Morning Report APAC: All eyes on British voters on "B" day
- It was quiet on precious metals markets, with the Brexit risk being quite even
- A remain vote may push gold to $1180/oz
- A Brexit outcome wouuld trigger new highs above $1300/oz
- Copper rallied in tandem with the US dollar selloff
- An uneasy calm settled over some markets in the leadup to the key Brexit vote
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
0935: JPY – Nikkei Japan PMI Manufacturing (Prev. 47.7)
1300: SGD – CPI NSA MoM (Exp. 0.0%, Prev. -0.1%), YoY (Exp. -0.8%, Prev. -0.5%)
1300: SGD – CPI Core YoY (Exp. -0.8%, Prev. -0.5%)
1555: EUR – Markit Germany Services PMI (Exp. 55.0, Prev. 55.2), Composite PMI (Exp. 51.0, Prev. 50.9)
1600: EUR – Markit Eurozone Services PMI (Exp. 53.2, Prev. 53.3), Composite PMI (Exp. 53.0, Prev. 53.1)
1600: THB – Industrial Production YoY (Exp. -1.20%, Prev. -4.06%)
1600: PHP – Philippines BSP Overnight Borrowing Rate (Exp. 3.00%, Prev. 3.00%), Special Deposit Account Rate (Exp. 2.50%, Prev. 2.50%)
2030: USD – Initial Jobless Claims (Exp. 270,000, Previous 277,000), Continuing Claims (Exp. 2,150,000, Prev. 2,157,000)
2200: USD – New Home Sales (Exp. 560k, Prev. 619k), MoM (Exp. -9.5%, Prev. 16.6%)
1615: AUD – RBA assistant governor Guy Debelle to deliver remarks at a Sydney event
EU Referendum Timing (Singapore, Hong Kong times) – Friday June 24
0500 - Sky News YouGov Poll (accurate for the Scottish referendum, less so for the UK general election)
0730 - 1030 - Starting with Newcastle and Sunderland, taking us through to half the results
1030 - 1200 - Busiest period of results culminating in the larger populous areas (Northern Ireland and Birmingham followed by Glasgow, Manchester and Liverpool)
1200 - 1400 - Unless the vote is exceptionally close, the result should be clear by this stage
Please note these official times could slip.
- US: Existing home sales rose to a more than nine-year high during May. The National Association of Realtors said sales increased 1.8% MoM (market est: 1.8%) to a seasonally adjusted annual rate of 5.53mln (Mkt est: 5.55mln), the strongest pace since February 2007. The national median sale price rose 4.7% YoY to $239,700.
Fed Speech: Federal Open Market Committee chair Janet Yellen said:
- "By many measures, market liquidity remains quite adequate and hasn’t deteriorated"
- "Even so, there are indications suggesting that, under stress, liquidity may disappear"
- "Fed is looking at factors including regulations, changes in business models and high-frequency trading"
- "We’re watching inflation and inflation expectations"
- Fed to Gradually Raise Rates If Economy Progresses
- "We do have the capacity to have different rates than the rest of the world, but we have to recognize that differentials in our stance of policy impact, for example, the value of the dollar"
- Brexit vote is “risk that we are monitoring,” and “we will be watching closely to see what the vote is and what possible repercussions it might have.”
All eyes will be on Brexit polls, which were mixed, and on the actual vote today. The Janet Yellen speech triggered some USD selling overnight with the main movers being EUR, Australian dollar, New Zealand dollar and GBP. We will resume talking about big levels after the vote, when the trends will be clearer.
USD also sold off more against emerging market currencies with USDBRL down 1%, USDSGD settling down below 1.3400. On the Singapore dollar, it feels as if the market was/is massively long USD (Real Money and Funds) using the currency as a proxy for risk-off and USDCNH, and now some of them are unwinding the trade.
Global rates were trapped in tight ranges overnight and treasuries halted their four-fay slide following strong demand for a $28bln auction ahead of Thursday’s Brexit vote.
Yields on the two-year note fell 2bps to 0.743%. The 10-year bond yield is losing 2.2 basis points to 1.683%. Ahead of the referendum in the UK today we expect little movement in markets.
US stocks gave up early gains that had the S&P500 to close marginally in negative territory, and at session lows, after a new poll moderated hopes that Britain will vote to remain in the EU. The S&P 500 eased 0.2% to 2,085.45 and the VIX jumped almost 15% to 21.17 erasing an early 3.5% drop amid renewed anxiety before Britain’s EU vote.
