IMF prefers a lower China GDP target in 2015

Asian Market Update: IMF prefers a lower China GDP target in 2015; Samsung Electronics drops on Q2 results

Economic Data

- (AU) AUSTRALIA Q2 IMPORT PRICE INDEX Q/Q: -3.0% (3 1/2 year low) V -1.5%E; EXPORT PRICE INDEX Q/Q: -7.9% V -4.0%E

- (AU) AUSTRALIA JUN PRIVATE SECTOR CREDIT M/M: 0.7% (5-year high) V 0.4%E ; Y/Y: 5.1% V 4.6%E

- (AU) AUSTRALIA JUN BUILDING APPROVALS M/M: -5.0% V 0.0%E; Y/Y: 16.0% V 23.3%E

- (JP) JAPAN JUN VEHICLE PRODUCTION Y/Y: 6.6% V 6.1% PRIOR

- (JP) JAPAN JUN LABOR CASH EARNINGS Y/Y: 0.4% (4-month low) V 0.8%E

- (SG) SINGAPORE Q2 PRELIM UNEMPLOYMENT RATE: 2.0% V 2.0%E

- (UK) UK JULY GFK CONSUMER CONFIDENCE: -2 (3-month low, 1st decline in 7-month) V +2E

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.4%, S&P/ASX +0.2%, Kospi -0.3%, Shanghai Composite -0.1%, Hang Seng flat, Sept S&P500 -0.1% at 1,963

Commodities/Fixed Income/Currencies

- Dec gold -0.1% at $1,295/oz, Sept crude oil -0.7% at $99.60/brl

- (CN) PBoC to drain CNY26B in 14-day repos (2nd consecutive drain); Drains net CNY11B this week v injected CNY18B prior (1st drain after 11 weeks of injection; last time PBoC conducted 14-day repos was on Apr 15th)

- (JP) Japan investors sold net ¥302.0B in foreign bonds vs bought net ¥116.1B prior week; Foreign Investors buyers net ¥204.5B in Japan Stocks last week vs bought net ¥139.2B in prior week

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1675 v 6.1645 prior setting (weakest setting since Jun 5th)

Market Focal Points/Key Themes

- Much higher than expected US GDP and incrementally more hawkish statement from the FOMC have produced higher US treasury yields, higher USD, and slightly lower precious metals. In late US session, the yield on the US 10-yr pushed up 9bps above 2.55%, USD/JPY briefly tested ¥103 figure, and Dec gold is down for the 4th straight day at $1,295. Fed's Plosser was a dissenter on the committee, voting in favor of keeping the "considerable time period" clause in the statement, even as the Fed acknowledged further decline in unemployment in spite of continued underutilization of labor resources. On inflation, the statement noted that it was somewhat closer to the Committee's longer-run objective, and the likelihood of inflation running persistently below 2% has diminished somewhat. As expected, the Fed tapered QE by another $10B to $25B per month.

- Among the notable movers on earnings, Western Digital was down over 2% despite beating on the top and bottom lines with gross margins holding steady. Whole Foods had another disappointing quarterly report, missing on the top line and also lowering the midpoint of its FY EPS guidance and same-store sales. Insurers Metlife and HIG were both down over 2% aftermarket on lower than expected profits, and Yum Brands warned of a significant impact related to China meat scandal, sending shares down 6%.

- Samsung Electronics is down 4% after posting final Q2 results that were largely in line with the already disappointing prelim earlier this month. Samsung also revealed KRW500B impact from stronger KRW and expressed further pessimism over the performance of its mobile division in the face of tighter competition. Results from Displays and TV appliances were also weaker, while earnings contribution from memory chips were seen higher.

- The clock struck midnight on the Argentina default without any signs of progress. Fin Min Kicillof called the holdout hedge funds "vultures", mediator Pollack said the two sides remained far apart, while S&P cut its sovereign rating to Selective Default (SD) from CCC- just after the US market close. Shares of YPF are punished particularly harshly afterhours, falling nearly 5%.

- IMF released a report on china, stating it saw low risk of a hard landing in the near term, but risks could rise if growth patterns do not change. Moreover, IMF said it would be appropriate for China to set 2015 GDP target between 6.5-7.0%, stay away from a large stimulus unless growth slowed materially, and also called Yuan remaining moderately undervalued.

