Volatility continues as China's CSRC looks to contain damage

Economic Data

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.5 v 111.8 prior

- (VN) Vietnam July Trade Balance: -$300M v -$400Me

Index Snapshot (as of 04:00 GMT)

- Nikkei225 -0.3%, S&P/ASX +0.2%; Kospi -0.2%, Shanghai Composite -1.0%, Hang Seng +1.3%, Sept S&P500 +0.4% at 2,072

Commodities/Fixed Income

- Aug gold -0.3% at $1,093/oz, Sept crude oil -0.7% at $47.02/brl, Sept copper +0.5% at $2.36/lb

- (CN) China Iron and Steel Association: China H1 steel production 410M tonnes, -1.3% y/y (1st decline in 20 years)

- SLV: iShares Silver Trust ETF daily holdings fall to 10,165 tonnes from 10,227 tonnes

- (CN) PBoC to inject CNY50B in 7-day reverse repos (10th consecutive injection)

- USD/CNY: PBoC sets yuan mid point at 6.1154 v 6.1176 prior setting; strongest Yuan setting since July 15

- JGB: (JP) Japan MoF sells ¥2.29T in 2-yr JGBs; Avg yield: 0.005% v 0.001% prior; bid to cover: 3.84x v 3.71x prior

Market Focal Points/FX

- Shanghai Composite opened down by over 4% and extended those declines above 5% to new 2-week lows in the opening hour, but has pared most of those losses and entered midday break down just 1%. Policymakers are looking to relieve the concerns that sent the markets plummeting in the afternoon session overnight, with securities regulator CSRC insisting that its China Securities Finance (CSF) is still present in the market and prepared to increase stock purchases if necessary. PBoC also promised to do its part, reiterating it will maintain "prudent" monetary policy, keep moderate liquidy, and continue supporting economic development. To that end, the PBoC injected another CNY50B via its 7-day reverse repo open market operations. PBoC also maintained that economic indicators are showing some modest improvement. In contrast, the planning body NDRC warned the economy is facing downward pressure, promising to boost construction of key projects in H2.

- South Korea's President Park declared that MERS outbreak is no longer a concern after about a month of no new infections reported. A press report also noted Korean authorities will extend easy mortgage policies by another year, just as Moody's was upbeat on the latest govt measures to contain the country's high levels of household debt. Korean Won came off its lows after hitting its worst levels in 3 years last week, with USD/KRW falling from 1,173 to 1,164.

- USD majors were also increasingly more volatile, largely tracking the swings on the mainland. USD/JPY fell to 123.10 but then rose above 123.50 along with Shanghai Composite rebound. AUD/USD and NZD/USD were also up about 50pips each from their lows, rising to as high as 0.73 and 0.6650 respectively. The euro was under modest pressure after the overnight rally, falling about 30pips below 1.1080.

- In equities, Baidu beat on the top and bottom lines, but shares traded down by over 6% in extended US session. Analysts remarked that markets are skeptical of China internet giant's continued aggressive spending plans.

Equities

US equities/ADRs:

- RCII: Reports Q2 $0.50 v $0.48e, R$815M v $811Me; +3.1% afterhours

- CR: Reports Q2 $1.06 v $1.05e, R$711M v $703Me; -1.7% afterhours

- BIDU: Reports Q2 $1.81 v $1.80e, R$2.67B v $2.58Be; -6.3% afterhours

- AMKR: Reports Q2 $0.08 (adj) v $0.10e, R$736.7M v $750Me; -12.6% afterhours

Notable movers by sector:

- Consumer discretionary: China Eastern Airlines 600115.CN -1.5% (H share sales to Delta); ANA Holdings 9202.JP +0.4% (Q1 result speculation)

- Financials: Beijing Capital Land 2868.HK -8.6% (H1 guidance); Huatai Securities 6886.HK -2.0% (H1 result); Citychamp Dartong Co 600067.CN -3.9% (H1 result); Hulic Co 3003.JP -0.4% (H1 result)

- Industrials: Great Wall Motor 2333.HK +4.2% (H1 result, non-public issuance); Korea Aerospace Industries 047810.KR +1.4% (Q2 result)

- Technology: Leshi Internet Info & Tech Co Beijing 300104.CN -3.0% (denies CSRC probe); Hithink Flush Information Network Co Ltd 300033.CN -3.4% (CSRC probe); Canon Inc 7751.JP +0.2% (H1 result); Samsung Electro-Mechanics 009150.KR +5.1% (Q2 result); Tokyo Electron Device 2760.JP +3.1% ( Q1 result)

- Materials: Western Mining Co 601168.CN -0.7% (H1 result); RUSAL PLC 486.HK -1.1% (Q2 result); Alacer Gold Corp AQG.AU -3.7% (Q1 result); Nitto Denko Corp 6988.JP -5.0% (Q1 result speculation)

- Utilities: CT Environmental Group 1363.HK -0.4% (H1 guidance)

- Healthcare: Guangxi Wuzhou Zhongheng Group 600252.CN +10.0% (H1 result)

- Energy: Senex Energy SXY.AU +2.0% (Q4 result)