Asian Market Update: Samsung Rallies on Strong Q2 Guidance; Energy, Commodity Sectors Lead Asian Indices Lower; Risk Aversion sets into Lower Energy and Higher Yen

- Major Asian equity markets sold off sharply in midday trading as poor employment data from the US and caution ahead of the new earnings season set to kick off this week weighed broadly on investor sentiment. Nikkei225 and S&P/ASX were led lower by energy and basic materials sectors, trading down by over 1.5% at their worst levels, before recovering slightly in late session. With about 90 minutes to go in Tokyo session, Nikkei225 is off by 1.4% and S&P/ASX is down about 1%. Korea's Kospi is a notable regional outperformer on the back of a surprisingly strong Samsung Electronics Q2 guidance while tech-heavy Taiex is around unchanged levels. Following the long-weekend, US markets are set to open lower as front month S&Ps slide 0.6% to 887.90 and benchmark yield falling back below 3.48%>

- In equity news, surprisingly strong guidance from Samsung shielded Korean market to overall regional decline while boosting company shares by over 5%. Samsung guided Q2 operating profit at KRW2.2-2.6T v KRW789M consensus estimate, with sales expected at KRW31-33T v KRW19T consensus. The guidance also marks the first time the company provided a quarterly forecast, as Q2 earnings are not expected before Jul 24th. In other notable equity developments, Toyota was reportedly considering a buyout for California GM joint venture, with the deal hinging on negotiations with UAW regarding cost concessions. Separately, Toyota's Prius model remained at the "top of the charts" as Japan's best-selling car in June, rising 2.5x on y/y levels. In other Nikkei news, Kyocera forecasted upside earnings surprise, with weaker than anticipated Yen levels potentially increasing profits. Among the decliners, Aeon was rumored to be facing a Q1 net loss of ¥2B v profit ¥1B expected. In other markets, Aussie miners were weaker amid sliding commodity prices. However, Rio Tinto saw some positive news from Chinese steelmakers who, according to Australian press, were no longer seeking a 40-45% price cut. Additionally, Aussie press reflected on the recent poor reports from the housing sector, noting that Lend Lease Corp did not see "massive pressure on prices".

- In terms of macro-oriented developments, notable economic data was contained to Australia's June ANZ job advertisement figures which came in at -6.7% - a figure far worse than the prior month's -0.2% and a potentially downbeat omen ahead of Thursday's employment data. In second-tier data, Australia's June TD Securities Inflation saw its first increase in 4 months on M/M basis at 0.4%, but Y/Y component saw its worst level on record since 2002 at 1.4%. Looking forward to other Australia data, Westpac forecasted that RBA would remain on hold at 3.00% at its decision tomorrow, but cut rates again before the end of 2009 amid rising jobless rate and falling business investment. Elsewhere, South Korea's KDI said the economy was moving away from a declining phase amid accelerating recovery in exports and domestic demand, and New Zealand Treasury saw downward pressure on current account from high currency rate and rising oil prices.

- In currencies, Japanese Yen was sharply higher across the board as traders shied away from risk-related majors, with the British Pound being hit the hardest among the majors. USD/JPY traded below 95.30, EUR/JPY tested downside of 133 handle, and GBP/JPY fell as low as 155 - all multi-session lows - before paring some of those declines later in the session.
GBP/USD traded down over one big figure below 1.63, and EUR/GBP targeted heavy resistance around 0.86. In other European majors, EUR/USD ranged between 1.3950-1.40 and USD/CHF traded around 1.0850-1.09, while commodity majors AUD and NZD ranged at 0.7910-60 and 0.6250-0.63 respectively.

- In commodities, oil traded sharply lower amid expectations of continued pressure on demand following poor US employment data. Front month crude contract briefly fell below $65.00 level, and spot gold traded down to $928, but backed away from intraday Friday lows just under those levels.