New Zealand business confidence slumps

Asian Market Update: New Zealand business confidence slumps; Japan inflation slows amid softer exports and consumption

Economic Data

- (NZ) NEW ZEALAND JULY ANZ ACTIVITY OUTLOOK: 45.1 V 45.8 PRIOR; ANZ BUSINESS CONFIDENCE: 39.7 (14-month low; 5th consecutive decline) V 42.8 PRIOR

- (JP) JAPAN JULY TOKYO CPI Y/Y: 2.8% V 2.8%E; CPI EX FRESH FOOD Y/Y: 2.8% V 2.7%E

- (JP) JAPAN JUN NATIONAL CPI Y/Y: 3.6% V 3.5%E; CPI EX FRESH FOOD Y/Y: 3.3% (first slower CPI in 9 months) V 3.3%E

- (JP) JAPAN JUN CORPORATE SERVICE PRICE INDEX Y/Y: 3.6% (11th consecutive rise) V 3.6E

- (UK) UK JUL HOMETRACK HOUSING SURVEY M/M: 0.1% V 0.3% PRIOR; Y/Y: 5.8% V 6.0% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.6%, S&P/ASX -0.3%, Kospi +0.2%, Shanghai Composite +0.4%, Hang Seng -0.1%, Sept S&P500 -0.1% at 1,979

Commodities/Fixed Income/Currencies

- Aug gold +0.1% at $1,292, Sept crude oil -0.1% at $101.98/brl, Sept Copper -0.3% at $3.25/lb

- GLD: SPDR Gold Trust ETF daily holdings fall 3.6 tonnes to 801.8 tonnes

- (JP) BOJ offers to buy ¥400B in CP and ¥3T in T-bills

- (AU) Australia MoF (AOFM) sells A$600M in 3.25% bonds due 2024; Avg yield: 3.528%; Bid-to-cover: 2.86x

- (US) Weekly Fed Balance Sheet Total Assets Week ending July 23rd: $4.41T v $4.40T prior; Reserve Bank Credit: $4.37T v $4.36T prior; M1 y/y change: 11.8% v 11.1% w/w; M2 y/y change: 6.8% v 6.6% w/w

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1597 v 6.1579 prior setting (weakest setting since July 8th, 3rd consecutive weaker setting)

Market Focal Points/Key Themes

- Another set of disappointing numbers from Japan is further indicative of the rising possibility of Abenomics hitting the skids. Following a 2nd consecutive drop in exports overnight, the trend of steady growth in CPI also appears to be waning, adding to pressure on the BOJ to take more action to meet its targets. Analysts noted that Japanese yen has not been weak enough to spur more overseas demand, and consumption still remains hamstrung by the higher sales tax. Moreover, some of the more pessimistic watchers note that the 2nd half of the year will be just as challenging, as wage inflation has not fully discounted the rise in consumer prices.

- New Zealand remained in focus among currency traders after yesterday's crushing blow on the kiwi by RBNZ Gov Wheeler. Today's July business confidence survey from ANZ justified the caution falling to a 14-month low, as economists pointed to a big drop in commodity prices and more contained housing having limited impact on the elevated NZD. Earlier, Westpac chief economist Stephens said NZD is expected to fall over the next few weeks by a substantial amount as markets anticipate a more proactive central bank that is growing much more intollerant of high exchange rate. NZD briefly fell below $0.8560 early in the session - a 6-week low.

- Among some of the more notable Asian companies reporting quarterly earnings, BIDU was up nearly 7% in the after-market following a solid beat on the top and bottom line. Q3 sales guidance was also very impressive at $2.16-2.22B v $2.0Be, as online marketing revenue rose nearly 60%. On a conference call, Baidu CFO said the Mobile segment has now achieved 70M daily users, and cloud storage activity has risen by over 30% in just the last quarter. Korean automakers are unimpressive, with Kia posting a 32% slide in operating profit due to the recent strength in KRW. Shares were still slightly higher however, as company announced it intends to lower costs and lift its high-margin premium cars to help reduce currency exposure.

