EM ASIA CREDIT: China Real Estate: Possible Real estate support
"*CHINA PROPERTY STOCK GAUGE SURGES BY AS MUCH AS 11%" - BBG
According to Bloomberg there are reports (unverified) of a high level government meeting to be held next week on measures to support the real estate sector. Positive bias for spreads if confirmed.
There are no details for now on the types of support that maybe forthcoming or whether it would be aimed at specific companies or more broadly at the sector.
Equity markets are reacting positively to the report, and in credit we note that Vanke is around 1pt higher.
As we can see in the chart below, both Vanke and Longfor are trading at the YTD highs, with valuations already assuming ongoing State support for the sector.
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SWEDEN: Solid Consumption and Production In April, But Pinch Of Salt Needed
Swedish April GDP rose 0.4% M/M, which may come as somewhat of a relief after the weaker-than-expected Q1 GDP print (-0.2% Q/Q). However, as always the monthly activity data should be taken with a pinch of salt – it is not often a good predictor of actual GDP outcomes and is prone to revisions. More focus should be placed on the Riksbank’s Business Survey at 0830BST/0930CET today.
- Despite these caveats, household consumption and business production rose solidly in April.
- Consumption rose 0.5% M/M (vs -0.1% prior), corresponding to a 0.6% 3m/3m rate (vs 0.5% prior). There was monthly growth in food and beverage sales, furniture and household equipment, transport and recreation. Meanwhile, clothing and footwear, housing, electricity, gas and heating and telecommunications all fell on the month. However, the monthly household indicator appears to have overstated actually quarterly growth in recent months.
- Private sector production rose a strong 2.3% M/M (VS -0.7% prior), with over 3% monthly growth in industry and services production. Construction was slightly negative.
USDCAD TECHS: Gains Considered Corrective
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4111 High Apr 4
- RES 2: 1.3901/1.4016 50-day EMA / High May 12 and 13
- RES 1: 1.3782 20-day EMA
- PRICE: 1.3715 @ 08:00 BST Jun 10
- SUP 1: 1.3611 Low Oct 8 2024
- SUP 2: 1.3579 1.500 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 3: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3473 Low Oct 2 2024
The trend structure in USDCAD remains bearish and short-term gains are considered corrective. Support at 1.3686, the May 26 low and a bear trigger, has recently been cleared. This confirms a resumption of the downtrend and maintains the price sequence of lower lows and lower highs. Sights are on 1.3579 next, a Fibonacci projection. Resistance at the 50-day EMA is at 1.3901 - a key level. The 20-day EMA is at 1.3782.
EQUITY TECHS: Bullish Trend Sequence
- RES 4: 0.6603 High Nov 11 ‘24
- RES 3: 0.6582 High Nov 12 ‘24
- RES 2: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 1: 0.6538 High June 5
- PRICE: 0.6503 @ 07:55 BST Jun 10
- SUP 1: 0.6458/6408 20- and 50-day EMA values
- SUP 2: 0.6357 Low May 12
- SUP 3: 0.6275 Low Apr 14
- SUP 4: 0.6181 Low Apr 11
The trend condition in AUDUSD is unchanged, it remains bullish and the pair continues to trade closer to its recent highs. Key support lies at 0.6408, the 50-day EMA. A clear break of this average is required to highlight a potential short-term reversal. The pair has recently cleared a key short-term resistance at 0.6515, the May 7 high, confirming a resumption of the uptrend. Sights are on 0.6550, a Fibonacci retracement.
