Jul 02 ,2024
Synopsis:
Asia equities poised for a firmer open Wednesday. Futures in Japan, Hong Kong and Australia traded mildly higher. US contracts edged lower following broad-based main session gains in a choppy session. Lighter than usual volumes expected to continue this week, shortened by the US Independence Day holiday Thursday (markets close early Wednesday). Tech leads were positive with Nasdaq outperforming S&P 500 and SOX up sharply. However, Nvidia (NVDA) fell sharply with other chip stocks generally mixed. Golden Dragon China index also higher. Virtually all Japan ADRs logged gains. Treasuries were firmer with some curve flattening. Dollar index down 0.2%. Gold finished down 0.2%. Bitcoin futures down 1.9%. WTI crude ended down 0.7%.
Fed Chair Powell highlighted progress on inflation and two-sided risks to Fed's goals. Comments seen generally consistent with expectations of rate cuts starting in September. Record-high close in S&P 500 above the 5,500 mark stimulated debate over sustainability. Outsized Big Tech contributions remain a notable characteristic this year and boosted by AI boom, though broader optimism supported by economic soft landing, earnings growth and positive skew in near-term seasonality. Risk of Trump election victory seen as a key emerging factor in the recent elevation in US yields, encouraging curve steepeners.
Sovereign bonds similarly a notable theme in Asia. Consistent with press leaks, PBOC announced plans to commence bond borrowing operations with primary dealers to sell in the secondary market, aiming to guide long yields higher and steepen the yield curve. Yesterday's 10-year JGB auction was seen as a key test of market stability after BOJ signaled purchase reductions plans to be unveiled at this month's MPM. Benign result suggested policy normalization trajectory remains on track as market discussions look ahead to prospects for a meaningful balance sheet runoff. With USD/JPY stabilizing in the 161 range, press noted MOF rhetoric seemingly softened after latest remarks from Finance Minister Suzuki omitted his usual readiness to take action.
Regional macro developments remain light with global attention turning to US payrolls Friday. China Caixin services PMI due for release today following mild deceleration in the official services sub-index. In contrast to clear expansion indicated by Caixin PMIs, subdued momentum in the official series generally consistent with broad views that solid Q1 GDP growth was skewed by outsized strength in Jan-Feb and tailed off by March, which was seen as a more accurate gauge of underlying growth. While Q2 GDP sequential growth projected to have slowed markedly, consensus 2024 forecast has edged up to 5%, matching the government target, following recent upside surprises in monthly export data.
Pre-open Company News:
300724.CH -- Shenzhen S.C New Energy Technology guides H1 net income attributable CNY1.16-1.35B vs year-ago CNY751.5M
500188.IN -- Hindustan Zinc releases business responsibility and sustainability report
600089.CH -- TBEA Co. completes listing of new energy REIT on Shanghai Stock Exchange to raise CNY1.17B
600521.CH -- FDA issues temporary approval to Zhejiang Huahai Pharmaceutical's ANDA of Rivaroxaban tablet to treat blood clots
2202.HK -- China Vanke reports June contracted sales CNY25.13B;StreetAccount notes year-ago CNY36.14B
600340.CH -- China Fortune Land Development chairman Wang Wenxue to buy CNY10-11M of shares on market within six months
AIR.FP -- Cebu Pacific signs binding MoU to buy up to 152 A321neos, list price $24B (PHP1.4T/€22.39B)
533274.IN -- Prestige Estates Projects upgraded to buy from reduce at YES Securities
1405.HK -- DPC Dash initiated overweight at China Merchants Securities (China) (timing uncertain)
600023.CH -- Zhejiang Zheneng Electric Power initiated buy at Guosheng Securities (timing uncertain)
6436.JP -- Amano Corp initiated buy at Nomura
300012.CH -- Centre Testing International Group launches up to CNY50.5M on-market share buyback at up to CNY16.83/share to run for 12 months
6181.HK -- Laopu Gold initiated strong recommend at China Merchants Securities (China) (timing uncertain)
On Deck:
Japan:
Earnings:
ABC-MART (2670.JP), ASKUL Corp (2678.JP)
Australia:
Economic:
11:30 AEST: Retail Sales SA M/M (Preliminary); consensus +0.3%
11:30 AEST: Building Approvals SA M/M; consensus +0.5%
Market Data:
Gold (Aug 24): +$5.80 or +0.25% to $2339.20
WTI Crude (Aug 24): +$0.23 or +0.28% to $83.04
$-¥: (0.02) or (0.01%) to 161.5040
$-KRW: +2.16 or +0.16% to 1385.6100
A$-$: +0.00 or +0.10% to 0.6668
$-INR: (0.05) or (0.06%) to 83.4635
$-CNY: +0.00 or +0.02% to 7.2698
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