HomeContributorsFundamental AnalysisMarket Update - Asian Session: RBA Holds Rates With A Neutral Policy...

Market Update – Asian Session: RBA Holds Rates With A Neutral Policy Statement Despite Soft Q1 Current Account

US Session Highlights

(US) MAY FINAL MARKIT SERVICES PMI: 53.6 V 54.0 PRELIM

(US) MAY ISM NON-MANUFACTURING COMPOSITE: 56.9 V 57.1E

(US) APR FINAL DURABLE GOODS ORDERS: -0.8% V -0.5%E; DURABLES EX TRANSPORTATION: -0.5% V -0.4% PRELIM

(US) APR FACTORY ORDERS: -0.2% V -0.2%E

(US) Senate Minority Leader Schumer: ready to work with Pres Trump on a real infrastructure plan

Stock rally slowed to a grind with most indices slightly lower on the day. Concerns over the rift between Saudi Arabia and allies with Qatar weighed on oil. Despite lower crude prices and subdued buying power, the worst performing S&P sectors YTD, Energy and Financials, managed to tick up today, by 0.2% each.

US markets on close: Dow -0.1%, S&P500 -0.1%, Nasdaq -0.2%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Utilities

Biggest gainers: KORS +4.4%; NVDA +3.0%; TSO +2.8%

Biggest losers: INCY -5.7%; MNK -5.1%; BMY -4.8%

At the close: VIX 10.1 (+0.3pts); Treasuries: 2-yr 1.30% (+1bp), 10-yr 2.18% (+2bp), 30-yr 2.84% (+3bps)

US movers afterhours

THO: Reports Q3 $2.11 v $1.87e, R$2.02B v $1.96Be; affirms FY17 capex $130M; +11.5% afterhours

COVS: Agrees to be acquired at $2.45/shr by OpenText for $103M; +9.1% afterhours

ACOR: CVT-301 Phase 3 Data showed significantly improved Motor Function during OFF Periods in Parkinson’s Disease; plans to file NDA in U.S. by end of 2Q17; +9.8% afterhours

SIG: COO Bryan Morgan resigns due to violations of company policy; -0.8% afterhours

CASY: Reports Q4 $0.76 v $0.89e, R$1.85B v $1.87Be; Guides FY18 SS fuel gallons sold +1-2%, SS grocery/merchandise sales +2-4% y/y, operating expenses +9-11% y/y; -3.9% afterhours

Politics

(US) White House wants debt ceiling to be raised by August Congressional recess – press

(US) White House nominates Joseph Otting as the US Comptroller of Currency (OCC) – financial press

(UK) According to Survation Poll taken June 2-3, support for Conservatives Party at 41.5% vs 40.4% for Labour – US financial press

Key economic data

(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50% (AS EXPECTED)

(AU) AUSTRALIA Q1 CURRENT ACCOUNT BALANCE (A$): -3.1B V -0.5BE; NET EXPORTS OF GDP: -0.7% V -0.4%E

(JP) JAPAN APR LABOR CASH EARNINGS Y/Y: 0.5% V 0.3%E (4-month high)

Asia Session Notable Observations

Asian markets are mixed in the wake of modest declines on Wall St where cash indices fell after two days of large gains. Despite the miss in US economic data and political risk of former FBI director Comey testinony this week, expectations for more than one rate hike by the FOMC are back above 50%, with a tightening this month now seen as nearly 95%-certainty. Risk aversion picked up slightly in the Asia session, as 10-year Treasury yield fell 2bps, USD/JPY plunged over 70pips below 109.70, and US equity futures turned from slightly gains to losses.

Australia economic data and monetary policy were in focus in today’s session. Q1 Current Account saw a much bigger drop in Exports as pct of GDP at -0.7%, and analysts are speculating this may result in an annualized q/q contraction in tomorrow’s GDP report. RBA stood pat at 1.5% and was also more Neutral than expected, acknowledging the expected slowdown in Q1 GDP but maintaining view of 3% long run growth forecast. RBA also added that business conditions have improved and capacity utilisation has increased.

