China PMIs mixed as Asia digests the sharp decline on Wall St

Economic Data

- (CN) CHINA JULY FINAL HSBC MANUFACTURING PMI: 51.7 V 52.0E (18-month high)

- (CN) CHINA JULY MANUFACTURING PMI: 51.7 V 51.4E (5th consecutive rise; highest since Apr 2012)

- (AU) AUSTRALIA Q2 PPI Q/Q: -0.1% V +0.9% PRIOR (1st negative reading in 9 quarters); Y/Y: 2.3% V 2.5% PRIOR

- (AU) AUSTRALIA JUL AIG PERFORMANCE OF MANUFACTURING INDEX: 50.7 V 48.9 PRIOR (first expansion in 9 months)

- (JP) JAPAN JUL FINAL MARKIT/JMMA MANUFACTURING PMI: 50.5 V 50.8 PRELIM

- (KR) SOUTH KOREA JUL TRADE BALANCE: $2.5B V $3.0BE

- (KR) SOUTH KOREA JUL HSBC MANUFACTURING PMI: 49.3 (3rd consecutive contraction; lowest reading since Aug) V 48.4 PRIOR

- (KR) SOUTH KOREA JUL CPI M/M: 0.1% V 0.2%E; Y/Y: 1.6% V 1.7%E

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.3%, S&P/ASX -1.4%, Kospi -0.1%, Shanghai Composite -0.1%, Hang Seng -0.6%, Sept S&P500 +0.3% at 1,930

Commodities/Fixed Income/Currencies

- Dec gold +0.2% at $1,284, Sept crude oil -0.2% at $97.99/brl, Sept Copper flat at $3.23/lb

- (US) National Hurricane Center (NHC): TS Bertha forms in the Atlantic, east of the southern lesser Antilles; TS warning issued

- (JP) BOJ offers to buy ¥110B in JGB with maturity under 1-yr and ¥400B in 5-10yr JGB as well as ¥3T in T-bills

- (AU) Australia MoF (AOFM) sells A$500M in 2018 Bonds; Avg yield: 2.9200%; Bid-to-cover: 3.97x

- (US) Weekly Fed Balance Sheet Total Assets Week ending July 30th: $4.41T v $4.41T prior; M1 y/y change: 11.2% (1-year high) v 11.1% w/w; M2 y/y change: 6.6% v 6.6% w/w

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1681 v 6.1675 prior setting (weakest Yuan setting since Jun 5th, 3rd consecutive weaker setting)

Market Focal Points/Key Themes

- US stocks fell on heavy volume as bullish sentiment soured from the hawkish tinges in the latest Fed statement, lower CPI figure from Europe, and a surprising drop in Chicago PMI. S&P500 index fell 2% - the biggest drop since mid-April - to 1,930 on highest volume in about a month, while the Vix spiked to a 3-month high at about 17 level. Among the notable companies reporting results, Tesla was flat afterhours despite beating estimates and forecasting 100K unit sales in 2015. Extreme high-flyer GoPro cratered by nearly 10% despite topping consensus, but LinkedIn rose 7.5% on a strong beat and raised FY guidance.

- Twin China manufacturing PMIs were identical at 51.7 - the official topping consensus and HSBC Final missing by the same 0.3pct margin. In the official print, new orders component hit its highest level this year to 53.6, with other sectors also improving moderately. NBS researcher noted July demand indicative of rapid growth, but also warned about the risks in the smaller sectors. HSBC final figure was still an 18-month high at 51.7. HSBC economist acknowledged downward revisions in several subindices but still said economy is improving sequentially, expecting the impact of policy stimulus to continue to filter in the coming months.

- As casualties in Gaza mounted amid reports of shelling of another UN refugee center, a 72-hour ceasefire was declared effective 8am local time. Palestinian, Israeli, and US officials are headed to Cairo in hopes of ironing out a more lasting truce, though subsequent reports indicated Abbas will not attend and Hamas leadership will not have direct access to the counterparties as Egypt leads the mediation proceedings. Late on Thursday, more casualties were reported on both sides, just before the official start of the ceasefire.

- Argentina situation is also tenuous at best despite reports of US bankers leading the efforts to purchase debt in question from the holdout creditors. Late in US session, Fitch lowered Argentina rating to Restricted Default (RD) and Moody's changed its outlook on its CAA1 rating to negative. Pres Fernandez said Argentina must defend the interests of the nation and would be open to negotiations, but still offering to pay holdouts under previous swap terms.

