Morning Report APAC: New poll favours Brexit, pushes GBP lower
- European equities fell after ICM/Guardian poll shifted in favour of Brexit
- GBP dropped 1.3% overnight after the poll
- AUD was bid following stronger than expected exports data
- US consumer spending grew a better than expected 1%
By Saxo APAC Sales Trading
Economic data of the day (Singapore Time: GMT plus 8 hours)
- 0700: KRW – South Korea CPI MoM (Act. 0.0%, Exp. 0.2%), YoY (Act. 0.8%, Exp. 0.9%)
- 0700: KRW – South Korea CPI Core YoY (Act. 1.6%, Exp. 1.6%)
- 0900: CNY –China Manufacturing PMI (Act. 50.1, Exp. 50.1), Non-Manufacturing PMI (Act. 53.1, Prev. 53.5)
- 0930: AUD – GDP QoQ (Exp. 0.8%, Prev. 0.6%), GDP YoY (Exp. 2.8%, Prev. 3.0%)
- 0945: CNY – Caixin China PMI Manufacturing (Exp. 49.2, Prev. 49.4)
- 1000: JPY – Nikkei Japan PMI Manufacturing (Prev. 47.6)
- 1030: TWD – Nikkei Taiwan PMI Manufacturing (Prev. 49.7)
- 1100: IDR – Nikkei Indonesia PMI Manufacturing (Prev. 50.9)
- 1130: MYR – Nikkei Malaysia PMI Manufacturing (Prev. 47.1)
- 1300: INR – Nikkei India PMI Manufacturing (Prev. 50.5)
- 1630: GBP – Markit UK Manufacturing PMI (Exp. 49.6, Prev. 49.2)
- 2130: CAR – RBC Canadian Manufacturing PMI (Prev. 52.2)
- 2145: USD – Markit US Manufacturing PMI (Exp. 50.5, Prev. 50.5)
- 2200: USD – ISM Manufacturing May (Exp. 50.3, Prev. 50.8)
- 2200: USD – ISM Price Paid May (Exp. 58.5, Prev. 59.0)
- IDR – Indonesia CPI YoY (Exp. 3.30%, Prev. 3.30%), CPI core YoY (Exp. 3.43%, Prev. 3.41%)
- US: consumer spending grew 1% (Exp. 0.7%) boosted by a 2.3% jump in
purchases of durable goods. Autos accounted for the majority of the growth. The “core” personal consumption expenditures price index, the Federal Reserve's preferred inflation measure, increased 0.2% MoM (Exp. 0.2%). The core PCE rose at a 1.6% YoY (Exp 1.6%). Personal income increased 0.4% as expected. Wages and salaries grew 0.5%. With spending outpacing income, savings dropped 7.2% MoM to $751.1bn. The personal saving rate fell to 5.4% from 5.9%.
- Chicago PMI returned to contraction in May at 49.3. The underlying details showed both new orders
and production posted poor results, both falling below 50. The production index slumped to its lowest level since February, while the new orders component registered its weakest performance since December. The employment index also posted a sub-50 reading, which could be problematic for the manufacturing component of the upcoming May jobs report. Texas manufacturing activity declined during May to -20.8 (Exp.-8.0)
- US single-family home prices rose at a faster-than-expected rate during March. The national S&P/Case-Shiller Home Price Index increased 5.15% YoY.
- Brexit: See below
As risk markets were fragile during the NY session, UST yields were trending lower for most of the session before consolidating in the late afternoon. The two-year note yield sank 3 basis points to 0.879%. The 10-year bond yield is edging down 0.5bps to 1.846%.
Yields on core European markets were hit even more, Bunds off 2.8 bps to 0.137%.
Stocks were broadly lower overnight in the first full trading day since the US Federal Reserve's Janet Yellen’s “in the coming months” comment at the end of last week. European equities fell particularly in late session after an ICM Brexit poll shifted in favour of the leave camp with the Euro Stoxx off 0.9%.
Volkswagen skidded 2.6% after the troubled automaker reported a 20% slump in first-quarter 2016 profit. Norwegian oil giant Statoil lost 1.8% after RBC Capital Markets cut its recommendation to underperform from sector perform.
US equities held up better initially but mixed data helped sellers getting the upper hand with the S&P 500 down 0.1% and Dow Jones Industrial off by 0.5%. BlackRock downgraded US equities to neutral, citing elevated valuations and greater probability of a summer interest-rate hike. BlackRock would be more bullish if it saw evidence of reflation and an emphasis on expansionary fiscal policy and structural reform over monetary policy globally.
