New Zealand trade falls into deficit as exports to China fall again

Economic Data

- (NZ) NEW ZEALAND JUL TRADE BALANCE (NZ$): -692M V -475ME (1st deficit in 9 months)

- (CN) CHINA JULY CONFERENCE BOARD ECONOMIC INDEX M/M: 1.3% V 1.3% PRIOR

- (JP) JAPAN JUL PPI SERVICES Y/Y: 3.7% V 3.7%E

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 113.5 v 112.5 prior

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.5%, S&P/ASX +0.1%, Kospi +0.4%, Shanghai Composite -0.2%, Hang Seng flat, Sept S&P500 -0.1% at 1,993

Commodities/Fixed Income/Currencies

- Dec gold flat at $1,279, Oct crude oil +0.2% at $93.53/brl, Sept Copper -0.4% at $3.20/lb

- (CN) China end-July crude oil inventory +5.8% m/m - Xinhua

- GLD: SPDR Gold Trust ETF daily holdings falls 3.0 tonnes to 797.1 tonnes (first decline since Aug 13th)

- JGB: (JP) Japan MoF sells ¥399.4B in 1.7% 40-yr bonds, bid to cover: 2.54x v 3.73x prior

- (CN) PBoC to drain CNY10B in 14-day repos (9th consecutive drain)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1663 v 6.1653 prior setting (2nd consecutive weaker Yuan setting, weakest setting since Aug 6th)

Market Focal Points/Key Themes

- Despite the record high set in SP500 cash index on Monday, sentiment in Asia is noticeably more subdued. Ukraine standoff remains tense going into the Minsk meeting among Putin, Poroshenko, as well as European Trade Commissioner De Gucht and EU Energy Commissioner Oettinger on Tuesday. There is little hope that any meaningful breakthrough will be achieved after Russia pushed through its humanitarian convoy through the border over the weekend without agreed upon inspections by Kiev govt and international monitors. On Monday, fresh reports surfaced that as many as 50 Russian armored vehicle crossed the border in the southern part of the country near Sea of Azov, potentially opening a new front with Ukraine military. US National Security Advisor Rice has reportedly tweeted the Russian incursion into Ukraine represents significant escalation in the conflict.

- Kiwi dollar hit a fresh 6-month low of $0.8310 on disappointing trade data, as New Zealand fell into deficit for the first time in 9 months. Among notable components, exports to China fell 5.4% y/y and 9.5% m/m - 7th consecutive sequential decline which marks the longest streak of deteriorating demand since 1996. Growth in exports of dairy was marginal at +0.9% y/y. Later in the day, S&P affirmed New Zealand sovereign rating at AA with stable outlook, noting the rating reflects the country's fiscal and monetary policy flexibility, economic resilience, public policy stability, and sound financial sector.

- Conference Board Leading Index for China rose by another 1.3%, matching an 8-month high rate of growth. Resident economist cautioned that the "improvement was driven primarily by an increase in new floor space starts, which is unsustainable in the longer-term", adding that bank loans offered their weakest contribution to the index since January 2012. Despite the recent slowdown in lending, PBoC drained another CNY10B in liquidity via 14-day repos - its 9th consecutive drain.

Equities

US markets:

- KITE: Announces Patients With Aggressive Non-Hodgkin's Lymphoma Experience Positive Results After Receiving Anti-CD19 Chimeric Antigen Receptor (CAR) T Cells at the National Cancer Institute (NCI); +28.7% afterhours

- CMTL: Confirms it is exploring strategic alternatives; +2.2% afterhours

- AMZN: Confirms acquisition of Twitch for $970M in cash; +0.3% afterhours

- VMW: CFO: See opportunity for mid-teens Rev growth in FY15; See op margin expansion of about 100bps - analyst day; -0.2% afterhours

- COCO: Entered into consent, amendment to credit agreement; expects to book impairment charge $55M-59M - filing; -5.5% afterhours

- KANG: Reports Q1 $0.13 v $0.17e, R$60.2M v $63.9Me (2 est); -17.2% afterhours

- BKW: Burger King, Tim Hortons (THI.CA) deal could be announced in a day or two; Buffet's Berkshire Hathaway to provide about 25% of funding - financial press

Notable movers by sector:

- Consumer staples: China Modern Dairy 1117.HK +6.6% (H1 results)

- Financials: Servcorp Ltd SRV.AU +3.9% (FY14 results)

- Materials: Zhejiang Crystal-Optech 002273.CN +4.3%, Han's Laser Technology 002008.CN +2.5%, Roshow Technology 002617.CN +2.9% (Huawei launches smartphone with sapphire material screen); Mirabela MBN.AU +15.0% (FY14 results)

- Energy: AWE AWE.AU -3.1% (FY14 results); Senex Energy SXY.AU -6.0% (FY14 results)

- Industrials: Boart Longyear BLY.AU -15.4% (H1 results)