Equities mixed as investors assess Portugal contagion risks

Economic Data

- (AU) AUSTRALIA MAY HOME LOANS M/M: 0.0% V -0.5%E; INVESTMENT LENDING: -0.9% V +1.3% PRIOR; OWNER-OCCUPIED LOAN VALUE: -0.7% V +1.3% PRIOR

- (NZ) NEW ZEALAND JUN FOOD PRICES M/M: 1.4% (1-year high) V 0.6% PRIOR

- (NZ) NEW ZEALAND JUN NON-RESIDENT BOND HOLDINGS: 64.2% V 64.6% PRIOR

- (PE) PERU CENTRAL BANK CUTS REFERENCE RATE BY 25 BPS TO 3.75% (vs EXPECTED HOLD AT 4.00%)

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.3%, S&P/ASX +0.5%, Kospi -0.5%, Shanghai Composite +0.5%, Hang Seng +0.2%, Sept S&P500 +0.1% at 1,958

Commodities/Fixed Income/Currencies

- Aug gold flat at $1,339, Aug crude oil flat at $102.91/brl, Sept Copper flat at $3.27/lb

- GLD: SPDR Gold Trust ETF daily holdings falls 0.2 tonnes to 800.1 tonnes (first decline since June 17th)

- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB, ¥100B in 10-25yr JGB, ¥30B in JGB with maturity over 25-yr as well as ¥3T in T-bills

- (AU) Australia MoF (AOFM) sells A$500M in 3.25% bonds due 2018; Avg yield: 2.8022%; Bid-to-cover: 4.61x

- Weekly Fed Balance Sheet Total Assets Week ending July 9th: $4.38T v $4.38T prior; Reserve Bank Credit: $4.34T v $4.33T prior; M1 y/y change: 10.9% (10-month high) v 10.7% w/w; M2 y/y change: 6.4% (7-month high) v 6.3% w/w

Market Focal Points/Key Themes

- Cautious sentiment remains prevalent in the final trading session of the week, with turmoil in Portugal adding to valuation concerns. The yield on the Portuguese 10-year bond spiked over 20bps (up for the 4th session) after Banco Espirito Santo SA suspended trading in its shares due to a missed debt payment. Portugal central bank said it can avoid contagion risks, while a separate press report stated BES is defending itself by announcing it has a €2.1B capital buffer above minimum Common Equity Tier 1 threshold.

- In his first address since being confirmed as the Fed vice chair, Fisher spoke on financial reform, stating it may be appropriate for the Fed to raise big bank capital surcharges and offering support for stress tests and tighter capital rules. In the Q/A segment, he noted he does not think US faces serious asset price problems, which could potentially diminish market perception of Fisher being much more hawkish than Fed chair Yellen.

- Australia's 3rd biggest iron ore miner Fortescue announced Q4 shipments of 38.7Mt. This is up from 31.5Mt in Q3, however the final FY volume of 124.2Mt is below the most recent target of 127Mt. FMG shares were down nearly 1% in Sydney. In Tokyo, Canon started higher by over 3% after a Nikkei report that it would post a 10% increase in Q2 op profit - a 5th consecutive quarter of rising profitability.

Equities

US markets:

- JOEZ: Reports Q2 $0.01 v -$0.02e, R$48.2M v $49.0Me; +15.5% afterhours

- CUDA: Reports Q1 $0.07 v $0.03e, R$66.2M v $64.2Me; Guides Q2 $0.03-0.04 v $0.03e, R$66-67M v $64.4Me; Guides FY15 $0.14-0.18 v $0.14e, R$270-274M v $270Me - slides; +1.5% afterhours

- CVX: Issues interim Q2 update: Earnings to be higher than Q1 (implies >$2.36 v $2.78e); +0.2% afterhours

- GPS: Reports June SSS -2% v -0.8%e; -1.3% afterhours

- PSMT: Reports Q3 $0.70 v $0.70e, R$615M v $626Me; -4.4% afterhours

- RCII: Reports prelim Q2 $0.36-0.38 (Ex $0.05 restructure charge) v $0.49e, R$773M v $788Me; launches rent-to-own smartphone offering; -11.4% afterhours

- BABA: May start IPO roadshow as early as the end of July - financial press

Notable movers by sector:

- Consumer Discretionary: Fast Retailing 9983.JP -0.8% (Q3 results); Anhui Jianghuai Automobile 600418.CN +10.0% (announces asset restructure)

- Financials: Sinolink Securities 600109.CN +1.9% (H1 guidance)

- Materials: Sichuan Shuangma Cement 000935.CN +3.3% (H1 guidance); FMG.AU -0.6% (Q4 shipment results)

- Energy: Datang International Power Generation 991.HK -1.0% (H1 power generation results); Roc Oil ROC.AU +4.0% (received 2nd proposal)

- Technology: Canon 7751.JP +2.5% (speculation on Q2 results); Unilumin Group 300232.CN +10.0% (H1 guidance); Pegatron 4938.TW +2.5% (June results); Taiwan Semiconductor 2330.TW +1.9% (press speculation on cooperation with Apple on processor development)