RBA on hold at 2% as expected

Asian Mid-session Update: China twin PMIs now both in contraction; RBA on hold at 2% as expected

Economic Data

- (CN) CHINA AUG MANUFACTURING PMI: 49.7 (first contraction in 6 months) V 49.7E; NON-MANUFACTURING PMI: 53.4 (3-month low) V 53.9 PRIOR

- (CN) CHINA AUG FINAL CAIXIN/MARKIT MANUFACTURING PMI: 47.3 (confirms 6-year low) V 47.1E; SERVICES: 51.5 (1-year low) V 53.8 PRIOR

- (JP) JAPAN AUG FINAL MANUFACTURING PMI: 51.7 V 51.9 PRELIM

- (JP) JAPAN Q2 CAPITAL SPENDING Y/Y: 5.6% V 8.8%E; CAPITAL SPENDING EX-SOFTWARE Y/Y: 6.6% V 10.9%E

- (AU) RBA LEAVES CASH RATE TARGET UNCHANGED AT 2.00%; AS EXPECTED

- (AU) AUSTRALIA Q2 CURRENT ACCOUNT BALANCE (A$): -19.0B (widest deficit in 7 years) V -15.9BE; NET EXPORTS OF GDP: -0.6% V -0.3%E

- (AU) AUSTRALIA JULY BUILDING APPROVALS M/M: 4.2% V 3.0%E; Y/Y: 13.4% V 10.1%E

- (AU) AUSTRALIA AUG CORELOGIC RPDATA HOUSE PRICES M/M: 0.3% V 2.8% PRIOR; 3rd straight increase

- (AU) AUSTRALIA AUG AIG MANUFACTURING INDEX: 51.7 V 50.4 PRIOR; 2nd straight expansion

- (NZ) NEW ZEALAND AUG QV HOUSE PRICES Y/Y: 11.3% V 10.1% PRIOR; Biggest increase since Nov 2007

- (NZ) NEW ZEALAND Q2 TERMS OF TRADE INDEX Q/Q: +1.3% V -2.5%E; 2nd straight quarter of increase

- (KR) SOUTH KOREA AUG MANUFACTURING PMI: 47.9 V 47.6 PRIOR (6th straight contraction)

- (KR) SOUTH KOREA AUG TRADE BALANCE: $4.3B V $6.1BE

- (KR) SOUTH KOREA AUG CPI M/M: 0.2% V 0.2%E; Y/Y: 0.7% V 0.7%E; CPI CORE Y/Y: 2.1% V 2.1% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 -2.4%, S&P/ASX -1.3%, Kospi -1.1%, Shanghai Composite -1.9%, Hang Seng -0.5%, Sept S&P500 -1.7% at 1,936

Commodities/Fixed Income

- Dec gold +0.7% at $1,140/oz, Oct crude oil -2.8% at $47.84/brl, Dec copper -0.1% at $2.33/lb

- USD/CNY: (CN) PBoC sets yuan mid point at 6.3752 v 6.3893 prior setting; 3rd straight stronger Yuan setting

- (CN) PBoC to inject CNY150B in 7-day reverse repos (20th consecutive injection)

Market Focal Points/FX

- For the 2nd straight day, Shanghai Composite is among the worst performing indices in the far east and S&P500 futures are down as much as 1.5%. The weakness was on display from the get-go, though the latest PMI figures have not helped matters one bit. Official manufacturing China PMI fell into contraction for the first time in 6 months and Services PMI slowed to a 3-month low. More vulnerable SME-oriented Caixin (formerly HSBC) was similarly disappointing, confirming a 6-year low, albeit not as weak as implied by the flash figures earlier. Caixin Services PMI was at a 1-year low. Resident economist noted "new orders and new export business both declined at sharper rates than in July, and contributed to the most marked contraction of output since November 2011." Report also cited recent volatility in equities, with pessimistic outlook becoming self-fulfilling.

- In other notable developments out of China, residential property prices in August showed further recovery in the sector, as m/m and y/y saw concurrent improvements for the first time in 16 months at m/m: +0.95% v +0.54% prior, y/y: +0.15% v -1.38% prior. Regulators continue to prop up the property sector, reducing the minimum downpayment requirements for 2nd home buyers to 20% from 30%.

- Reserve Bank of Australia policy statement was perhaps slightly less dovish than anticipated, sending AUD/USD up 20pips to 0.7150 in the wake of the announcement. The RBA acknowledged "some further softening in conditions in China and east Asia of late", but also saw stronger US growth. In terms of domestic growth, RBA noted "moderate expansion" in the economy continues - a slight departure from "economy has continued to grow" assessment - but reiterated inflation would remain consistent with target. The focus now shifts to tomorrow's release of quarterly GDP data, especially after today's release of worse than expected Q2 Current Account and contribution of exports component than anticipated, with some analysts forecasting a quarterly contraction.

- Japan MoF released Q2 Capex below expectations, but corporate profits were up sharply at 23.8% v 2.2%e. After the release, MoF official said the figures show continued moderate recovery. August final manufacturing PMI slowed slightly from prelim, but remained in expansion for the 4th straight month. USD/JPY pair is down for the 2nd straight day, falling another 60pips to 120.60 amid risk off flows.

Equities

US equities/ADRs:

- TRVN: Positive results from Phase 2b Study of TRV130 in Acute Postoperative Pain announced; +41.3% afterhours

- SUNE: Points72 asset management (formerly SAC) discloses passive 5.1% stake - filing; +3.4% afterhours

- BV: Reports Q1 -$0.13 v -$0.08e, R$48.9M v $48.6Me; +2.1% afterhours

Notable movers by sector:

- Consumer discretionary: Zhongsheng Group Holdings 881.HK -3.4% (H1 result); Qantas Airways QAN.AU +4.0% (July result)

- Consumer staples: Fufeng Group 546.HK -7.0% (H1 result); First Pacific Co 142.HK +0.2% (H1 result)

- Financials: CITIC Securities 600030.CN -2.1% (insider trading speculation); Evergrande Real Estate Group 3333.HK -0.4% (H1 result); China Merchants Holdings International 144.HK -1.2% (H1 result); Shanghai Industrial Holdings 363.HK -1.7% (H1 result); Central China Real Estate 832.HK -1.4% (H1 result)

- Industrials: China Machinery Engineering Corp 1829.HK +1.9% (H1 result); Baoxin Auto 1293.HK -5.7% (H1 result)

- Technology: Toshiba Corporation 6502.JP -3.1% (annual report delay)