Economic Data
(CN) CHINA MAY INDUSTRIAL PROFITS YTD Y/Y: -2.4% V -1.6% PRIOR (3rd consecutive decline); MAY y/y: -5.3%
(JP) JAPAN MAY PRELIMINARY INDUSTRIAL PRODUCTION M/M: -3.1% V -2.8%E (largest decline in 8 months); Y/Y: 6.2% V 6.7%E
(NZ) NEW ZEALAND MAY BUILDING PERMITS M/M: -7.1% V 3.0%E (2nd consecutive decline)
(JP) JAPAN MAY OVERALL HOUSEHOLD SPENDING Y/Y: 4.0% V 2.5%E (26-month high)
(JP) JAPAN JUN TOKYO CPI Y/Y: -0.6% V -0.5%E; TOKYO CORE CPI Y/Y: -0.6% V -0.7%E
(JP) JAPAN MAY NATIONAL CPI Y/Y: 0.2% V 0.2%E; NATIONAL CORE CPI Y/Y: -0.1% V 0.0%E (first y/y decline in 4 months)
(JP) JAPAN MAY UNEMPLOYMENT RATE: 4.4% V 4.5%E (8-month low); JOB-TO-APPLICANT RATIO: 0.81 V 0.8E
(JP) JAPAN JUN MARKIT/JMMA MANUFACTURING PMI: 49.9 V 50.7 PRIOR (1st contraction since Nov 2011)
(UK) UK JUN GFK CONSUMER CONFIDENCE: -29 V -29E
(KR) SOUTH KOREA MAY CYCLICAL LEADING INDEX: -0.4% V 0.0% PRIOR
(KR) SOUTH KOREA MAY INDUSTRIAL PRODUCTION M/M: 1.1% V 0.3%E; Y/Y: 2.6% V 0.4%E
(JP) JAPAN MAY CONSTRUCTION ORDERS Y/Y: -0.9% V -16.2% PRIOR; HOUSING STARTS Y/Y: 9.3% V 10.3% PRIOR
(JP) JAPAN MAY VEHICLE PRODUCTION Y/Y: 59.5% V 173.8% PRIOR
(NZ) NEW ZEALAND MAY MONEY SUPPLY M3 Y/Y: 6.3% V 5.5% PRIOR
(SG) SINGAPORE MAY MONEY SUPPLY M1 Y/Y: 7.4% V 7.8% PRIOR; M2 Y/Y: 6.7% V 6.4% PRIOR
(SG) SINGAPORE MAY BANK LOANS & ADVANCES Y/Y: 22.5% V 24.0% PRIOR
(SG) SINGAPORE MAY CREDIT CARD BAD DEBTS (S$): 16.4M V 18.0M PRIOR; CREDIT CARD BILLINGS: 2.25B V 3.0B PRIOR
(AU) AUSTRALIA MAY PRIVATE SECTOR CREDIT M/M: 0.5% V 0.4%E; Y/Y: 4.0% V 3.9%E
(JP) JAPAN MAY LOANS & DISCOUNTS CORPORATE M/M: -0.5% V -0.6% PRIOR
(VN) Vietnam Q2 GDP YTD y/y: 4.4% v 4.3%e
Markets Snapshot (as of 04:30GMT)
Nikkei225 +1.0%
S&P/ASX +1.2%
Kospi +1.2%
Taiwan's Taiex +1.4%
Singapore Straits Times Index +1.5%
Shanghai Composite +0.7%
Hang Seng +1.9%
Sept S&P Futures 1.0% at 1,336
Aug gold +1.0% at $1,565/oz
Aug Crude oil +2.1% at $79.27/brl
Overview/Top Headlines
Asian markets rallied on comments from the highly anticipated EU Summit. Round one of the meeting saw short term measures well established to bring down sovereign borrowing costs and the establishment of a single supervisory body by the end of the year for EU banks. The group plans to delve into longer term measures on day two.
Interestingly German Chancellor Merkel cancelled her press conference after the meeting let out and made only generic comments leaving the dinner meeting in the wee hours of the morning. Van Rompuy indicated that the EU leaders agreed on jobs and growth agenda valued at €120-130B, includes 'project bonds'; had good discussions on budget; will discuss financial stability later today. As expected the group agreed to provide €10B to EIB. He also said that ESM Spain banks loan will not have senior credit status.
Eurozone finance officials proposed that EFSF and ESM are used in a flexible manner to stabilize markets; Involve a single supervisory banking authority in euro zone involving ECB. Once it is set up, an ESM rescue fund should be allowed to recapitalize banks directly with conditionality.
Both Italy and Spain have said they will not approve growth pact until agreement reached on bond buying proposal. Italy was surprised over earlier comments from Van Rompuy and continue to demand more efforts to lower Italian govt bond yield. France President Hollande said growth measures are not enough; need stability policy to prop up countries with high spreads. France will not endorse the fiscal pact at this time; To await until the end of the Summit before approving the fiscal pact.
Markets surged on the after dinner comments, EUR/USD extended above $1.26 gaining 180 pips, EUR/JPY rose over 140 pips testing over ¥100 level, while Sept S&P500 futures rise 13 handles to 1,335. The Greenback weakened against the emerging market currencies in addition to the majors. AUD rose over 100 pips to $1.0170 before retreating off its highs. With a risk on attitude commodities also traded higher copper up 1.6% to $3.37, silver +2% to $26.78, corn and wheat also were well into positive territory.
PBoC Gov Zhou reiterated China will maintain prudent monetary policy with fine tuning when necessary; China will optimize lending to support the real economy.
Speakers/Geopolitical/In the press
(CN) China Securities Regulatory Commission (CSRC) Chairman Guo: China slowdown this year is very reasonable and normal - financial press
(KR) South Korea truckers union has reached an agreement on a fare increase; To end week-long strike - Korean press
(CN) Turnover at China's top 4 realtors Poly Real Estate, China Vanke, Evergrande and China Overseas Holdings in May rose above CNY10B - China Daily
(JP) Former DPJ party leader Ozawa would leave the party if consumption tax bill passes the upper house - Japan press
(EU) EU Official Wieser: Over the medium term Spain bank aid can be removed from sovereign debt burden for Spain
Equities
BYD, 1211.HK: To lower workers' salaries because of sharply lower profits and weak market demand - China Daily
LYC.AU: Has reached an agreement with Malaysia to transport radio active waste back to Australia
BOQ.AU: Suspends plans to sell off A$230M in bad property loans because of low offers - AFR
DJS.AU: UK's EB Private Equity offers A$1.65B for the company
Suzuki Motor, 7269.JP: Looking to increase annual capital investment by over 60%, spending ¥200B on avg through FY16/17 - Nikkei News
NSANY: To hire another 1K workers at its plant in Mississippi, as part of expanded production in the US - financial press
US Equities
NOW: Prices 11.65M share IPO at $18/shr above the $15-17/shr range given
UAL: Guides Q2 ASM -0.6% y/y, PRASM +3.2-4.2%; Sees Q2 cargo rev $1.14-1.19B - filing; -1.0% after hours
RIMM: Reports Q1 -$0.37 (adj) v -$0.05e, R$2.81B v $3.1Be; -13.9% after hours
NKE: Reports Q4 $1.17 v $1.37e, R$6.47B v $6.5Be; -12.5% after hours
ACN: Reports Q3 $1.03 v $0.99e, R$7.64B (before reimbursements) v $7.2Be; -3.0% after hours
WLT: Guides Q2 production to be solid and inline with guidance; affirms FY12 production guidance; -2.4% after hours