Asia tracks declines in US equities, but initial losses less severe

Asia Mid-Session Market Update:   Asia tracks declines in US equities, but initial losses less severe; Infosys down over 6% on CEO change, Lenovo's earnings miss weighs

Asia Summary

- Following the over 2% decline seen in the Nasdaq during NY trading, Asian equities are broadly weaker. Some attributed the weakness in US equities to concerns about President Trump’s economic policies amid speculation (that was later denied) that White House Economic Advisor and former Goldman COO Gary Cohn might consider resigning . The earlier terrorist attack in Barcelona was also said to weigh. During today’s Asian session, Catalonia officials said they thwarted a separate incident in Cambrils, which is south of Barcelona.

- In terms of sectors, the Japanese chip equipment sector has been in focus after Applied Materials traded higher on better than expected quarterly results and guidance.

- Shares of Lenovo traded lower after the company reported an unexpected Q1 loss, amid declines in gross margins.

 

Key economic data

- (CN) CHINA JUL PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITES VS 60 PRIOR; Y/Y RISE IN 70 OUT OF 70 CITIES VS 70 PRIOR

 

Speakers and Press

China

- (CN) People’s Daily: US won’t win and cannot afford trade war against China

- (CN) China State Planner (NDRC) Approves CNY165.5B in fixed-asset investment projects in July

- (CN) China insurance regulator (CIRC) wants insurers to disclose info related to ‘big’ investment projects and ‘major’ losses – Chinese Press

Other

- (ES) Catalonia Government: One police officer was injured in alleged terrorist attack in Cambrils; there are 4 presumed terrorists that have been killed**Note: On Thursday, in Barcelona a van rammed into dozens of people at the Ramblas tourist area; Cambrils is located south of Barcelona.

- (NZ) New Zealand Foreign Visitor Spending in June Year at NZ$10.3B, flat y/y; China visitor spending -16%; Avg spending per tourist NZ$3.2K, -8%; Suggests the stronger Kiwi (NZD) could be a factor

 

Asian Equity Indices/Futures (00:30ET)

- Nikkei -1.1%, Hang Seng -0.8%, Shanghai Composite -0.2%, ASX200 -0.7%, Kospi -0.1%

- Equity Futures: S&P500 +0.1% ; Nasdaq +0.3% , Dax +0.1% , FTSE100 +0.2%

 

FX ranges/Commodities/Fixed Income (00:30ET)

- EUR 1.1709-1.1735; JPY 109.30-109.58 ; AUD 0.7870-0.7900; NZD 0.7276-0.7295

- Aug Gold +0.1% at 1,293/oz; Aug Crude Oil -0.2% at $47.02/brl; Sept Copper +0.4% at $2.92/lb

- GLD SPDR Gold Trust ETF daily holdings unchanged at 795.4 Mt

-(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6744 V 6.6709 PRIOR

-(CN) China PBOC OMO injects CNY120B v CNY100B in 7 and 14-day reverse reports prior: net injection CNY20B v CNY50B prior

-(CN) PBoC auctions 3-month MOF deposits at yield of 4.46%

-(AU) Australia sells A$500M in 2.0% 2021 bonds, avg yield 2.1077%%, bid to cover 5.62x

 

Equities notable movers

Australia

- Kingsgate Consolidated, KCN.AU Favorable regulatory decision in Thailand; +35%

- Kogan.com, KGN.AU FY17 net profit more than doubled; +7%

Hong Kong/China

- Lenovo, 992.HK, Reported unexpected Q1 Net loss as gross margins missed ests; -2.3%

 

US markets on close: Dow -1.2%, S&P500 -1.5%, Nasdaq -1.9%, Russell -1.8%

- Best Sector in S&P500: Utilities, Real Estate -0.7%

- Worst Sector in S&P500: Tech -2%

- At the close: VIX 15.55 (+3.81pts); Treasuries: 2-yr 1.31% (-2bps), 10-yr 2.19% (-4bps), 30-yr 2.78% (-3bps)

 

US Market Summary

- Unfounded market speculation that White House economic advisor Gary Cohn was considering stepping down sent prices tumbling in the morning, followed by more pressure on equities as reports came in of a horrendous terrorist attack in Barcelona, Spain. The S&P extended its fall to the lowest level in a month, while the VIX index gained 28%, rising above 15.00 for the first time in a week. Treasury yields continued to decline as investors sought safety, with the 10-year yield down 3 bps to 2.19. Gold also on the rise today amid uncertainty, with the precious metal rising 0.4% to $1,288.00

 

US Afterhours Movers

-SPWH Reports Q2 $0.15 v $0.13e, Rev $191.5M v $192Me; Guides Q3 $0.23-0.26 v $0.24e, Rev $220-225M v $228Me, SSS -6 to -8%; +14.2% afterhours

-ROST Reports Q2 $0.82 v $0.76e, Rev $3.43B v $3.37Be- Guides Q3 $0.64-0.67 v $0.77e, SSS +1-2% - Guides Q4 $0.88-0.92, SSS +1-2% +10.1% afterhours

-GPS Reports Q2 $0.68 v $0.52e, Rev $3.80B v $3.77Be- Raises FY17 $2.02-2.10 v $2.00e (prior $1.95-2.05) +6.3% afterhours

-ZOES Reports Q2 $0.00 v $0.02e, Rev $74.3M v $75.4Me; affirms FY17 Rev $314-322M v $316Me, SSS flat to -3%; -2.0% afterhours