Asia volatility subsides ahead of FOMC as US markets finally rebound

Economic Data

- (JP) JAPAN JUN RETAIL SALES M/M: -0.8% V -0.9%%E; RETAIL TRADE Y/Y: 0.9% (3-month low) V 1.1%E

- (KR) South Korea Jun Department Store Sales y/y: -11.9% v +3.1% prrior; Discount store sales y/y: -10.2% v +0.5% prior

Index Snapshot (as of 04:00 GMT)

- Nikkei225 -0.2%, S&P/ASX +1.0%, Kospi +0.6%, Shanghai Composite -0.2%, Hang Seng +0.1%, Sept S&P500 -0.1% at 2,085

Commodities/Fixed Income

- Aug gold flat at $1,096/oz, Sept crude oil -0.3% at $47.85/brl, Sept copper +0.9% at $2.42/lb

- (US) API Petroleum Inventories: Crude -1.9M v 0e

- (CN) China MOF sells 3-yr bonds, avg yield at 2.7941%

- USD/CNY: PBoC sets yuan mid point at 6.1150 v 6.1154 prior setting; Strongest yuan setting since July 13th

- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥425B in 3-5yr JGBs, ¥240B in 10-25 yr JGBs and ¥140B in JGBs with maturity over 25-yr

- (AU) Australia MoF (AOFM) sells A$500M in 3.75% 2037 Bonds; avg yield: 3.4350%; bid-to-cover: 2.42x

Market Focal Points/FX

- Asian indices are trading mixed but with more upbeat overtones, as US markets finally broke a string of 5 straight losing sessions with resounding gains. Overall volatility is relatively subdued across asset classes, with the next 48 hours to reveal a policy update out of the FOMC as well as the initial US GDP print for Q2.

- Shanghai Composite oscillated between gains and losses in the opening morning session, rising over 1.5% in the opening minutes, falling by as much as 1.1%, and finally entering its break down 0.2%. Outsized leverage fanning that volatility continued to subside, with total margin debt falling for the 3rd straight day to CNY1.38T v CNY1.43T yesterday - also the lowest level in over 4 months. China MoF remarked H2 CPI growth will be moderate and 2015 would remain around 2%, well below 3.0% official target. PBoC also remained active in supporting sentiment, with reports the central bank has encouraged foreign investors - including global central banks, sovereign wealth funds and foreign financial institutions - to invest in interbank market.

- Among USD majors, NZD/USD was most active as it spiked over 60pips above $0.6730 on less dovish than anticipated comments from RBNZ Governor Wheeler. He said further policy easing is "likely" to be required - a less resolute position than anticipated by investors pricing in well over 50bps in cuts from the current 3.00% cash rate. Indeed, Westpac reaffirmed its view that New Zealand cash rates will be cut by another 100bps to 2.00%. In other USD majors, USD/JPY fell about 30pips toward 123.30, EUR/USD was up above 25pips above 1.1080, and AUD/USD was flat ahead of tomorrow's Australia housing data and comments from RBA's Stevens.

Equities

US equities/ADRs:

- BWLD: Reports Q2 $1.12 v $1.25e, R$426.4M v $430Me; +8.9% afterhours

- PNRA: Reports Q2 $1.61 v $1.63e, R$677M v $681Me; +8.0% afterhours

- CTXS: Reports Q2 $1.00 v $0.82e, R$796.8M v $792Me; Commences Strategic Alternatives for GoTo Family of Products; CEO resigns; +3.8% afterhours

- GILD: Reports Q2 $3.15 v $2.64e, R$8.24B v $7.36Be; +3.4% afterhours

- ESRX: Reports Q2 $1.44 v $1.41e, R$25.4B v $26.0Be; +1.6% afterhours

- APC: Reports Q2 +$0.01 adj v -$0.53e, R$2.64B v $2.57Be; +0.9% afterhours

- SPWR: Reports Q2 $0.18 v $0.14e, R$376.7M v $621.1M y/y; -0.2% afterhours

- AFL: Reports Q2 $1.50 v $1.52e, R$5.29B v $5.34Be; -2.1% afterhours

- X: Reports Q2 -$0.79 v -$0.68e, R$2.90B v $3.06Be; -4.1% afterhours

- AKAM: Reports Q2 $0.57 v $0.58e, R$541M v $541Me; -10.4% afterhours

- TWTR: Reports Q2 $0.07 v $0.05e, R$502M v $487Me; Raises FY 15 guidance; -11.3% afterhours

- YELP: Reports Q2 -$0.02 v $0.01e, R$139.9M v $134Me; -16.6% afterhours

Notable movers by sector:

- Consumer discretionary: Goodman Group GMG.AU +0.9% (divestment speculation); Air China Ltd 601111.CN -7.2% (H1 guidance, private placement); SK Networks 001740.KR +1.6% (Q2 result); Phoenix Satellite Television Holdings 2008.HK -5.3% (H1 guidance)

- Financials: Xinhu Zhongbao Co 600208.CN +0.5% (H1 result); Bank of Nanjing Co 601009.CN +1.2% (H1 result, private placement)

- Industrials: Fanuc LTD 6954.JP -11.9% (Q1 result); Hitachi Construction Machinery 6305.JP -1.0% (Q1 result); Hitachi Metals 5486.JP +4.6% (Q1 result); Murata MFG 6981.JP -3.4% (Q1 result speculation); Xinyi Glass Holding 868.HK +2.9% (H1 result, spin-off); China Aviation Optical-Electrical Technology 002179.CN +5.6% (H1 result)

- Technology: Tokyo Electron Ltd 8035.JP -11.3% (Q1 result); Toshiba Corporation 6502.JP -2.2% (speculation that more executives to resign); Beijing Orient National Communication Science & Technology Co 300166.CN +0.4% (private placement)

- Materials: Sandfire Resources SFR.AU -2.7% (Q4 result); Independence Group IGO.AU +0.5% (Q4 result); Mincor Resources MCR.AU -8.3% (Q3 result); Kobe Steel 5406.JP -2.2% (Q1 result); Daido Steel 5471.JP -6.4% (Q1 result); Huaxin Cement 600801.CN +5.2% (H1 guidance); Yueyang Forest & Paper Co 600963.CN -3.4% (H1 result); Chongqing Iron & Steel 601005.CN +1.2% (Chairman to resign)

-Energy: Tonengeneral Sekiyu 5012.JP +2.2% (raises H1 guidance); Xinyi Solar 968.HK +3.6% (H1 result)