China State Council to stick with targeted stimulus

Asian Market Update: China State Council to stick with targeted stimulus; Brazil Central Bank on hold for 2nd time

Economic Data

- (AU) AUSTRALIA Q2 NAB BUSINESS CONFIDENCE: 6 V 7 PRIOR

- (AU) AUSTRALIA MAY CONFERENCE BOARD LEADING INDEX M/M: +0.2% (first rise in 3 months) V -0.2% PRIOR

- (NZ) NEW ZEALAND JUL ANZ CONSUMER CONFIDENCE INDEX: 132.7 V 131.9 PRIOR; M/M: 0.6% V 3.4% PRIOR

- (NZ) NEW ZEALAND JUN ANZ JOB ADS: +5.7% V -4.8% PRIOR (highest since Oct 2008)

- (SG) SINGAPORE JUN ELECTRONIC EXPORTS Y/Y: -17.4% V -12.1%E; NON-OIL DOMESTIC EXPORTS M/M: 1.5% V 3.4%E; Y/Y: -4.6% V -3.0%E

- (KR) SOUTH KOREA JUN PPI Y/Y: 0.1% V 0.0% PRIOR (first rise in 21 months)

- (BR) BRAZIL CENTRAL BANK (BDB) LEAVES SELIC TARGET RATE UNCHANGED AT 11.00%, AS EXPECTED (2nd consecutive rate hold)

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.2%, S&P/ASX +0.4%, Kospi +0.5%, Shanghai Composite -0.5%, Hang Seng +0.1%, Sept S&P500 -0.2% at 1,971

Commodities/Fixed Income/Currencies

- Aug gold +0.2% at $1,303/oz, Aug crude oil flat at $101.48/brl, Sept Copper flat at $3.22/lb

- GLD: SPDR Gold Trust ETF daily holdings falls 2.7 tonnes to 806.0 tonnes

- (CN) PBoC to drain CNY18B in 28-day repos (6th consecutive drain); Injects net CNY17B this week v injected CNY50B prior (10th consecutive week of net injection)

- (JP) BOJ offer to buy ¥400B in 5-10yr JGB, ¥100B in 10-25yr JGB and ¥30B in JGB with maturity over 25-yr

- (JP) Japan investors bought net ¥671.5B in foreign bonds vs sold net ¥294.1B prior week; Foreign Investors sold net ¥160.9B in Japan Stocks last week vs bought net ¥330.9B in prior week

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1564 v 6.1535 prior setting (weakest Yuan setting since Jul 9th; 5th consecutive weaker setting)

Market Focal Points/Key Themes

- After confirmation from the State Dept that Russia continues to aid separatists in Ukraine earlier this week, US Treasury unveiled a list of targets in a new round of sanctions that included separatist leaders and some large Russian companies. Among the most notable firms are GAZPROMBANK and Rosneft Oil. European leaders also said they agreed on additional sanctions, but would not publish the list until the end of the month. Response from Russian dep foreign min Ryabkov indicated the sanctions were "unacceptable and that Russia may retaliate." Putin was somewhat less perturbed, noting that Russia needs to assess the damage and react with calm but also warning the escalation by the US will lead to a "dead end" in bilateral relations. Russian ruble fell to 1-month lows following the sanctions announcement.

- China State Council indicated it will continue to promote targeted economic stimulus measures, also maintaining its commitment to achieve 7.5% 2014 GDP target after matching that level in Q2 GDP report overnight. Beijing reiterated it will push forward railway, city infrastructure, water conservancy projects. Separately, China's Director of the Ministry of Housing and Urban-Rural Development said he anticipates better property market in H2, and that the govt needs to support reasonable housing needs, but curb speculative demand.

- Australia's top operator of oil and gas production, Woodside Petroleum, reported Q2 output of 23.5Mmboe v 20Mmboe y/y and also raised its FY14 guidance to 89-94Mmboe from 86-93Mmboe prior. Q2 Sales were up 25% on both higher output and rising price of brent crude. Shares of WPL were up about 1% on the report.

- Fed watcher Hilsenrath posted a summary of his interview with Chicago Fed Pres Evans - a typically dovish alternate voting member on the FOMC. Evans said unemployment rate is "much lower rate than I had in my previous forecasts" and estimated GDP outlook around 3% over the next 18 months, but also noted inflation "is more likely that inflation is going to be under 2% than over 2% for at least the next three years." He further stated he would like to be much more confident of inflation holding 2% mark before embracing rate hikes.

- Among notable US earnings, Sandisk was down nearly 10% in extended session despite beating on top and bottom lines. Non-GAAP gross margins fell sequentially, while GAAP GM was also down y/y. Shares continued to slide afterhours following a softer than expected top-line guidance for Q3. Yum Brands was down 2% on shortfall in revenue despite the impressive 15% SSS growth in China. Las Vegas Sands is down slightly after missing on earnings and revenues.

Equities

US markets:

- URI: Reports Q1 $1.65 v $1.43e, R$1.40B v $1.36Be; +3.6% afterhours

- EBAY: Reports Q2 $0.69 v $0.68e, R$4.37B v $4.38Be; +1.5% afterhours

- LVS: Reports Q2 $0.85 v $0.89e, R$3.62B v $3.78Be; -1.4% afterhours

- YUM: Reports Q2 $0.73 v $0.73e, R$3.20B v $3.23Be; -2.2% afterhours

- SNDK: Reports Q2 $1.41 v $1.37e, R$1.63B v $1.60Be; Guides Q3 R$1.675-1.725B v $1.74Be; Gross margin 47-49% v 48% q/q - conf call; -9.8% afterhours

Notable movers by sector:

- Consumer Discretionary: China Automotive Engineering Research Institute 601965.CN -2.6% (prelim H1 results); I.T Limited 999.HK +2.5% (Q1 sales results)

- Financials: ORIX Corp 8591.JP +1.0% (investment plans in Hyundai Logistics)

- Materials: Fortescue Metals Group FMG.AU +3.5%, BHP BHP.AU +1.4% (iron-ore prices); Mount Gibson MGX.AU +5.0% (Q4 results)

- Energy: Woodside Petroleum WPL.AU +1.0% (Q2 production results); Solargiga Energy Holdings 757.HK +5.2% (H1 results); AGL Energy Ltd AGK.AU -3.1% (FY14 forecast to be affected by carbon tax repeal)

- Technology: Taiwan Semiconductor Manufacturing 2330.TW -4.6% (Exec comments, outlook)

- Industrials: Cardno CDD.AU -3.7% (FY14 guidance)