Asian Market Update: China continues to slow, Australia remains robust; BoJ and BoK hold rates


Economic Data

- (CN) CHINA JULY CONSUMER PRICE INDEX (CPI) M/M: +0.1% V -0.1%E; Y/Y: 1.8% V 1.7%E (lowest level since Jan 2010); -0.8% M/M

- (AU) AUSTRALIA JULY UNEMPLOYMENT RATE: 5.2% V 5.3%E; EMPLOYMENT CHANGE: +14.0 K V +10.0KE; PARTICIPATION RATE: 65.2% V 65.3%E

- (NZ) NEW ZEALAND Q2 UNEMPLOYMENT RATE: 6.8% V 6.5%E (2-year high); EMPLOYMENT CHANGE Q/Q: -0.1% V 0.4%E (first decline in 6 quarters); Y/Y: 0.6% V 1.2%E; PARTICIPATION RATE: 68.4% V 68.6%E

- (CN) CHINA JULY RETAIL SALES Y/Y: 13.1% V 13.5%E; RETAIL SALES YTD: 14.2% V 14.3%E

- (CN) CHINA JULY INDUSTRIAL PRODUCTION Y/Y: 9.2% V 9.7%E; YTD Y/Y: 10.3% V 10.4%E

- (CN) CHINA JULY YTD URBAN FIXED ASSETS Y/Y: 20.4%V 20.6%E

- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 3.00%, (AS EXPECTED)

- (NZ) NEW ZEALAND AUG ANZ CONSUMER CONFIDENCE INDEX Y/Y: 3.3% V 4.4% PRIOR; 114.1 V 110.5 PRIOR

- (JP) JAPAN Q2 HOUSING LOANS Y/Y: 2.7% V 2.4% PRIOR

- (NZ) NEW ZEALAND JULY QV HOUSE PRICES Y/Y: 4.6% V 4.2% PRIOR

- (JP) JAPAN JUL MONEY STOCK M2 Y/Y: 2.2% V 2.2%E; M3 Y/Y: 1.9% V 1.9%E

- (JP) JAPAN JUN MACHINE ORDERS M/M: 5.6% V 12.0%E; Y/Y: -9.9% V -4.5%E; CORE MACHINE ORDERS -1.2% Y/Y

- (JP) BANK OF JAPAN (BOJ) LEAVES TARGET RATE UNCHANGED AT 0.0-0.1%; (AS EXPECTED); ASSET PURCHASE PROGRAM UNCHANGED AT ¥70T; ECONOMIC ASSESSMENT UNCHANGED

- (IN) INDIA JUN INDUSTRIAL PRODUCTION Y/Y: -1.8% V +0.4%E

- (CN) CHINA JULY PRODUCER PRICE INDEX (PPI) Y/Y: -2.9% V -2.5%E (biggest decline since Oct 2009)

- (JP) JAPAN JUL CONSUMER CONFIDENCE: 39.7 V 40.0E; Govt downgrades assessment of consumer confidence

- (NZ) NEW ZEALAND JULY REINZ HOUSE PRICES M/M: +0.7% V -0.3% PRIOR; Y/Y: +4.6%; HOUSE PRICE SALES Y/Y: +19.5% V 17.3% PRIOR

- (JP) JAPAN JULY TOKYO AVERAGE OFFICE VACANCIES Y/Y: 9.3% V 9.4% PRIOR

- (IN) India July Local Car Sales: 143.5K v 155.8K prior

- (MA) MALAYSIA JUN INDUSTRIAL PRODUCTION Y/Y: 3.7% V 4.8%E; MANUFACTURING SALES VALUE Y/Y: 6.3% V 10.0% PRIOR

- (JP) Japan investors bought ¥448B in foreign bonds last week vs ¥8.9B sold in prior week; Foreign investors sold ¥82.5B in Japan stocks last week vs ¥76.5B sold prior

- (US) US July Foreclosure Activity M/M: -3% v -4% prior; Y/Y: -10% v -11% prior - RealtyTrac

- (RU) Russia July Light Vehicle & Car Sales Y/Y: 14% v 12%e


Markets Snapshot (as of 04:30GMT)

