Kraemer: China rating has a negative outlook, signaling that a downgrade is a real possibility
Japan
(JP) Bank of Japan (BOJ) Apr 27th Policy Meeting Minutes: Momentum toward price goal not firm enough; High chance exports will continue to show solid gains; Risks to economy are skewed to downside.
(JP) Japan govt (Cabinet office) expected to raise economic assessment in its June report on June 22nd – Nikkei
Australia/New Zealand
(NZ) According to New Zealand’s Home Loan Affordability Reports, typical first home buyers in Auckland need over 7 years to save a 20% downpayment on median wages – NZ press
(NZ) ANZ economist: Today’s dairy auction prices disappointed amid lower participation from China – NZ Press
Korea
(KR) South Korea FTC chair and Finance Minister to hold a meeting today about the economy – press
Asian Equity Indices/Futures (00:30ET)
Nikkei -0.5%, Hang Seng -0.6%, Shanghai Composite +0.2%, ASX200 -1.6%, Kospi -0.6%
Equity Futures: S&P500 -0.2%; Nasdaq -0.2%, Dax -0.1%, FTSE100 -0.4%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1125-1.1140; JPY 111.20-111.50; AUD 0.7555-0.7585; NZD 0.7220-0.7245
Aug Gold +0.4% at 1,247/oz; Aug Crude Oil -0.1% at $43.47/brl; July Copper -0.1% at $2.55/lb
(CN) PBOC to inject combined CNY40B v CNY10B prior in 7-day reverse repos
(CN) PBOC SETS YUAN MID POINT AT 6.8193 V 6.8096 PRIOR; Weakest Yuan fix since May 31st and 2nd straight weaker setting
(KR) Bank of Korea (BOK) sells KRW2.4T in 2-yr monetary stabilization bonds; avg yield 1.63% v 1.58% prior
(AU) Australia Finance Ministry (AOFM) sells A$800M in 2.75% 2028 bonds; avg yield 2.5124% v 2.4988% prior; bid-to-cover 2.69x v 3.26x prior
Asia equities notable movers
Australia
Yowie Group (YOW) -4.7%; Cuts FY17 Rev growth guidance to 55% from 70%; Guides FY18 Rev +55-70%
QBE (QBE) -9.8%; Top 3 operating divisions on track to report results in line with budget; Emerging markets experienced much higher than expected claims in Jan-May, H1 combined op ratio may reach 110% (update)
Retail Food Group (RFG) -10.2%; Cuts FY17 Underlying Net profit growth ~15% y/y (prior 20%)
Japan
Toshiba (6502) -1.3%; Selects INCJ-led group that includes Bain, SK Hynix, and DBJ as preferred bidder for chip unit sale; Aim to complete chip sale by end of FY17/18 – Japan press
Kubota (6326) -2.2%; CLSA Cuts 6326.JP to Outperform from Buy
Hong Kong
Midland Holdings Limited (1200) +6.0%; Announces profit alert: Guides H1 Net profit v loss HK$134M y/y
UBA Investments Limited (768) +4.6%; Reports FY Net profit HK$4.8M v loss HK$10.2M y/y
EVA Precision Industrial Holdings (838) +2.4%; Guides H1 Net +170% y/y