Tesla Motors sank the most in two years over Elon Musk's plan to consolidate his empire with Tesla's proposed acquisition of SolarCity. Adobe Systems fell 5.7% and weighed on technology shares. The software company forecast revenue in the current quarter that may miss analysts’ estimates signalling slowing momentum for its cloud-based products. FedEx fell 4.5% as investors were disappointed not to get specifics details on how the $4.8bn acquisition of TNT Express will affect earnings.
It was a very quiet day ahead of the Brexit vote in the credit space.
Hong Kong equities preview
- Beijing Zhong Ke (000970 CH): Cut to hold at Deutsche Bank.
- BoCom (3328 HK): Cut to sell at UBS.
- China Cinda (1359 HK): Cut to sell at UBS.
- China Merchants Bank (3968 HK): Cut to hold at Morningstar.
- China Unicom (762 HK): Raised to buy at Morningstar.
- Citic Bank (998 HK): Cut to sell at UBS.
- SMIC (981 HK): Raised to neutral at UBS.
- Vinda Intl (3331 HK): Raised to accumulate at GuoTai JunAn.
- HKEX(388) will let brokers begin testing SZ connect trading platform on June 27.
- Chalco(2600) seven people died and five remain missing after accident at plant in Henan province (Xinhua).
- Shun Tak(242) to sell Macau assets to Abu Dhabi investor for $HK3.2bn.
- Great Eagle(41) agrees to sell property including a 28-storey office building for $255mln.
- Future Land(1030) enters 1.05bn yuan sales agreement with Orient Asset.
- China Grand Automotive (600297 CH) offer to buy 75% of Baoxin Auto(1293).
- HNA (521) plans to buy gold property in Western US involving $1bn to $1.1bn.
- Geely(175) plans to sell interests in electric vehicle maker, Ninghai Zhidou.
- HuaBao (336) announced FY16 net profit was HK$1.45bn, -27% YoY.
- China PPT Inv (736) issued profit warning, expecting full year net loss to widen YoY.
- Trinity (891) issued profit warning, expecting interim to record significant loss.
- Emperor (163) announced FY16 to record net loss of $HK2.39bn vs net profit of $HK898mln last year.
- Jingrui Hld(1862) proposed investment in Xiamen Intl Bank for a total consideration of 403.2mln yuan.
- Fullshare (607) tp sell interest in Fullshare Green Building for 240mln yuan.
- Ali Health(241) announced FY16 net loss widened to RMB191.6mn, vs net loss of 81.2mln yuan last year.
Japan equities preview
- Bridgestone (5108 JP): Issuer rating raised to AA+ from AA at JCR; outlook revised to stable from positive.
- Keyence (6861 JP): Raised to buy at Haitong.
- Mitsubishi Heavy (7011 JP): Cut to neutral at Macquarie.
- Oriental Land (4661 JP): Cut to sell at UBS.
- Pola Orbis (4927 JP): Rated new outperform at SMBC Nikko.
- Resona (8308 JP): Raised to buy from hold at Jefferies.
- Sumitomo Mitsui Trust (8309 JP): Cut to hold from buy at Jefferies.
- Toyo Tire & Rubber (5105 JP): Issuer rating cut to BBB+ from A- at JCR; outlook revised to stable from negative.
- Japan Excellent (8987 JP): Seeks to raise ¥5.8bn from public share sale
- Japan Exchange Group (8697 JP): Next-generation derivatives trading system to go live July 19
- Mitsubishi Motors (7211 JP): Co. says no more financial toll from fuel scandal expected beyond charges already booked; co. forecasts full-year dividend of ¥10, down from previous year’s dividend of ¥16.
- SoftBank (9984 JP): Names Ken Miyauchi as representative director, president and COO; Masayoshi Son remains chairman and CEO.
- Takara Bio (4974 JP): Begins sale of human iPS-derived heart muscle cells.
- Transcosmos (9715 JP): To offer about ¥1bn of treasury shares to a designated investor.
- Virtualex Consulting (6193 JP): Begins trading on Mothers after IPO priced at ¥1,090.
- World Holdings (2429 JP): To move Tokyo listing to 1st section on June 29.
- Yokohama Rubber (5101 JP): Issuer rating outlook revised to negative from stable at JCR; A+ rating affirmed.
Australia equities preview
- Charter Hall (CHC@AU) cut to neutral vs buy at UBS.
- Ardent Leisure (AAD@AU) raised to buy vs neutral at Goldman Sachs.
- Platinum Asset Management (PTM@AU) cut to underweight vs equalweight at Morgan Stanley.
Source: Bloomberg / CIMB
– Edited by Robert Ryan
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