In China, PBoC skipped its regular daily reverse repo ops but injected CNY498B in medium-term lending facility (MLF) operations. Yuan fix was also set marginally stronger, with the Offshore rate remaining at 6.77.

Speakers and Press

China

(CN) Muddy Waters’ Carson Block: China is a massive asset bubble and credit bubble; blow up could start in shadow banking and wealth management

(CN) Analysts expect liquidity conditions to tighten in June amid seasonal factors; Unlikely it will lead to full-scale liquidity crunch – Chinese press

(CN) China Foreign Min Wang Yi announced an agreement had been reached between China and ASEAN countries on a first draft of a framework for a Code of Conduct (COC) for the South

China Sea – press

(CN) China Information Daily: China should continue to push for normalizing IPOs

Japan

(JP) Japan Fin Min Aso: Importance of lowering Japan debt-to-GDP ratio is clear – press

Australia/New Zealand

(AU) AMP’s Oliver: Overall picture for Australia economy is subpar growth running well below that assumed by RBA and in the budget – SMH

(AU) Australia Fair Works Council (FWC) to raise Minimum Wage by 3.3%/A$22.20/week for a total of A$694.90/week – press

(AU) ANZ CEO: Australia house prices are very inflated; There is a very low probability of a housing crash – press

(NZ) New Zealand real estate agency Barfoot & Thompson: Auckland region May property sales were 886 units, up from 664 m/m but down from 1,306 y/y; lowest number of sales in the month of May since 2010 – NZ press

Korea

(KR) Bank of Korea (BOK): THAAD dispute may impact talks on Korea-China currency swap – Korean press

(KR) US Nuclear Submarine USS Cheyenne has arrived in Busan, South Korea – Korean press

Asian Equity Indices/Futures (00:15ET)

Nikkei -0.6%, Hang Seng +0.4%, Shanghai Composite -0.2%, ASX200 -1.2%, Kospi closed

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.3%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:15ET)

EUR 1.1255-1.1275; JPY 109.75-110.50; AUD 0.7455-0.7490; NZD 0.7125-0.7160

Aug Gold +0.4% at 1,287/oz; July Crude Oil -0.4% at $47.19/brl; July Copper -0.1% at $2.56/lb

iShares Silver Trust ETF daily holdings fall to 10,562 tonnes from 10,601 tonnes prior; 4th straight decline

(CN) PBOC SETS YUAN MID POINT AT 6.7934 V 6.7935 PRIOR; 5th straight firmer Yuan fix; Strongest Yuan fix since Nov 10th

(CN) PBOC skips open market operations v CNY70B prior injected (first skip since May 28th)

(CN) PBOC conducts CNY498B in medium-term lending facility (MLF) operations; Offers 1-year MLF at 3.2% v 3.2% prior

(JP) Japan MoF sells ¥723B v ¥0.8T offered in 30-year 0.8% (0.8% prior) JGBs; Avg yield: 0.817% v 0.819% prior; bid to cover: 3.63x (highest since Oct 2016) v 3.35x prior

Asia equities notable movers

Australia

Musgrave (MGV) +1.4%; Reports high grade gold intersected near surface at Lena

BHP (BHP) -1.3%; Tribeca Partners said to propose some candidates to replace certain BHP directors

Sirtex (SRX) -1.5%; Announces primary endpoint of combined SIRFLOX/FOXFIRE study was not met

Spark Infrastructure (SKI) -2.0%; Cut at Goldman Sachs

APA Group (APA) -4.5%; Cut at Goldman Sachs

Japan

Toshiba (6502) +3.5%; Western Digital reportedly willing to compromise in order to get deal on Toshiba chip unit – Nikkei

Hong Kong

Evergrade (3333) +6.2%; To redeem all of its perpetual bonds by the end of June, ahead of plan

Beijing Capital (2868) +3.0%; May contracted sales

China Aoyuan Property Group (3883) +1.3%; May contracted sales

Shimao Property (813) +5.9; May contracted sales

Trade The News
Trade The Newshttp://www.tradethenews.com/
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

Featured Analysis

Learn Forex Trading