Asia stock markets pause ahead of earnings

Asian Market Update: Asia stock markets pause ahead of earnings; Samsung Electronics preliminary results miss with cautiously positive outlook

Notable Economic Data

- (AU) AUSTRALIA JUN NAB BUSINESS CONFIDENCE: 8 V 7 PRIOR; NAB BUSINESS CONDITIONS: +2 V -1 PRIOR

- (JP) JAPAN MAY BOP CURRENT ACCOUNT BALANCE: ¥523B (4th consecutive surplus) V ¥418BE; BOP ADJUSTED CURRENT ACCOUNT: ¥385B V ¥158BE; TRADE BALANCE BOP BASIS: -¥676B V -¥823BE

- (JP) JAPAN JUN BANK LENDING INCL TRUSTS: 2.3% V 2.2%E; BANK LENDING EX-TRUSTS: 2.5% V 2.4% PRIOR

- (NZ) NEW ZEALAND Q2 NZIER BUSINESS CONFIDENCE: 32 V 52 PRIOR (largest decline since Q4 2011)

- (CN) China H1 new foreign investment $130.1B, +23.8% y/y - People's Daily

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 105.1 v 105.4 prior

- (TW) TAIWAN JUN CPI Y/Y: 1.6% V 1.6%E; WPI Y/Y: 0.8% V 1.1%E

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -0.5%, S&P/ASX -0.2%, Kospi -0.3%, Shanghai Composite -0.5%, Hang Seng -0.3%, Sept S&P500 -0.1% at 1,968

Commodities/Fixed Income/Currencies

Aug gold +0.2% at $1,319, Aug crude oil -0.2% at $103.39/brl, Sept Copper -0.2% at $3.25/lb

- (CN) PBoC to drain CNY20B in 28-day repos (3rd consecutive drain)

- (CN) PBoC sets yuan mid-point at 6.1626 v 6.1658 prior setting (strongest setting since July 2nd)

- (AU) Australia MoF (AOFM) sells A$300M in 1% indexed bonds due 2018; Avg yield: 0.5971%; Bid-to-cover: 3.07x

- (JP) Japan MoF sells ¥400B in 10-year CPI-linked Bonds; Bid-to-cover ratio 2.54x v 2.89x prior

- (CN) Morgan Stanley: Sees China iron ore mines shutting; Cuts 2015 thermal coal price forecast by 16% to $74/t - financial press

- (US) USDA weekly crop progress report

Market Focal Points/Key Themes

- Taking its cues from Wall Street the Asian stock markets were trading lower with the Nikkei225 down 0.8% in early trading as the yen strengthened against the dollar. Investors will now be focused on earnings out of the US, the Fed's position on monetary policy, as well as Chinese economic data including the trade inflation data and GDP.

- Japan's current account balance had a surplus for the fourth consecutive at ¥523B; imports sliding for the first time in 19 months with the consumption tax increase cooling domestic demand.

- South Korea's largest electronics firm Samsung released preliminary Q2 results with operating profits declining to a two-year low of KRW7.2T -24% y/y. Despite the weak results share price initially jumped by over 2%before settling to 0.5% in early trading as a drop in profits were widely expected and as it cautiously expects a more positive outlook for the next quarter with the release of its new smartphone lineup and improving mobile business.

- The June NAB business confidence index increased to 8 from 7 as confidence strengthened in nearly all the industries. The AUD recovered from its early lows against the major currency pairs, with the AUD/USD trading higher by 10pips above 0.9390-level following the confidence data.

- Iran Supreme Leader Khamenei was reported to have said Iran required additional centrifuge capacity, higher than the amount acceptable to the western governments. The leader stated that they were being offered 10k SWU when 190k SWU is needed. These comments have changed course from those reported on July 3rd where Iran said it would ease its nuclear capacity demands during Vienna talks.

Equities

US markets:

- MIC: To acquire remaining 50% of International-Matex Tank Terminals (IMTT) for $910.0M in cash, $115.0M in stock; raises quarterly dividend by 1.3% to $0.95/shr; +5.4% afterhours

- CRMB: 07/07/2014 19:45:26 CRMB: Reportedly to cease operations, close all stores; considers filing for bankruptcy - financial press

Notable movers by sector:

- Financials: Evergrande Real Estate 3333.HK +0.9% (June sales results); Guotai Junan 1788.HK +1.4% (H1 guidance); Gemdale Properties and Investment Corp 535.HK -3.1% (Jun sales results)

- Materials: Zhejiang Kaier New Materials 300234.CN +5.0% (H1 results)

- Energy: Datang International Power Generation 991.HK +16.2% (announces restructure; shares resume trading)

- Industrials: Anhui Heli 600761.CN -2.5% (H1 guidance); Daiwa House Industry 1925.JP -0.1% (revenue target); Elders ELD.AU +8.9% (may receive bid)

- Technology: TCL Corp 000100.CN +1.3% (H1 guidance); Samsung Electronics 005930.KR +0.4% (Q2 prelim results)

- Healthcare: Pharmaxis PXS.AU -16.9% (updates on pre-clinical projects)

- Utilities: Leshan Electric Power 600644.CN +2.9% (H1 guidance)