Equities open lower after US declines
|Asia Market Update: Equities open lower after US declines, trade-related uncertainty will not disappear; Markets cautious ahead of FOMC minutes ; Declines in iron ore futures weigh on Aussie miners
General Trend:
- Asian financials trade generally lower after declines in the US on lower bond yields
- Property shares outperform in China amid recent cut in the loan prime rate (LPR)
- Wanhua Chemical reports ~46% decline in H1 profits [co. is the world’s largest producer of MDI]
- Smartphone company Xiaomi declines in HK on weaker than expected results
- Alibaba said to postpone HK IPO due to recent protests
- Air China and China Construction Bank are expected to report earnings after the HK close
- Australia’s Brambles [supply-chain logistics co.] declines over 9 % on outlook
- Australia sells 2031 bonds at lower yield and bid to cover
- Yen weakens after gains on Tuesday, Nikkei Futures pare losses; Bond yields and FOMC minutes in focus
- Fed’s Quarles does not comment on monetary policy ahead of FOMC minutes release on Wed
- Offshore yuan (CNH) rises amid stronger yuan fixing
- Some Japanese companies have reported being granted permits to resume exports to South Korea
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.3%
- (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: monetary policy is still effective, latest rate cut gave inflation best chance to lift earlier, reducing probability unconventional tools needed
- BXB.AU Reports FY19 Underlying net $803.7M v $826.1M y/y; Rev $4.6B v $4.5B y/y; Guides FY20 Rev growth at lower end of mid-single digit growth objective
- (AU) Australia sells A$800M v A$800M indicated in 1.50% June 2031 bonds, avg yield 0.9753% v 1.056% prior, bid to cover 2.46x v 3.38x prior
- (AU) Australia July Skilled Vacancies M/M: +0.4% v -0.6% prior
Japan
- Nikkei 225 opened -0.9%
- (JP) Convenience stores in Japan are expected to offset increase in sales tax with discounts - Japanese Press
- (KR) Japan Defense White Paper alleges that North Korea has already made nuclear warheads - Japanese Press
- 7203.JP Planning to charge auto part companies more for steel in H2 - Japan press
- (JP) Japan Foreign Min Kono: Agreed with China and South Korea to aim for a Regional Comprehensive Economic Partnership (RCEP) agremeent by end of the year
Korea
- Kospi opened -0.3%
- (KR) South Korea July PPI M/M 0.0% v -0.3% prior, Y/Y: -0.3% v +0.1% prior
- (KR) South Korea Aug 1-20th Exports -13.3% y/y; Chip Exports -29.9% y/y; Imports -2.4% y/y
- (KR) South Korea Q2 Short Term External Debt: $140.0B v $129.4B prior
China/Hong Kong
- Hang Seng opened -0.3%; Shanghai Composite opened -0.2%
- BABA Follow Up: Said to be postponing HK$15B IPO in Hong Kong to October due to protesting (was expected in late August) - press
- (US) Pres Trump: Reiterates the US is not ready to make a deal with China
- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY50B prior; Net drain CNY40B v drain CNY10B prior
- (CN) China PBoC sets yuan reference rate: 7.0433 v 7.0454
- 2202.HK Reports H1 (CNY) Net 11.8B v 9.1B y/y , Rev 139.3B v 104.9B y/y
- 1810.HK Reports Q2 (CNY) adj Net 3.64B v 2.1B y/y, Op 2.34B v -7.59B y/y; Rev 52.0B v 45.2B y/y
- (CN) China Foreign Exchange Trade System: On Aug 20th conducted CNY3.0B in LPR based interest rate swaps - WeChat
- (HK) US Senate Majority Leader McConnell Op Ed: Senate to reconsider Hong Kong status is autonomy eroded; China's actions in HK will shape US relationship
North America
- (CN) Sec of State Pompeo: thinks a US-China deal could be reached by the 2020 election – CNBC
- (US) Pres Trump: we are looking at possible tax cuts all the time; not talking about doing anything at this moment on tax cuts but it's something I'm thinking about
- (US) Fed's Quarles (hawk, voter): No comments on monetary policy
- (US) Fed's Daly (dove, non-voter): sees solid domestic momentum that points to a continued economic expansion; don’t think we're headed towards a recession right now
- (VE) Venezuela President Maduro: Authorized 'secret' meetings with the Trump Administration, notes his gov't had secret contacts with the Trump Admin
- (US) Weekly API Oil Inventories: Crude: -3.5M v +3.7M prior
Europe
- (IT) Italy PM Conte: confirms will meet with President to tender resignation later today; will stop govt experience here
- (UK) UK budget reportedly could be delayed until 2020 if general election is called; could delay decision on BOE governor until after Brexit
- (DK) US President Trump to postpone meeting with leader of Denmark over Greenland - US financial press
Levels as of 1:20 ET
- Nikkei 225, -0.3%, ASX 200 -0.9%, Hang Seng flat; Shanghai Composite +0.1%; Kospi flat
- Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.5%; FTSE100 flat
- EUR 1.1105-1.1090; JPY 106.55-106.22 ; AUD 0.6791-0.6772 ;NZD 0.6424-0.6406
- Gold -0.2% at $1,512/oz; Crude Oil +0.4% at $56.34/brl; Copper +0.2% at $2.580/lb
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