Asian Market Update: Equities sink and USD recovers after China HSBC Flash Manufacturing PMI disappoints again


Economic Data

- (CN) CHINA SEPT HSBC FLASH MANUFACTURING PMI: 47.8 V 47.6 PRIOR

- (NZ) NEW ZEALAND Q2 GDP Q/Q: 0.6% V 0.4%E; Y/Y: 2.6% V 2.3%E

- (NZ) NEW ZEALAND AUG ANZ NZ JOB ADS M/M: 0.9% V 0.7% PRIOR

- (JP) JAPAN AUG MERCHANDISE TRADE BALANCE TOTAL: -¥754.1B V -¥829.3BE; ADJ TRADE BALANCE: -¥472.8B V -¥384.6BE

- (AU) AUSTRALIA AUG RBA FOREIGN EXCHANGE TRANSACTION (A$): 351M V 528M PRIOR

- (AU) Australia ACCI Q3 Survey of Industrial Trends q/q: 52.3 v 47.9 prior

- (PH) Philippines Aug Balance of Payments: $582M v $3.2B prior


Markets Snapshot (as of 04:00GMT)

- Nikkei225 -1.2%

- S&P/ASX -0.4%

- Kospi -0.9%

- Shanghai Composite -1.1%

- Hang Seng -0.5%

- Dec S&P500 -0.3% at 1,453

- Dec gold at $1,768/oz

- Oct Crude oil -1.07% at $91/brl


Notes/Observations

- Market sentiment was soured by weak HSBC flash manufacturing PMI figure out of China, failing to stage a meaningful bounce from last month's disappointing print and remaining in contraction for the eleventh consecutive month. Asian equity markets accelerated their decline, with most major indices falling by over 1%. Greenback strengthened across the board against the risky majors, as AUD fell over 50 pips toward the $1.04 handle and euro briefly tested below the $1.30 level. NZD was briefly boosted by stronger than expected Q2 GDP which catapulted the kiwi above $0.83 level, only to reverse all of those gains back below 0.8250 after disappointing China data.

- Elsewhere, declining growth overseas continues to weigh on exports from Japan, pushing its Aug trade balance into a second straight monthly deficit. The August merchandise trade deficit stood at ¥754B and increased from the prior month, while the trade deficit with Europe hit record levels. On adjusted basis, Japan's terms of trade remains in deficit since early 2009.

- Japanese yen pared some of its overnight decline following yesterday's policy easing decision by the BoJ. USD/JPY fell about 20 pips from session highs below ¥78.30, having briefly tested above the ¥79 handle after the more aggressive than expected policy easing by the BoJ overnight.


Fixed Income/Currencies/Commodities

- (NZ) New Zealand sells NZ$100M 2019 bonds, avg yield 3.18%; Sells NZ$150M 2023 bonds, avg yield 3.64% v 3.62% prior

- (AU) Australia MoF (AOFM) sells A$500M in Dec 2012 Notes, avg yield 3.35%


Speakers/Political/In the Papers

- (CN) China MOFCOM spokesperson: Plans to announce foreign trade growth policies by the end of the month - Chinese press

- (AU) IMF official Masahiko: Australia GDP at reasonable rate; inflation under control; there continues to be pessimism amid two speed and high AUD.

- (NZ) New Zealand Fin Min English: Economy posts solid H1 growth; outlook for moderate growth for the next 3-4 years

- (JP) Japan PM Noda: Decision made yesterday by the BOJ was 'bold' and appropriate

- (JP) Japan Automobile Manufacturers Association (JAMA): Japan should revise its vehicle tax as consumption tax; BoJ stimulus is not enough; to see impact on Sept sales from recent anti-Japan demos in China

- (JP) S&P comments on Japan: Japan is a slowly deteriorating story

- (US) Fed's Fisher (non-voter, hawk): Congress has been actively subverting job creation and hurting the economy, Congress has hurt the Fed's efforts to help the economy and has been doing nothing to lower unemployment

- (DE) German banks to receive additional six months to comply with Basel III - financial press


Asia Equities

- HEIA.NL: To acquire KPG's 8.6% stake in APB (update) at S$53.00/shr - financial press

- NTT: To spend up to ¥150B on share repurchase - Japanese press

- XTA.UK: Focusing on getting approvals for $6.0B construction project in Philippines

- SYD.AU: Reports Aug passenger figures +5.7% y/y; YTD +2.3% y/y; record monthly passenger reading

- (CN) China's Industrial Bank to extend loans of CNY40B to the China Railway Construction Corporation (CRCC) to support infrastructure construction.


US Equities

- NKE: Board approves 4 year $8B share repurchase program (approx 22% of market cap)

- BBBY Reports Q2 $0.98 v $1.02e, R$2.59B v $2.54Be; -4.4% afterhours

- ADBE Reports Q3 $0.58 v $0.59e, R$1.08B v $1.10Be; -0.9% afterhours

- NSC Guides Q3 $1.18-1.25 v $1.64e; cites volume declines in certain markets and lower revenues from fuel surcharges; -5.1% afterhours