With European markets closed across the continent on Monday as the Easter holiday continues, overnight Asia was busy with the Shanghai Composite letting off some steam, and closing down 0.7% at session lows on concerns the Shanghai and Shenzhen home bubble have been popped prematurely by the politburo.
Japan was a different story with the Yen sliding following a report by the Sankei newspaper that Abe will announce in May his intention to delay the planned April 2017 sales tax hike from 8% to 10%, coupled with additional reports that Japan will unveil a major fiscal stimulus (and just on Friday Abe said he is “not thinking at all about supplemental budget” at this time).
This turned out to be nothing but the latest Japanese market trial balloon, because hours after the report, Abe reiterated that Japan’s sales tax will indeed be raised as scheduled in April 2017 “barring a crisis like the one caused by the collapse of Lehman Brothers”, while cabinet secretary Suga said there is no truth in the report that the government has decided to delay the sales tax hike. By the time these denials hit, however, the FX momentum algos were engaged, and the USDJPY jumped, leading to seven straight days of Yen losses, the longest losing streak since October 23 and in the process sending the Nikkei higher by 0.8%.
And thanks to the low volume, illiquid futures market, U.S. equity index futures followed the Japanese rebound, with the E-Mini rising 0.3% to 2034.5 in the thin premarket trade. Dollar falls slightly, reversing earlier gains, while gold also declines. Oil rises for first day in 3. Traders are pricing in a 6% chance of a U.S. rate increase in April, and about 38% probability of a boost in June, according to Fed funds futures. Increasingly many strategists are concerned that the market is underplaying the risk of a June rate cut and as a result odds will have to rise substantially in the coming weeks so the Fed will avoid a “surprise.”
Markets Snapshot
- S&P 500 futures up 0.3% to 2035
- Stoxx 600 closed
- MSCI Asia Pacific up less than 0.1% to 128
- Nikkei 225 up 0.8% to 17134
- Hang Seng closed
- Shanghai Composite down 0.7% to 2958
- S&P/ASX 200 closed
- US 10-yr yield up less than 1bp to 1.91%
- Dollar Index down 0.06% to 96.22
- WTI Crude futures up 1.1% to $39.88
- Brent Futures up 0.8% to $40.78
- Gold spot down less than 0.1% to $1,216
- Silver spot up 0.3% to $15.23
Top Global News
- Japan’s NTT to Acquire Dell Units for $3.055b: NTT Data to acquire Dell Systems Corp. and other units related to IT services.
- Sanders Says He’s Seized Momentum After Crushing Caucus Wins: Sanders received 73% in Washington state, day’s biggest delegate prize, 70% in Hawaii, 82% in Alaska.
- Bull Market in U.S. Stocks Goes AWOL as History Rewards Patience: S&P 500 Index hasn’t seen a new high in 10 months, longest streak outside a bear market since 1995.
- Avon Activists Near Deal to Call Off Proxy Fight: WSJ: Deal would allow Barington Capital, NuOrion Partners to approve new independent director.
- Third Point Warns Seven & I Against Nepotism Deciding CEO: Seven & i CEO Toshifumi Suzuki, 83, is having chronic health problems; investors fear he may try to name his son, Yasuhiro Suzuki, to lead Seven?Eleven Japan, eventually become president of Seven & i, Loeb wrote.
- Microsoft Said to Meet With Possible Yahoo Bidders Seeking Funds: MSFT met with possible bidders for Yahoo! such as Verizon, private equity firms, who may seek backing from the software maker for their offers.
- Fed’s Williams Sees ’Huge Impact’ on U.S. From China, Brazil: “The real issue is the global financial and economic developments. There’s uncertainty about what’s happening around the world and how that feeds back to the dollar and the U.S. economy,” Williams, who doesn’t vote on monetary policy this year, told CNBC.
- ‘Batman v Superman’ Soars in Boost to Warner’s DC Franchise: Film opened with weekend sales of $170.1m in North American theaters, meeting estimates, giving studio a new foundation to build on.
- Qlik Tech Said to Hire Morgan Stanley for Possible Sale: Reuters: Co. has begun exploring strategic alternatives.
- Oil Halts Two-Day Slide After U.S. Rig Count Resumes Decline: Rigs targeting oil in the U.S. fell by 15 to 372, according to Baker Hughes.
Looking quickly at regional markets, we start in Asia where equities traded mixed with Topix, Nikkei 400 outperforming and CSI 300, Sensex 30 underperforming. As noted earlier the Chinese weakness was led by concerned about the potential bursting of the housing bubble: “developers are facing some headwinds as these measures are likely to cause immediate negative impact on the demand side,” said Wu Kan, fund manager at JK Life Insurance in Shanghai. “The market is in the stage of building a bottom so we’ll see lots of ups and downs.” 8 out of 10 sectors rise with health care, utilities outperforming and finance, energy underperforming.
Over the weekend, we got the latest China Jan.-Feb. Industrial Profit data, which rose 4.8% Y/y while China Feb. Diesel Stocks Increased 38.26% M/m; Shanghai New Home Sales Rise 48% on Week, Uwin Says.
