Markets recover as selling on failed US healthcare bill subsides

US Session Highlights

- (RU) Senate Intel Committee reportedly requests White House aide Jared Kushner to be interviewed regarding prior Russia meeting - press

- (MX) Mexico Central Bank Gov Carstens: if bilateral relations go well, peso could strengthen to levels seen before the US election or even more - press interview

- (QA) Qatar Energy Min: OPEC supply cut deal must be judged over the agreement's full cycle

- (US) MAR DALLAS FED MANUFACTURING ACTIVITY: 16.9 V 22.0E

 

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

- Best Sector in S&P500: Healthcare

- Worst Sector in S&P500: Telecom

- Biggest gainers: HCA +5.2%, UHS +3.4%, BBY +3.0%, VIAB +2.9%, FLS +2.9%

- Biggest losers: FCX -4.7%, FTR -3.4%, HAL -3.3%, KIM -2.6%, SEE -2.5%

- At the close: VIX 12.5 (-0.5 pts); Treasuries: 2-yr 1.27% (+2bps), 10-yr 2.37% (-3bps), 30-yr 2.98% (-2bps)

 

US movers afterhours

- PSIX: Announces strategic investment and collaboration agreement with Weichai America Corp; +47.7% afterhours

- RHT: Reports Q4 $0.61 v $0.61e, R$629M v $619Me; +5.3% afterhours

- DRI: Reports Q3 $1.32 v $1.27e, R$1.88B v $1.86Be (earnings released a day early); Raises FY17 $3.95-4.00 v $3.93e, guides SSS ~1.5%; +3.9% afterhours

- SNX: Reports Q1 $1.82 v $1.66e, R$3.52B v $3.50Be; +2.2% afterhours

- DECK: Red Mountain (3.3% stake) calls on Deckers to explore sale of the company; +1.8% afterhours

- HUN: Guides Q1 adj EBITDA to exceed $274M; provides restart time-line for Pori, Finland Pigment Facility; +0.7% afterhours

 

Politics

- (US) US White House press secretary Spicer: August is potential target date for tax reform, depends on consensus on 'big issues'

- (US) Seven Democratic Senators ask Carl Icahn to explain role in the Trump administration - press

- (US) House Ways & Means Chair Brady (R-TX): not looking to repeal Obamacare taxes via upcoming tax reform legislation

- (US) White House said to consider infrastructure and tax reform as a package deal; Prepared to work with Democrats after feeling burned by Freedom Caucus - Axios

 

Asia Key economic data:

- (KR) SOUTH KOREA Q4 FINAL GDP Q/Q: 0.5% V 0.4%E; Y/Y: 2.4% V 2.3%E

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.8 v 112.0 prior

 

Asia Session Notable Observations, Speakers and Press

- Key Asian equity indices are higher with the exception of the mainland, as market takes note of the rebound on Wall St to much more benign losses relative to the tumble in the morning session. Investors are willing to test a bottom in hopes that the White House has learned its lesson from the healthcare debacle to seek a broader consensus as it moves forward to more economy sensitive tax reform, deregulation, and infrastructure investment. Indeed, an Axios report notes that Trump is prepared to work more with the Democrats after feeling burned by Freedom Caucus while combining tax reform with an infrastructure investment initiative that may be an easier sell to the left. However, POTUS was also active on Twitter late on Monday, claiming that Democrats will come to him to fix healthcare once Obamacare fails

- In FX, JPY was under some early pressure on risk-on flows, with USD/JPY rising about 25pips above 110.80. Other USD majors are consolidating recent greenback selling in narrow ranges with an eye on Tuesday's Consumer Confidence data.

- Asia economic calendar is very light until Friday of this week. Today's only notable data were Q4 GDP figures from South Korea, where final prints rose slightly from prelim levels on smaller decline in construction investment and CAPEX.

- In China, CNY weakened after PBoC set its yuan fix lower for the first time in 5 days. PBoC also skipped its open market operations for the first time in 3 days pledging it will maintain relatively tight liquidity. On that note, Hong Kong earnings season is entering its final stretch with China's top banks on tap for FY16 results.

China

- (CN) China Govt: China continues to face serious challenges in cutting steel overcapacity

- (CN) PBoC said to maintain relatively tight liquidity - Chinese press

- (CN) China Finance Ministry: Jan-Feb profit for China SOEs rose 40.3% y/y to CNY301.9B; Rate of growth rose from 1.7% in 2016 and 14.2% y/y - Chinese press

Japan

- (JP) Former BOJ Chief Economist Momma: BOJ should adopt rate guidance to improve its communication with the market and give clearer signals on the direction of borrowing costs

- (JP) Japan Fin Min Aso: Japan Cabinet asks for smooth enactment of FY17 budget

Korea

- (KR) North Korea said to have conducted another missile engine test last Friday - financial press

 

Asian Equity Indices/Futures (00:30ET)

- Nikkei +1.0%, Hang Seng +0.5%, Shanghai Composite -0.3%, ASX200 +1.2%, Kospi +0.2%

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

 

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

- EUR 1.0855-1.0870; JPY 110.50-110.80; AUD 0.7610-0.7635; NZD 0.7035-0.7050

- Apr Gold -0.1% at $1,255/oz; May Crude Oil +0.5% at $47.98/brl; May Copper -0.3% at $2.63/lb

- SPDR Gold Trust ETF daily holdings rise 2.7 tonnes to 835.3 tonnes

- (CN) PBOC SETS YUAN MID POINT AT 6.8782 V 6.8701 PRIOR; First weaker setting in 5 days

- (CN) PBoC skips open market operations for 3rd straight session; Said to drain ¥70B

- (AU) Australia MoF (AOFM) sells A$150M in 2.0% 2035 inflation-indexed Bonds; avg yield: 1.0930%; bid-to-cover: 5.63x

 

Asia equities/Notables/movers by sector

- Consumer discretionary: 493.HK Gome Electrical Appliances +1.0% (FY16 result); 1055.HK China Southern Airlines -2.2% (cooperation with American Airlines); 3197.JP Skylark Co -4.4% (Bain Capital may sell partial stake); MTR.AU Mantra Group +11.9% (buyout speculation); MYR.AU Myer Holdings -5.0% (block trade)

- Consumer staples: 1610.HK COFCO Meat Holdings +1.7% (FY16 result)

- Financials: 1112.HK Biostime International Holdings +5.2%, 1918.HK Sunac China Holdings +9.4% (annual result)

- Industrials: 822.HK Kai Shui International Holdings +3.3%, 3969.HK China Railway Signal & Communication Corporation -3.0% (FY16 result)

- Technology: 110.HK China Fortune -2.9% (profit warning); 6899.HK Ourgame International Holding -6.0%, 981.HK Semiconductor Manufacturing International Corp +3.6% (FY16 result); 2039.HK China International Marine Containers Group +3.2% (FY16 result)

- Materials: 893.HK China Vanadium Titano-Magnetite Mining -4.6% (FY16 result); SYR.AU Syrah Resources +5.4% (signs MOU)