- Nikkei225 +1.3%

- S&P/ASX +0.3%

- Kospi +1.6%

- Shanghai Composite +0.2%

- Hang Seng +0.8%

- Taiwan Taiex +1.4%

- Straits Times Index closed

- Sept S&P500 +0.3%

- Dec gold +0.1% at $1,617/oz

- Sept Crude oil +0.3% at $93.64/brl


Overview/Top Headlines

- Asian markets were all in the green Thursday as China inflation continues to slow to 1.8% in July, this is the lowest level since January 2010. Food inflation continued to fall m/m to 2.4% y/y, non-food was a tick higher to 1.5%. Year-to-date CPI fell to 3.1% from 3.3% in June. Industrial production and retail sales for China were also lower than expected, Shanghai Composite held on to its 0.5% gain despite the slowdown. 9,053 kilometers south in Australia July unemployment was lower than expected at 5.2% also down from the revised lower reading of 5.3% in June. Employment change was +14K higher than expected, on an part and full time positions added in the month. June numbers were all revised lower. AUD/USD tested above $1.0610 on the news.

- Shares of BHP and Rio Tinto were up (+2.1% and 3.9% respectively) after Rio's results were positively impacted by a lower than expected tax rate. Shares of Telstra fell 2% after giving its FY12 results, numbers were strong but failed to beat expectations. The telecom guided higher FY13 EBITDA and sales.

- The Bank of Japan left rates, policy and easing at status quo, USD/JPY fell to session lows around ¥78.30. EUR/JPY rose nearly to ¥97.30. Markets had held some expectations that the 2 new members could help to clarify and solidify the bank's position. The BoJ downgraded its assessment on exports and production, but held its economic assessment.

- The Bank of Korea (BoK) also kept rates and policy changes unchanged after last month's surprise rate cut. BoK affirmed to implement policies that would focus on domestic growth and price stability. Korea expects inflation to stay low but cited oil and grain prices as possible risks. KRW stayed stronger against the USD by 0.3%, the Kospi came off session highs before rebounding back to new highs later in the session.

- Corn (+0.5%), wheat (+0.4%) and copper (+0.4%) rose in the session. Silver tracked gold rising 0.2% to $28.11. Brent crude held above $114.


Speakers/Geopolitical/In the press

- (NZ) Reserve Bank of New Zealand (RBNZ) Gov Bollard: Have seen the impact of carry trade on NZ$; Pressure on the fx market from global monetary policy is a problem

- (KR) South Korea state-run think tank Korea Development Institute (KDI): Korean economy showing signs of weakening due to worsening external conditions and moderating growth in domestic demand - Korean press

- (CA) BoC's Carney: Wants to see CAD to reflect Canada's fundamentals; May increase rates if growth is above trend - Canadian press interview

- (CN) China State Electricity Regulatory Commission: Supply and demand for electricity in July were balanced; H1 power consumption rose 5.5% y/y to 2.38T KWh - China Daily


Equities

- APA.AU: Increased its offer for HDF from A$2.00 to A$2.56 per share vs A$2.325 offered by PPA

- TAH.AU: Reports FY12 Net A$340M v A$337Me; Rev A$3.04B v A$4.5B y/y


US Equities

- SPWR: Reports Q2 $0.08 v -$0.10e, R$596M v $608Me; -12.6% afterhours

- MNST: Reports Q2 $0.59 v $0.61e, Net Rev $592.6M v $600Me; -9.7% afterhours

- NWSA: Reports Q4 $0.32 v $0.32e, R$8.37B v $8.71Be; -3.5% afterhours

- CTL: Reports Q2 $0.65 v $0.61e, R$4.61B v $4.57Be; +0.1% afterhours

- CELL: Reports Q2 $0.13 v $0.16e, R$1.27B v $1.32Be; +0.1% afterhours

- MDRX: Reports Q2 $0.16 v $0.18e, R$370M v $369Me; +7.6% afterhours


Fixed Income/Commodities/Forex

- (CN) China H1 Rare Earth Exports 5K tons (below quota) - China media

- (CN) PBoC has injected CNY44B into the markets this week v CNY86B taken out last week - financial press

- (KR) University of Sydney Korea expert thinks North Korea has minerals worth $6.0T - Asia Times

- (CN) China plans to establish a global authoritative pricing index for rare earth - Chinese press