Asia Mid-Session Market Update: Takata enters bankruptcy; FX majors quiet ahead of US durable goods report
Friday US Session Highlights
(US) JUN PRELIMINARY MARKIT MANUFACTURING PMI: 52.1 V 53.0E
(US) MAY NEW HOME SALES: 610K V 590KE; Median price: $345.8K v $310.2K prior
Major indices in New York are mixed, firming up after some early downward momentum. A weaker than expected Markit manufacturing PMI reading sent the Dollar to a session low against the Yen, but markets were buoyed by a beat in US new home sales data just minutes later. USD/CAD spiked after Canada May CPI came in lower than anticipated, which is seen as muting BOC rate hike expectations. The energy complex has been lifted by crude prices bouncing off their lows, and healthcare names have retreated from yesterday’s highs as attention remains on Washington’s ACA repeal efforts.
Politics
(US) Sen Collins (R-ME) awaiting Congressional Budget Office review of Senate healthcare legislation proposal before deciding on whether she will support the bill – US press
(DE) Germany Social Democratic chancellery candidate Martin Schulz rejects a grand coalition lead by Angela Merkel’s CDU/CSU; Calls for Chancellor Merkel to go further in spurring "erratic" US Pres Trump – press
(JP) Japan PM Abe cabinet approval rating falls another 9pts to 39% – Yomiuri
(JP) Ahead of July 2nd metropolitan assembly election in Tokyo, ruling LDP party trails Gov Yuriko Koike’s new political group "Tokyoites first" by 26.7% to 25.9% margin – Nikkei
Key economic data:
none seen
Asia Session Notable Observations
Takata finally succumbs to bankruptcy in New York and Japan filings; Trading suspended.
BoJ summary of opinions from last meeting reiterates concerns over slow progress in wage and price inflation while praising improved Consumption sentiment. Recall the last BOJ decision raises Consumption assessment while maintaining policy settings unchanged.
Approval rating for Japan PM Abe continues to crater amid unfolding political scandals.
PBoC sets Yuan firmer for the first time in 5 days; FX majors in very narrow ranges.
Speakers and Press
China
(CN) China’s National Development and Reform Commission (NDRC) has asked all coal miners to curb thermal coal prices at CNY570/t
(CN) China Premier Li calls for more investment in industries such as artificial intelligence, quantum science, gene editing, new materials and new energy – Chinese press
Korea
(KR) Bank of Korea (BOK) regional growth report: Economy is expected to see gradual improvement this year thanks to manufacturing and services
(KR) South Korea President Moon said to be under pressure to drop protectionism
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.1%, Hang Seng +0.4%, Shanghai +0.6%, ASX200 +0.1%, Kospi +0.4%
Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax +0.1%, FTSE100 +0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1190-1.1200; JPY 111.15-111.35; AUD 0.7560-0.7585; NZD 0.7270-0.7290; GBP 1.2730-1.2755
Aug Gold flat at 1,256/oz; Aug Crude Oil +1.3% at $43.55/brl; Sept Copper -0.1% at $2.63/lb
(US) Weekly Baker Hughes US Rig Count: 941 v 933 w/w (+0.8%) (23rd straight weekly rise)
SPDR Gold Trust ETF daily holdings fall 3.0 tonnes to 851.0 tonnes
(CN) PBOC SETS YUAN MID POINT AT 6.8220 V 6.8238 PRIOR; first firmer Yuan fix in 5 sessions
(CN) PBoC: To skip today’s open market operation (OMO); 2nd straight skip; Drains CNY50B
(KR) South Korea Finance Ministry sells 20-yr treasury bonds; avg yield 2.190%
Asia equities/Notables/movers
Hong Kong
epring Group (1884) +5.7%; Reports FY17 (HK$) Net 22.2M v 29.7M y/y; Rev 390.6M v 382.8M y/y
ICBC (1398) +0.6%; Responds to media reports that it had been ordered to assess credit risks, saying checks of loans to companies that made overseas acquisitions is routine
International Entertainment Corporation (1009) -2.5%; Reports FY17 (HK$) Net 66.1M v 45.2M y/y; Rev 290.7M v 330.9M y/y
Upbest Group (335) -8.0%; Reports FY17 (HK$) Net 225.9M v 518.2M y/y; Rev 317.5M v 443.4M y/y
Australia
Metcash (MTS) +3.4%; Reports FY17 adj Net A$194.8M v A$186Me; EBIT A$296.7M v A$287Me; Rev A$14.13B v A$14.1Be
Rio Tinto (RIO) +0.9%; Confirms receipt of revised proposal from Glencore plc to acquire Rio Tinto’s wholly-owned Australian subsidiary; Yancoal considering matching Glencore bid for Coal & Allied – AFR
Japan
Kirin (2503) +0.5%; Looking to sell its dairy business, have received some interest in parts of the business, but the company is aiming to sell the entire operation – AFR
Honda (7267) flat; Takata decision has limited impact on FY17 earnings; no decision reached over inflator recall responsibilities; Nissan (7201) +0.1%; set aside appropriate reserve related to Takata recall
