RBA keeps rates at record lows

Asian Market Update: RBA keeps rates at record lows; Japan stocks higher on weak yen, cabinet reshuffle

Economic Data

- (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 2.50%; AS EXPECTED (12th straight pause)

- (KR) SOUTH KOREA AUG CPI M/M: 0.2% V 0.3%E; Y/Y: 1.4% V 1.6%E

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.6 v 113.5 prior

- (JP) JAPAN AUG MONETARY BASE Y/Y: 40.5% V 42.7% PRIOR; MONETARY BASE END OF PERIOD: ¥243.5T V ¥243.2T PRIOR

- (NZ) NEW ZEALAND AUG ANZ COMMODITY PRICE M/M: -3.3% V -2.4% PRIOR

- (JP) JAPAN JUL LABOR CASH EARNINGS Y/Y: 2.6% (5th consecutive increase) V 0.9%E

- (AU) AUSTRALIA Q2 CURRENT ACCOUNT BALANCE (A$): -13.7B V -14.0BE; NET EXPORTS OF GDP: -0.9% V -0.7%E

- (AU) AUSTRALIA JUL BUILDING APPROVALS M/M: 2.5% V 1.9%E; Y/Y: 9.4% V 7.8%E

Index Snapshot (as of 03:30 GMT)

- Nikkei225 +1.3%, S&P/ASX +0.1%, Kospi flat, Shanghai Composite +0.2%, Hang Seng -0.3%, Sept S&P500 +0.1% at 2,002

Commodities/Fixed Income/Currencies

- Dec Gold -0.2% at $1218.1, Oct Crude -0.1% at $95.84

- (CN) PBoC to drain CNY18B in 14-day repos (11th consecutive drain)

- JGB: (JP) Japan MoF sells ¥2.20T in 0.5% 10-yr notes; Avg Yield: 0.5217% v 0.522% prior; bid-to-cover: 3.58x v 4.29x prior

Market Focal Points/Key Themes

- The Australia RBA kept the official cash rate at a record low of 2.50%, as widely expected. The central bank again forecasted no moves for a period of time. Although the RBA said there has been some improvement in indicators for the labor market this year, but it will probably be some time yet before unemployment declines consistently. The central bank also reiterated that the AUD is high by historical standards, particularly given the declines in commodity prices. The rate decision follows the release of the current account deficit of A$13.7B.

- Japan July wages increased 2.6%, the fastest pace in more than 17 years in July, quelling expectations of a slowdown. Total average wages for July rose for the fifth consecutive month to ¥369.8K. In addition, the average base wages increased at its fastest pace in more than 14 years at 0.7%.

- USD/JPY traded stronger by over 45 pips, above ¥104.80 and marks the highest level in 7 months. The strengthening followed press reports that Japan Prime Minister Abe may offer a cabinet position to LDP Deputy Policy Chief Shiozaki, who has been an outspoken proponent of GPIF pension reform.

- Australia's official building approval data for July gained 2.5% from the prior month beating forecasts of 1.9%, and from the prior year approvals were up 9.4% also beating estimates of 7.8%. In terms of components permits to build houses increased 1.4% from the prior month, with approvals for apartments, townhouses and other dwellings were up 5.9%.

- China press reporting big four banks in China had CNY125B in new loans during Aug 1st-28th, comparing to CNY210B in month of July. Deposit in big four banks said to have fallen CNY450B, comparing to fall of CNY1.5T in July. China big four banks continue to report disappointing lending data, after month of July China reported overall lending data well below expectations. Reminder earlier in the month, CICC speculated China Aug new loans at CNY600-700B, on stronger new loans from joint-stock banks.

Equities

US markets:

- AAPL: Spokesperson: Actively investigating reports of hacking - financial press

- CPWR: Said in advanced talks to be acquired; May announce on Sept 2nd - financial press

Notable movers by sector:

- Consumer discretionary: Huangshan Tourism Development 600054.CN +% (private placement)

- Consumer staples: China Modern Dairy 1117.HK -% (KKR sells stakes)

- Technology: Samsung Electronics 005930.KR -% (hits lowest level since July 2012)

- Energy: Malpo Energy MPO.AU +10.0% (CEO resigns)

- Financials: Aspen Group APZ.AU -1.2% (Ingenia withdraws plan of acquisition)