Slump in China HSBC Flash PMI sends Aussie to 11-week lows

Economic Data

- (CN) CHINA AUG HSBC/MARKIT FLASH MANUFACTURING PMI: 50.3 V 51.5E (First sequential decline in 5 months; 3-month low)

- (JP) JAPAN AUG MARKIT/JMMA MANUFACTURING PMI: 52.4 V 51.5E (5-month high; 3rd straight month of expansion)

- (JP) Japan investors bought net ¥659.8B in foreign bonds vs bought net ¥267.6B prior week; Foreign Investors bought net ¥87.7B in Japan Stocks last week vs sold net ¥585.2B in prior week

- (AU) AUSTRALIA JUN CONFERENCE BOARD LEADING INDEX: 0.4% V 0.2% PRIOR (2nd consecutive increase)

- (NZ) NEW ZEALAND AUG ANZ CONSUMER CONFIDENCE INDEX: 125.5 (10-month low) V 132.7 PRIOR; M/M: -5.4% V 0.6% PRIOR (first decline in 3 months)

- (NZ) NEW ZEALAND JULY CREDIT CARD SPENDING M/M: -0.9% V +0.7% PRIOR; Y/Y: 4.5% V 7.0% PRIOR

- (NZ) NEW ZEALAND JUL NET MIGRATION: 4.5K V 4.3K PRIOR (highest since Feb 2003)

- (NZ) NEW ZEALAND JUL ANZ JOB ADS M/M: -2.7% V +3.3% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.8%, S&P/ASX +0.5%, Kospi -1.2%, Shanghai Composite -0.4%, Hang Seng -0.7%, Sept S&P500 flat at 1,984

Commodities/Fixed Income/Currencies

- Dec gold -0.4% at $1,290, Oct crude oil -0.1% at $93.38/brl, Sept Copper flat $3.17/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 0.9 tonnes to 800.1 tonnes (3rd consecutive increase)

- SLV: iShares Silver Trust ETF daily holdings rise to 10,272 tonnes from 10,228 tonnes prior; Highest since June 16th

- (CN) PBoC to drain CNY10B in 14-day repos (8th consecutive drain); Injects net CNY11B this week v Injected net CNY14B prior (2nd consecutive week of injection)

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1632 v 6.1580 prior setting (3rd consecutive weak setting; weakest setting since Aug 6th)

Market Focal Points/Key Themes

- Shanghai Composite is down 1% entering its midday break after China HSBC flash manufacturing PMI surprisingly sank to a 3-month low. 50.3 print was well below consensus 51.5 and also marked the first sequential decline in 5 months. Among notable components, new orders are increasing at a slower rate, output/input prices are now decreasing, and employment is decreasing at a faster rate. HSBC chief economist said disinflationary pressure returned, industrial demand would stay subdued, and further policy support is warranted to consolidate the recovery. Note that Shanghai Composite was up about 8% over the past months before today's drop.

- In Japan, a Nikkei report indicated the govt is looking to set aside ¥1.0T in funds in the 2015 budget to build a stimulus fund that would include public-works projects and subsidies for small and midsize businesses. Report speculated the funds would be serve as a cushion if PM Abe decides to proceed with raising consumption tax to 10% after digesting Q3 economic data. Early August figures are looking up after a consistently disappointing July, with Japan's prelim PMI hitting a 5-month high. In other notable Japanese press, NHK reported the Defense Ministry would request a record defense budget of ¥5.05T, up 3.5% from the current year.

- USD remained generally bid in morning Asian trade in the wake of a somewhat more hawkish sentiment expressed in the latest Fed meeting minutes. EUR/USD is now down about 50 pips since the release, falling to 11-month low below $1.3250, GBP/USD is now down 60pips below $1.6560, and USD/JPY got within 5pips of ¥104 - also a 4-month high. AUD/USD is down 70pips, with some added headwinds following the China PMI data, testing an 11-week lows around $0.9240.

Equities

US markets:

- SMTC: Reports Q2 $0.42 v $0.39e, R$145.7M v $142Me; +4.8% afterhours

- ACT: Pfizer still considering M&A opportunities, including Actavis - financial press; +4.3% afterhours

- HTZ: Investor Icahn disclosed 8.48% stake; may also seek board representation - filing; +0.7% afterhours

- HPQ: Reports Q3 $0.89 v $0.89e, R$27.6B v $27.0Be; CEO: to introduce "game changing" new products in multiple areas including printing over the next few months - conf call; -0.9% afterhours

- KIN: Announces Top-Line Results from Pivotal Study of CereKin in Dogs with Osteoarthritis; did not meet statistical significance for endpoint; -31.4% afterhours

Notable movers by sector:

- Consumer Discretionary: Adastria Holdings 2685.JP -5.2% (H1 results); Tatts Group Ltd TTS.AU -5.1% (FY14 results); Cabcharge Australia CAB.AU +3.0% (FY14 results); Super Retail Group SUL.AU +5.7% (FY13/14 results); Breville Group BRG.AU -16.3% (FY14 results)

- Financials: E.Sun Financial Holding 2884.TW -6.1% (H1 results); Mirvac Group MGR.AU -1.7% (FY14 results); AMP Limited AMP.AU +3.8% (H1 results)

- Materials: BC Iron BCI.AU -4.1% (operation update); Alumina AWC.AU +2.7% (H1 results); PanAust PNA.AU -2.1% (H1 results)

- Energy: Origin Energy ORG.AU +4.4% (FY14 results)

- Industrials: Kawasaki Heavy Industries 7012.JP +1.8% (to expand precision machinery operations); Mazda Motor Corp 7261.JP +3.1% (on track for debt free target - Nikkei); Asciano Limited AIO.AU +2.8% (FY14 results)

- Technology: Siasun Robot & Automation 300024.CN +3.3% (private placement plan)

- Healthcare: Acrux Ltd ACR.AU +2.8% (FY14 results); Tong Ren Tang 1666.HK -1.2% (H1 results)

- Telecom: ZTE 763.HK +2.4% (H1 results); Coolpad 2369.HK +1.6 % (H1 results)