Equities

US markets:

- LOGM: Reports Q2 $0.29 v $0.24e, R$55.0M v $51.7Me; +12.1% afterhours

- ECHO: Reports Q2 $0.22 v $0.18e, R$305.1M v $275Me; +10.8% afterhours

- BIDU: Reports Q2 $1.63 v $1.24e, R$1.93B v $1.80Be; CEO Robin Li: Mobile Baidu now has 70M Daily Active Users (DAUs) - conf call; +6.2% afterhours

- DECK: Reports Q1 -$1.07 v -$1.31e, R$212M v $191Me; raises outlook; +5.6% afterhours

- RFMD: Reports Q1 $0.24 v $0.17e, R$316.3M v $305Me; +4.9% afterhours

- CERN: Reports Q2 $0.40 v $0.40e, R$852M v $810Me, Raises FY14 $1.64-1.67 v $1.65e; +2.9% afterhours

- UHS: Reports Q2 $1.51 v $1.25e, R$2.02B v $1.95Be; Board approves share repurchase for up to $400M (4.1% of market cap), Raises FY14 guidance by 15-16%; +2.1% afterhours

- IM: Reports Q2 $0.54 v $0.53e, R$10.9B v $10.6Be, Op Margin 0.90% v 1.10% y/y; -1.0% afterhours

- FLEX: Reports Q1 $0.25 v $0.22e, R$6.6B v $6.27Be, Guides Q2 $0.22-0.26 v $0.25e, R$6.2-6.6B v $6.52Be; -1.7% afterhours

- SBUX: Reports Q3 $0.67 v $0.66e, R$4.15B v $4.16Be; Exec: Sees long-term EPS growth of about 15-20%; -2.5% afterhours

- V: Reports Q3 $2.17 v $2.09e, R$3.16B v $3.16Be, Guides FY14 EPS +17.5-18.5%, Rev +9-10%, FX impact 2% (prior EPS mid to high teens, Rev growth up in low double digits, FX impact -2%); -3.0% afterhours

- KLAC: Reports Q4 $0.80 (adj) v $0.90e, R$734M v $749Me; Guides Q1 $0.34-0.54 v $0.90e, R$590-650M v $746Me - conf call; -4.1% afterhours

- P: Reports Q2 $0.04 v $0.03e, R$219M v $219Me; -10.5% afterhours

- AMZN: Reports Q2 -$0.27 v -$0.13e, R$19.3B v $19.3Be; CFO: Discount pricing decisions in the US is impacting Q3 guidance - conf call; -10.6% afterhours

- MXIM: Reports Q4 $0.43 v $0.46e, R$642M v $650Me; raised dividend 8%; -11.2% afterhours

- WCG: Reports Q2 -$0.07 adj v $0.88e, Rev $1.8B v $3.0Be; Cuts FY14 EPS guidance; -12.8% afterhours

Notable movers by sector:

- Consumer Discretionary: Zhejiang Kaier New Materials 300234.CN +2.9% (H1 guidance); CyberAgent 4751.JP -13.9% (9-month results)

- Financials: AIA Group 1299.HK +1.5% (H1 operating results); Bank of Ningbo 002142.CN +1.3% (shareholder raises stake)

- Materials: Itochu Corp 8001.JP +2.2% (announces share sale, repurchase)

- Industrials: Fanuc 6954.JP +4.0% (Q1 results); IHI Corp 7013.JP +1.9% (press speculation on H1 results); Kia Motors 000270.KR +1.8% (Q2 results); Hyundai Motor 005380.KR -0.4% (Q2 results)

- Technology: Luxshare Precision Industry 002475.CN +3.2% (H1 results); Obic 4684.JP +3.5% (Q1 results); LG Electronics 066570.KR +0.1% (Q2 results)

- Healthcare: Chugai Pharmaceutical 4519.JP +4.9% (H1 results)

- Utilities: China Datang Renewable Power 1798.HK -3.7% (H1 guidance); Oki Electric Industry 6703.JP +5.5% (press speculation on Q1 results)

- Telecom: ZTE Corp 000063.CN +0.9% (exec comments on H1 smartphone shipments)