Asian Top News
- Online Property Companies Soar on China’s Real Estate Recovery: Leju’s ADRs jump most on Bloomberg China-US Equity Index
- Woes Descend on Japanese IPOs as Stocks Tank on First Day: 6 of 21 cos. this year opened below their offer price
- Amazon to Flipkart Clash in India’s Nascent E-Commerce Market: Battlefield challenges accelerate pace of innovation
- Indian Paradox: As Economy Soars Modi Reforms Face Big Headwinds: IMF warns prosperity at risk without structural reforms
- Pakistan Vows to Hunt Terrorists After Easter Sunday Carnage: At least 65 people killed, death toll may rise further
European markets are closed today due to the Easter holiday.
European Top News
- Belgium Conducts More Raids in Aftermath of Terror Attacks: Authorities conducted 13 raids in Belgium on Sunday, detaining nine people as part of their efforts to prevent further terrorist attacks.
- Abengoa Wins Support of Creditors for Extension: Europa Press: Co. lined up enough support from creditors to ask court in Seville for an extension of several months in process of negotiation of financial restructuring; Abengoa Presents Standstill Request, Has 75% Creditor Support
FX markets are in consolidation mode for the most part, with the run up to US payrolls on Friday a usually quiet affair. This should keep many specs on the side-lines for now, but there looks to be some respite for GBP despite the uncertainty over the Brexit vote overwhelmingly restrictive. Nevertheless, Cable has recovered towards 1.4200, but any move through the figure should find plenty of sellers from 1.4225-50. EUR/GBP should find some support from the mid .7800’s also, though larger support not until the mid-.7700’s.
USD/JPY has made some decent gains from the mid 111.00’s, but will start to find better offers ahead of 114.00, with 113.65¬70 capping the Asian session today. The commodity currencies are still looking heavy, but with Oil up off the lows, USD/CAD is threatening a return through 1.3200. All very tight so far, with much of Europe away, but North American players may take advantage of thin markets.
In Commodities, the energy complex was in a consolidation mode amid holiday thinned trading volumes and ahead of the eagerly awaited meeting by oil producing countries on April 17th to discuss the output freeze plan.
Bulletin Headline Summary from Bloomberg
- Treasuries fall in overnight trading while European markets closed for holiday and Asian equity markets mixed; week’s U.S. auctions begin today with $26b 2Y notes, WI yield 0.87%, compares with 0.752% awarded in Feb., was 21st straight 2Y auction to stop through or even with WI yield at bidding deadline.
- Hedge funds are crowding into U.S. Treasuries, and that has bond traders bracing for more turbulence. While the Federal Reserve doesn’t break out hedge-fund ownership, a group seen as a proxy increased its holdings to a record $1.27 trillion
- Japanese primary dealers say negative bond yields are here to stay in 2016; bond investors are still trying to adjust to the conditions that have turned yields on 70% of the market negative; Japanese banks are sitting on profits made last year and can withstand the impact of negative rates, according to the Bank of Japan
- Gold has been thrown onto the defensive by a resurgent dollar, sinking to the lowest in more than a month as the U.S. currency’s rally hurts the allure of the metal that’s been the best-performing commodity of 2016
- Oil’s rebound to about $40 a barrel means some investors are nursing losses after betting that Saudi Arabia would abandon its three-decade-old currency peg
- It’s been barely a month since investors first started betting on a copper rally, and they’re already on the retreat. Money managers cut their wagers on price gains for a second week, pulling back just before futures capped the worst slump in a month
- Terrorism probes advanced across Europe in the wake of last week’s deadly bombings in Brussels, with suspects arrested in Italy and the Netherlands, and Belgium carrying out police raids in several areas
- Sovereign 10Y bond yields mostly unchanged; European equity markets closed, Asian mixed; U.S. equity-index futures rise. WTI crude oil higher; gold and copper fall
US Event Calendar
- 8:30am: Advance Goods Trade Balance, Feb., est. -$62.2b (prior -$62.228b)
- 8:30am: Personal Income, Feb., est. 0.1% (prior 0.5%)
- Personal Spending, Feb., est. 0.1% (prior 0.5%)
- Real Personal Spending, Feb., est. 0.1% (prior 0.4%)
- PCE Deflator m/m, Feb., est. -0.1% (prior 0.1%)
- PCE Deflator y/y, Feb., est. 1% (prior 1.3%)
- PCE Core m/m, Feb., est. 0.2% (prior 0.3%)
- PCE Core y/y, Feb., est. 1.8% (prior 1.7%)
- 10:00am Pending Home Sales m/m, Feb., est. 1.1% (prior -2.5%)
- Pending Home Sales y/y, Feb., est. -0.5% (prior -0.9%)
- 10:30am: Dallas Fed Mfg Activity, March, est. -26 (prior -31.8)
- 11:00am: U.S. to announce plans for auction of 4W bills
- 11:30am: U.S. to sell $31b 3M bills, $26b 6M bills
- 1:00pm: U.S. to sell $26b 2Y bills
Запись Futures Rise In Thin Trading On Back Of Yen Weakness; Europe Closed впервые появилась crude-oil.top.