China property price growth slows; Japan enters trade deficit

Friday US Session Highlights

- (US) MAY HOUSING STARTS: 1.09M V 1.22ME (lowest since Sept); BUILDING PERMITS: 1.17M V 1.25ME (lowest since Aug)

- Amazon to acquire Whole Foods Market for $42/shr in cash in $13.7B deal

- (US) JUN PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 94.5 V 97.0E

- (US) May Labor Market Conditions Index Change: 2.3 v 3.0e

 

Politics

- (JP) Japan PM Abe intends to refresh his cabinet in Aug/Sept amid approval rating decline but expected to keep Fin Min Aso and top spokesman Suga - Nikkei

- (JP) Japan PM Abe's cabinet approval rating declines by 12 pct points to 49%; First time below 50% in over a year - Yomiuri; Support also declines in polls from Mainichi, Nikkei and Asahi'

- (AU) Australia's opposition Labor party leads ruling Coalition by 53% to 47% margin in the latest survey - Australian press

- (FR) President Macron’s "En Marche" party (with centrist ally) said to take 361 out of the 577 seats in the National Assembly following 2nd round of parliamentary elections – Ipsos Sopra-Steria

 

Key economic data:

- (CN) CHINA MAY PROPERTY PRICES M/M: RISE IN 56 OUT OF 70 CITIES VS 58 PRIOR; Y/Y: RISE IN 69 OUT OF 70 CITIES V 69 PRIOR

- (JP) JAPAN MAY TRADE BALANCE: - ¥203B (first deficit in 4 months) V + ¥43BE; ADJ TRADE BALANCE: ¥134B V ¥346BE

- (NZ) NEW ZEALAND MAY PERFORMANCE OF SERVICES INDEX: 58.8 V 53.2 PRIOR

- (NZ) NEW ZEALAND Q2 WESTPAC CONSUMER CONFIDENCE: 113.4 V 111.9 PRIOR; 8-month high

- (KR) SOUTH KOREA MAY PPI M/M: -0.2% V -0.2% PRIOR; Y/Y: 3.5% V 3.8% PRIOR

 

Asia Session Notable Observations

- Weekend activity quiet as investors continue to process last week's FOMC hike and reconcile Fed's expectations of transitory nature of inflation retreat against the less rosy market-based view.

- Key political developments include the 2nd round of French parliamentary elections, giving Macron's En Marche party a comfortable margin to govern with absolute majority. In Japan, approval ratings for PM Abe's cabinet dipped below 50% for the first time in over a year on allegations of favoritism over plans to establish a veterinary school in a government-designated special zone for deregulation. Cabinet officials indicated Abe is willing to reshuffle his cabinet, but likely to retain Fin Min Aso and Spokesperson Suga.

- In economic data, Japan May Trade fell into deficit for the first time in 4 months - export growth at 15% was below 16% consensus, while Import grew by 18% - higher than 15% expected. Shipments to Asia, China, US, and Europe were all up double digits. In China, annualized property price growth continued to slow to 10.4% across top 70 cities vs 10.7% prior.

 

Speakers and Press

China

- (CN) S&P: China property sector may see a cyclical downturn in H2 of this year

- (CN) China regulators said to have loosened trade zone restrictions - Chinese press

- (CN) China National Development and Reform Commission (NDRC) wants banks in Beijing to cancel the interest rate floor for corporate loans, lowering loan costs – financial press

- (CN) China’s National Development and Reform Commission (NDRC) to allow some coal miners to increase capacity – financial press

- (CN) China may cancel restrictions on futures investment by financial companies – Chinese Press

Japan

- (JP) Japan PM Abe's cabinet approval rating declines by 12 pct points to 49%; First time below 50% in over a year - Yomiuri; Support also declines in polls from Mainichi, Nikkei and Asahi

- (JP) Japan cabinet spokesperson Suga: Not swayed by movements in opinion polls; PMs have the right to reshuffle cabinets - press

Australia / New Zealand

- (AU) RBA Gov Lowe: Economy is capable of stronger growth and Australia will fall behind without sharp focus on reforms

Korea

- (KR) South Korea's FTC to push for a meeting with top four conglomerates - press

- (KR) South Korea President Moon reiterates plan to phase out nuclear power

- (KR) South Korea to limit mortgage limits to 60% (current 70%) of mortgage value in Seoul and cities showing heavy buying; effective July 3rd

 

Asian Equity Indices/Futures (00:00ET)

- Nikkei +0.7%, Hang Seng +0.9%, Shanghai +0.7%, ASX200 +0.3%, Kospi +0.4%

- Equity Futures: S&P500 +0.2%; Nasdaq +0.4%, Dax +0.2%, FTSE100 +0.2%

 

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

- EUR 1.1190-1.1210; JPY 110.75-111.15; AUD 0.7615-0.7630; NZD 0.7250-0.7300; GBP 1.2760-1.2780

- Aug Gold -0.2% at 1,255/oz; July Crude Oil -0.3% at $44.83/brl; July Copper +0.1% at $2.57/lb

- (US) Weekly Baker Hughes US Rig Count: 933 v 927 w/w (+0.6%) (22nd straight weekly rise)

- (CN) PBOC SETS YUAN MID POINT AT 6.7972 V 6.7995 PRIOR

- (CN) PBOC to inject combined CNY120B v CNY290B prior in 7-day, 14-day and 28-day reverse repos

- (AU) Australia sells A$400M in 3.75% 2037 bonds; avg yield 3.0158%; bid-to-cover 2.96x

- (KR) South Korea MOF sells 10-yr bonds; avg yield 2.170%

 

Asia equities/Notables/movers

Hong Kong

- Chevalier International Holdings (25) +3.6%; Issues positive profit alert for FY17

- Yuan Heng (332) -1.5%; Issues profit warning, citing stiff market competition

- Man Wah (1999) -2.6%; Comments on Muddy Waters report, says it stands by the 2017 annual report

- Wanjia (401) -2.9%; Reports FY17 Net loss HK$25.8M v loss HK$13.8M y/y, Rev HK$985.9M v HK$1.32B y/y

Australia

- AWE Lted (AWE) +9.6%; Reports primary and secondary targets were intersected at Waitsia

- Australian Finance Group (AFG) +7.9%; Guides FY17 Net A$37.0-37.8M v A$26Me

- ANZ (ANZ) +0.8%; Said to value its Wealth unit at about A$5B - Australian press

Japan

- Toshiba (6502) +2.7%; Expected to finalize sale of chip unit to Bain-led group - Japanese Press

- NEC (6701) +2.1%; Guides Q1 Op profit ¥100B v loss ¥29.9B y/y - Japanese Press