Energy shares fell 0.6% as crude wiped out its gains. Oil prices rolled over late session after the UAE oil minister said he was happy with the oil market. We can expect more comments on oil leading up to Thursday's Opec meeting.
Hong Kong market preview
- Beijing Ent Water (371 HK): Cut to neutral at CS
Bonjour (653 HK): Raised to hold at DBS Vickers
CGN Power (1816 HK): Raised to neutral at Goldman
China Everbright Intl (257 HK): Raised to buy at Goldman
CMST Development (600787 CH): Rated new buy at Haitong
Datang Power (991 HK): Cut to neutral at Macquarie
Huadian Power (600027 CH): Cut to neutral at Macquarie
Huaneng Power (902 HK): Cut to neutral at Macquarie
Prudential (2378 HK): Cut to hold at Societe Generale
Sa Sa Intl (178 HK): Raised to buy at DBS Vickers
- Samsonite (1910 HK): Raised to buy at DBS Vickers
MGM (MGM US) to acquire Boyd Gaming’s 50% interest in Borgata Hotel Casino & Spa in Atlantic City for $600m and then sell all Borgata Real property to MGP for $1.18bn
China Datang (991) and Electricite De France sign strategic investment plan to jointly seek investment opportunities in energy projects
BBMG(2009) to invest RMB4.75bn in Jidong Development, co also agrees to buy 10% stake in Jidong from Zhongtai Trust for RMB475m, co will 55% stake upon completion
Shoufeng (1165) to sell solar production unit for RMB5bn, and focus on development
China Property: China home prices +1.7%MoM in May (SouFun/搜房)
ICBC(1398)named Yi Huiman as chairman and announced plans to invest €1bn to set up a company focused on central and eastern Europe that will invest in projects including infrastructure.
Citic (267) and China Broadcasting Network Corp. plan to jointly invest in, construct and operate a mobile multimedia interactive broadcast television network in China
HSBC (5) is cutting senior investment-banking positions as part of the lender’s ongoing plan to reduce costs
Huaneng Power(902) gets CSRC approval to sell RMB 4.2bn of bond
ZTE (763) and spin-off ZTE We Link, receives acknowledgement from NEEQ
Dahsing Banking(2356) expects FY loan to see single-digit growth; senior management remains bullish on property insurance business
Boc Aviation (2588) debut today, closed at $44-44.2 in grey market, at 4.8%-5.2% premium vs issue price $42.
Japan market preview
- Askul (2678 JP): Raised to neutral at Goldman
Dentsu (4324 JP): Raised to buy at Daiwa
Honda (7267 JP): Cut to neutral at BofAML
Inpex (1605 JP): Raised to buy at Okasan
Nippon Steel & Sumitomo Metal (5401 JP): Cut to underperform from hold at Jefferies
Sumitomo Dainippon (4506 JP): Raised to neutral at Credit Suisse
Toyota Tsusho (8015 JP): Cut to neutral from outperform at Daiwa
- Trusco Nakayama (9830 JP): Rated new buy at Goldman Sachs, PT 6,900
Daido Steel (5471 JP): To buy back up to 2.34% of shares for ¥5bn
Daiichi Sankyo (4568 JP): Halts HER3 lung drug trials in US and Europe
Japan Aviation Electronics (6807 JP): NEC (6701 JP) offers ¥1,920 per share in tender, 29% above close; NEC looks to raise stake from current 39%, make co. consolidated subsidiary
Mitsubishi Heavy Industries (7011 JP): Company’s hydraulic gate operations to be bought by Sato Tekko
Mitsubishi Paper (3864 JP): To conduct 1 for 10 reverse split October 1; round lot to 100 from 1,000
Nexyz Group (4346 JP): Raises planned 2H dividend to 10 yen per shares from 5 yen
Park24 (4666 JP): 1H operating profit up 20% to ¥9.53bn vs company forecast ¥9.1bn
Pietro (2818 JP): Seeks to raise about ¥1.19bn from sale of shares to public
Star Micronics (7718 JP): To offer ¥8bn of CBs; to use ¥5bn of proceeds to buy back up to 10.63% of shares
Yomiuri Land (9671 JP): Forecasts full-year operating profit down 69% to ¥610m
Australia market preview
- Pulse Health (PHG@AU) cut to hold at Bell Potter
FlexiGroup (FXL@AU) cut to neutral vs buy at Goldman Sachs
Seven Group (SVW@AU) raised to buy vs hold at Morningstar
Greencross (GXL@AU) cut to hold vs buy at Morningstar
Source: Bloomberg / CIMB
– Edited by Susan McDonald
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