Asian Market Update: Australia job growth improves while New Zealand unemployment rises; Euromean majors in narrow ranges ahead of ECB, BOE decisions

- Major Asian bourses are trading on firmer footing after consolidation favored defensive health-care and industrials sectors over the prior session. Nikkei225 and S&P/ASX are both up over 1%, led by risk appetite driven tech, materials, and energy names. Korea's Kospi is trading around unchanged after yesterday's relative regional strength, while China's markets are off by 2% in a second day of broad-based selling on rising expectation of a less accommodative stance by the People's Bank of China. Ahead of the Thursday US session, front-month S&Ps have pared much of the early decline but still traded lower 0.1% just below 1,000 level. Notably, following the sharp gains seen in Fannie, Freddie, and AIG in the course of the Wednesday US session, Washington Post reported that the Obama administration is mulling a "bad bank" structure pooling troubled assets into a government-sponsored corporation.

- On the economic docket, Australia and New Zealand saw a mixed set of employment results. New Zealand posted a Q2 jobless rate of 6.0% - the highest since Q3 of 2003 - even though employment change q/q and y/y were slightly better than expected at -0.4% and -0.9% respectively. Speaking after the jobs reports, Finance Minister English said 6% unemployment is unacceptable even as additional signs of stabilizing economy had emerged. Over in Australia, July unemployment rate remained unchanged at 5.8% vs consensus forecast of 6.0%. Employment change was also substantially better than -18K expected at +32.2K - the largest job growth since June 2008. However, for the third consecutive month, part-time job growth disproportionally outweighed full-time jobs improvement, suggesting ongoing sluggish conditions in business investment. Subsequently, Australia's deputy prime minister Gillard said unemployment will continue to rise amid cross-sector exposure to global recession within the local economy.

- In other speakers, Chinese Government think tank once again reaffirmed 2009 GDP target growth around 8%, and also forecasting full-year export levels at -17.5% and CPI at -0.5%, noting that consumer prices could begin rising on higher resource rates. In Singapore, trade officials remained cautious on the overall outlook for the local economy, stating it was too early to say exports stabilized or a sustained recovery was taking place. Over in Japan, BOJ was reportedly expected to forecast ongoing declines in consumer prices extending into 2011.

- In equities, Nikkei automakers rallied as Honda commented on cost-cutting production plans to import motorcycles from Thailand for sale in Japan and Toyota saw sales of its new Prius models rise 290% to 27.7K units in the month of July. In other winning names, Sharp was also 3% higher following an upgrade at Credit Suisse. Among the biggest losers, Nikon fell over 10% after the company posted a wider Q1 loss accompanied by worse than expected FY09/10 outlook afterhours in the prior session. Reporting during market hours today, Konami posted Q1 Net ¥0.4B v ¥5.7B y/y, Op Profit ¥1B v ¥11.6B y/y, leading to a 5.5% drop in its shares after the report. Chiyoda also pared its early gains to trade around unchanged after Q1 sales of ¥82.7B were seen just short of ¥90.0B expected. Chinese PC maker Lenovo was over 7% lower in Hong Kong even though Q1 net loss of $16M was narrower than the loss $54M expected as market environment was still seen as challenging and PC unit sales were down 9% y/y.

- In currencies, European majors were thinly traded ahead of the BOE and ECB decision coming later in the session.
EUR/USD bounced around 1.44, GBP/USD hugged the 1.70 handle, and USD/CHF traded just above 1.06. Ahead of the highly anticipated BOE decision on whether to expand its GBP125B quantitative easing program, London Times Monetary Policy Committee said the BoE should suspend money printing as economic data suggested that the recession was coming to an end. Earlier, RICS forecasted UK housing prices to rise "slightly" in 2009 vs prior forecast of -10% . In commodity majors, AUD/USD strengthened across the board on better than expected jobs number, rising to fresh 10-month high above 0.8450. USD/CAD flat-lined around 1.07, while NZD/USD underperformed after higher than expected Q2 jobless rate, briefly falling below 0.67. Japanese Yen was marginally weaker, with USD/JPY and EUR/JPY rising above 95.00 and 137.00 handles respectively.

- Crude oil prices are lower on the session after its was reported during the US session that weekly US crude inventories were higher than expected (DOE CRUDE: +1.7M V +800KE). Spot Gold prices are marginally lower at the time of writing in a range bound session as markets await Friday's US employment figures. In other commodities, Shanghai Copper prices declined for the first time in 6 sessions, tracking the weakness in Chinese equities.