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Market Update – Asian Session: Super Thursday Concludes With Political Chaos In UK

Asia Mid-Session Market Update: Super Thursday concludes with political chaos in UK and more White House scrutiny in US

US Session Highlights

(US) INITIAL JOBLESS CLAIMS: 245K V 240KE; CONTINUING CLAIMS: 1.917M V 1.92ME

(MX) MEXICO MAY CPI M/M: -0.1% V -0.1%E; Y/Y: 6.2% V 6.2%E; CORE CPI M/M: 0.3% V 0.3%E

(QA) Qatar Foreign Min: dispute with Gulf neighbors is threatening the stability of the entire region

(US) Former FBI Dir Comey: the shifting explanations of firing confused and concerned him; administration chose to defame me and the FBI; reasons for firing were lies, plain and simple; I don’t think it’s for me to say whether conversation with Trump over Flynn investigation was an effort to obstruct; My common sense was that Trump is looking to get something in exchange for granting my request to stay on the job

With all eyes on DC, former FBI Dir Comey’s reiterated in testimony the accusations made in his statement released yesterday, and he also accused President Trump of lying about conversations regarding former National Sec Advisor Flynn. However, investors didn’t see any cause for panic, and stock markets continued to value stocks positively. Techs and Small Caps made the largest gains on the day, while the broader S&P and blue chips were basically flat.

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: Utilities

Biggest gainers: JWN +10.3%; YHOO +10.2%; NVDA +7.3%

Biggest losers: URBN -10.3%; AAP -3.6%; BWA -3.0%

At the close: VIX 10.2 (-0.2pts); Treasuries: 2-yr 1.32% (+1bps), 10-yr 2.19% (+1bp), 30-yr 2.86% (+2bps)

US movers afterhours

LMNR Reports Q2 $0.24 v $0.18e, Rev $36.9M v $32.1Me; EBITDA $7.8M v $3.4M y/y ; +4.2% afterhours

PAY Reports Q2 $0.30 v $0.30e, Rev $473M v $474Me; Guides Q3 $0.35-0.36 v $0.40e, Rev $463-465M v $485Me; -3.1% afterhours

ENDP FDA requests removal of Opana ER from the market due to risks related to opioid abuse, concern that benefits of the drug may no longer outweigh its risks- FDA requested that Endo Pharmaceuticals remove its opioid pain medication ; -13.6% afterhours

CLDR Reports Q1 -$0.27 v -$0.36e, Rev $79.6M v $75.9Me; Guides Q2 -$0.26 to -$0.24 v $0.25e, Rev $85-86M v $84.0Me, subscription Rev $70-71M, +38-40% y/y ; -15.6% afterhours

Politics

(UK) HUNG PARLIAMENT RESULT CONFIRMED AS CONSERVATIVES FAIL TO SECURE 326 PARLIAMENT SEATS

(US) AG Sessions said to have had a 3rd undisclosed meeting with Russian officials – US press

(US) House passes Dodd-Frank financial law replacement bill – press

Key economic data

(CN) CHINA MAY CPI M/M: -0.1% V 0.1% PRIOR; Y/Y: 1.5% (4-month high) V 1.5%E

(CN) CHINA MAY PPI Y/Y: 5.5% V 5.6%E; 5-month low

(AU) AUSTRALIA APR HOME LOANS M/M: -1.9% V -1.0%E

Asia Session Notable Observations

Asia indices are mixed and volatility has finally settled after a near-24-hour spate of high-profile event risk. In the US, Pres Trump can find solace that he was not the target of FBI investigation. However the charged testimony by former FBI director Comey also paints him in a callous light, subsequent reports that AG Sessions may have had more undisclosed meetings with Russian diplomats, and indication that Democratic leadership is still prepared to pursue obstruction charges leaves the White House – along with its promise of tax reform and infrastructure spending – in peril.

Across the Atlantic, UK elections backfired on PM May, resulting in a hung Parliament rather than her initial intention of bolstering her Parliamentary majority going into Brexit negotiations. Tories’ austerity-laden agenda was a tough sell, just as PM May’s haphazard communication of policy commitment left her exposed to criticism of being unreliable in negotiations with EU. GBP plunged over 2 big figures to 1.27 after the initial exit polls suggested a strong showing for Labour, hit session lows near 1.2680 after Betfair briefly swung in favor of Labour’s Corbyn becoming next PM, and then settled in mid 1.27 range once expectations were distilled to Conservatives ending the day with most votes but shy of the 326 seats needed to form a govt and likely relying on a coalition. PM May will likely pay the ultimate price in the Tory defeat, losing her post.

Asia region was much more subdued relative to ECB-US-UK activity, with developments limited to softer China wholesale and higher consumer inflation. This time around, food CPI decline was much smaller than in the prior month at -1.6% v -3.5% in April. AUD and commodities were little changed on the release.

Speakers and Press

China

(CN) China property investment to keep growing next 1-2 years – Chinese Press

Japan

(JP) BOJ’s Kuroda: Japan is no longer experiencing deflation; long way to go until Japan price stability target is achieved – comments in UK

Australia/New Zealand

(AU) Australia Senate to hold inquiry into bank levy plan on Friday, June 16th – Australian Press

Korea

(KR) Korea Joint Chiefs said to investigate report of a small flying object in Gangwon – press

Asian Equity Indices/Futures (01:00ET)

Nikkei +0.4%, Hang Seng -0.4%, Shanghai Composite flat, ASX200 +0.1%, Kospi +0.7%

Equity Futures: S&P500 +0.1%; Nasdaq flat, Dax flat, FTSE100 flat

FX ranges/Commodities/Fixed Income (01:00ET)

EUR 1.1180-1.1235; JPY 109.75-110.35; AUD 0.7525-0.7545; NZD 0.7190-0.7220

Aug Gold -0.1% at 1,278/oz; July Crude Oil flat at $45.66/brl; July Copper -0.3% at $2.60/lb

SPDR Gold Trust ETF daily holdings rise 2.1 tonnes to 867.0 tonne (4th consecutive increase)

(CN) PBOC SETS YUAN MID POINT AT 6.7971 V 6.7930 PRIOR; weakest Yuan fix since June 2nd

(CN) PBOC to inject combined CNY60B v CNY150B prior

(AU) Australia Finance Ministry (AOFM) sells A$800M in 2.75% 2028 bonds; avg yield 2.519%; bid-to-cover 3.08x

Asia equities notable movers

Australia

BlueScope (BSL) +3.6%; Guides H1

SpeedCast (SDA) +1.0%; To be added to ASX200 index

Japan

Toshiba (6502) +8.2%; Bain Capital said to replace KKR in consortium that will include Western Digital and INCJ

FujiFilm (4901) -4.0%; Accounting problems found to extend to Australia operations – Nikkei

Hong Kong

Aac Technologies Holdings (2018) +1.8%; Announces strategic cooperation agreement with Citic Bank for CNY10B

Dongfeng Motor (489) +1.0%; May vehicle sales

China SCE Property (1966) -1.0%; May sales

Nan Nan Resources (1229) -3.6%; FY17 profit alert

Longfor Properties (960) -4.2%; May sales

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