Equities

US markets:

- VPRT: Reports Q3 $0.75 v $0.54e, R$338.2M v $320Me; +20.9% afterhours

- OTEX: Reports Q4 $1.05 v $0.93e, R$494M v $480Me; +10.2% afterhours

- SAM: Reports Q2 $1.88 v $1.73e, R$231.6M v $220Me; +4.3% afterhours

- ALL: Reports Q2 $1.01 v $0.80e, R$8.86B v $7.59Be; +2.6% afterhours

- MPC: Announces Additional $2B (8.8% of market cap) Share Repurchase Authorization; +1.5% afterhours

- EQIX: Reports Q2 $0.22 v $0.81 y/y, R$605.2M v $596Me; +1.1% afterhours

- WTW: Reports Q2 $0.95 v $0.77e, R$397.5M v $388Me, Guides higher FY14 EPS; +0.2% afterhours

- ABX: Reports Q2 $0.14 v $0.14e, R$2.43B v $2.42Be, Cuts FY14 gold cost/ounce $580-630 (prior 590-640); -0.9% afterhours

- KRFT: Reports Q2 $0.80 v $0.83e, R$4.75B v $4.88Be; -1.3% afterhours

- LRCX: Reports Q4 $1.25 v $1.22e, R$1.25B v $1.22Be, Guides Q1 $0.85-0.99 v $1.03e; -1.4% afterhours

- YELP: Reports Q2 $0.04 v -$0.03e, R$88.8M v $86.2Me, concerns on number of businesses added; -1.5% afterhours

- MET: Reports Q2 $1.39 v $1.41e, R$17.8B v $17.2Be; -2.1% afterhours

- VECO: Reports Q2 -$0.16 v -$0.17e, R$95.1M v $92.7Me, Guides Q3 -$0.15 to -$0.07 v -$0.01e, Rev $92-100M v $104Me; -2.2% afterhours

- WDC: Reports Q4 $1.85 v $1.74e, R$3.65B v $3.59Be; Guides Q1 $1.95-2.05 v $2.06e; -2.6% afterhours

- HIG: Reports Q2 $0.31 v $0.68e, R$2.80B v $2.83Be; -2.7% afterhours

- WFM: Reports Q3 $0.41 v $0.39e, R$3.38B v $3.40Be, Narrows lower FY14 EPS $1.52-1.54 v $1.53e, Rev 9.6-9.9%, Lowers SSS 4.1-4.4%; -3.4% afterhours

- AKAM: Reports Q2 $0.58 v $0.55e, R$476.0M v $469Me; Guides Q3 R$484-496M v $482Me; -5.4% afterhours

- YUM: Comments further on former China supplier OSI; seen significant negative impact on SSS at KFC and Pizza Hut in China; -6.2% afterhours

- CODE: Reports Q2 $0.24 v $0.26e, R$314M v $328Me; -13.0% afterhours

- EHTH: Reports Q2 $0.22 v $0.09e, R$42.6M v $47.3Me, Lowers FY14 $0.30-0.43, R$185-194M v $209Me; -24.6% afterhours

- EDAP: Updates on FDA Advisory Committee Meeting on Ablatherm-HIFU; Gastroenterology and Urology Devices Panel (GUDP) voting results; -40.9% afterhours

- SSP: Scripps, Journal merging broadcast operations, spinning off Newspapers

Notable movers by sector:

- Consumer Discretionary: Stanley Electric 6923.JP +3.9% (Q1 results); Suning Appliance 002024.CN -1.3% (H1 results)

- Financials: SOCAM Development 983.HK -8.7% (no agreement reached on previous sales proposal)

- Materials: St Barbara SBM.AU +7.1% (Q4 gold production results)

- Industrials: Fuji Electric Holding 6504.JP +5.2% (Q1 results); Anritsu Corp 6754.JP -8.9% (Q1 results)

- Technology: Nintendo 7974.JP -6.5% (Q1 results); Samsung Electronics 005930.KR -4.0% (Q2 results, outlook); COLOPL 3668.JP +18.7% (9-month results); Wacom 6727.JP -17.3% (Q1 results); NEC Corp 6701.JP +4.9% (Q1 results); Wangsu Science & Technology 300017.CN -2.6% (H1 results)

- Telecom: Hutchison Telecom 215.HK -5.2% (H1 results)