- Ahead of next week's BOJ policy meeting, local press noted increasing divergence of views among the board members. Specifically, the report latched on to commentary from BOJ's Kiuchi overnight hinting that the 2% inflation target could be unattainable. Separately, PM Abe was once again rumored to consider a cabinet reshuffle in the 1st week of September.

Equities

US markets:

- PMCS: Reports Q2 $0.09 v $0.08e, R$126.8M v $125Me; +7.7% afterhours

- LNKD: Reports Q2 $0.51 v $0.39e, R$534M v $512Me; Raises FY guidance; +7.5% afterhours

- EXPE: Reports Q2 $1.03 v $0.80e, R$1.49B v $1.44Be; Raises FY14 EBITDA +16-19% (prior +13-16%); +4.5% afterhours

- MHK: Reports Q2 $2.21 v $2.20e, R$2.05B v $2.08Be; +3.0% afterhours

- MCHP: Reports Q1 $0.68 v $0.67e, R$531.3M v $527Me; +1.3% afterhours

- WU: Reports Q2 $0.36 v $0.36e, R$1.41B v $1.42Be; flat afterhours

- TSLA: Reports Q2 $0.11 v $0.04e, non-GAAP Rev $858M v $802Me; sees Q3 deliveries at 9.0k units ; -0.1% afterhours

- OUTR: Reports Q2 $1.42 v $1.40e, R$549M v $557Me, Cuts FY14 guidance; -1.0% afterhours

- EEP: Reports Q2 $0.21 v $0.23e, R$1.87B v $2.15Be; -1.3% afterhours

- BYD: Reports Q2 $0.05 v $0.07e, R$722.5M v $737Me; -2.8% afterhours

- SPWR: Reports Q2 $0.28 v $0.25e, R$621M v $623Me, Affirms FY14 guidance; -5.1% afterhours

- YRCW: Reports Q2 -$0.16 v $0.04e, R$1.32B v $1.30Be; -9.3% afterhours

- GPRO: Reports Q2 $0.08 v $0.06e (GAAP -$0.24), R$244.6M v $237Me; -9.7% afterhours

- ADNC: Reports Q2 -$0.10 v -$0.12e, R$37.5M v $38.5Me, Guides Q3 -$0.37 to -$0.43 v +$0.01e, R$25-28M v $45Me; -9.8% afterhours

Notable movers by sector:

- Consumer Discretionary: Nippon Television Holdings 9404.JP -5.4% (Q1 results); Skymark Airlines 9204.JP -6.5% (Q1 results)

- Consumer staples: Nippon Meat Packers 2282.JP +7.0% (Q1 results)

- Materials: Doray Minerals DRM.AU -5.7% (production update); Lynas LYC.AU -13.2% (quarterly production) - Energy: Tohoku Electric 9506.JP +3.4% (Q1 results)

- Industrials: China Rongsheng Heavy Industries Group 1101.HK -1.9% (H1 guidance); Hyundai Motor 005380.KR -1.6% (update on wage talks); Mazda Motor Corp 7261.JP +2.7% (Q1 results); Okuma Corp 6103.JP -6.7% (Q1 results); NGK Insulators 5333.JP+9.1 % (Q1 results); NTN 6472.JP -5.2% (Q1 results); Daihatsu Motor 7262.JP -3.6% (Q1 results)

- Technology: Sony Corp 6758.JP +5.7% (Q1 results); Transcosmos 9715.JP -5.8% (Q1 results); Ushio 6925.JP -6.1% (Q1 results); Seiko Epson Corp 6724.JP -3.1% (Q1 results); MediaTek 2454 +5.0% (Q2 results, Q3 guidance)

- Healthcare: Guangzhou Baiyunshan Pharmaceutical 600332.CN +8.2% (may receive approval for drugs); Guilin Layn Natural Ingredients Corp 002166.CN +10.0%, Shandong Lukang Pharma 600789.CN +10.0% (Ebola virus continues to get attention)

- Utilities: China Suntien Green Energy Corp 956.HK -10.3% (profit warning)

- Telecom: SmarTone Telecommunications 315.HK -2.5% (H1 guidance)