Asia data fails to move any needles

Asia market update: Mixed day in thin markets ahead of Nth Am holiday; Asia data fails to move any needles; Focus on various European Mnfg PMIs.

General trend

- Asian equity markets mixed in quiet trading with the looming US Labor Day holiday tonight. CN and HK markets under-performed with Hang Seng -1.8%. Note that earnings season was completed last Friday in Australia/NZ and China.

- Heading into the long-holiday weekend for North America global interest rates ticked up slightly late Friday night Asia time as the US Fed’s preferred inflation gauge PCE did little to change expectations around the Fed’s rate outlook, while July personal consumption data remained solid.

- China official Aug PMI for manufacturing stayed in contraction for the 4th straight month and at a 6-month-low, with manufacturer sentiment remaining stubbornly negative amid a fear that exports will be under pressure due to tariffs and quotas increasingly being placed against Chinese goods around the world. Factory gate prices plunged to 42, their worst level in 14 months.

- That was followed by today’s Caixin Aug PMI Manufacturing, which moved back into expansion after a one-month contraction. Export orders were subdued, however, falling marginally for the first time in the year-to-date amid reports of deteriorating external conditions.

- China real estate woes continue to worsen, with China home sales in August -22% y/y (further accelerating July's fall) [update]. Giant property developer Vanke also reported a net loss for the first half, with Revenues down about 1/3, while beleaguered Country Garden said it would postpone its FY23 annual results and FY24 results as it ‘needs more time to collect financial information”.

- China PBOC's sovereign bond trading in the open market "strengthens monetary and fiscal policy coordination", according to a front-page Securities Times article.

- Over the weekend RBA's Dep Gov Hauser said Australia interest rates are likely to stay unchanged in the near future.

- A lot of data out of Australia today, but Aussie dollar merely bounced around a fairly narrow range at the levels attained at the end of Friday trading, despite 10-yr yields up nearly 7bps.

- Former RBA Research Head John Simon (recently departed) warned inflation could become entrenched in Australia. Said that a decision not to raise interest rates further risks entrenching high inflation and hasn’t been adequately scrutinised by the RBA's board.

- China has warned Japan of retaliation over its potential new chip curbs; Toyota reportedly told officials that Beijing could react by cutting Japan's access to minerals for automotive production.

- Currencies range-traded in thin markets, with BTC showing continued weakness down into the $57K handle again and WTI crude losing another -0.5% after the ~$2.50 plunge seen on Friday night during US trading.

- US equity FUTs slightly down during Asian trading.

Looking ahead (Asian time zone)

- Monday Sept 2nd (Mon eve: Various European Mnfg PMI).

- Tuesday Sept 3rd KR Aug CPI, (Tue night US Aug ISM Mnfg PMI).

- Wednesday Sept 4th AU + JP final Aug Services PMI, AU Q2 GDP, CN Caixin Aug Services PMI, (Wed night US July JOLTS).

- Thursday Sept 5th KR 2nd prelim Q2 GDP, JP July Labor cash earnings, AU July Balance of Trade, (Thu night US initial weekly Jobless Claims, US Aug ISM Services PMI, US Fed Beige Book).

- Friday Sept 6th AU July Home Loans (Fri night US Aug NFP).

- Saturday Sept 7th CN Aug Trade Balance.

Holidays in Asia this week

- Mon Sept 2nd Vietnam, (Mon night US and Canada).

- Tue Sept 3rd Vietnam.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,085.

- Australia July Building Approvals M/M: 10.4 % v 2.8%e.

- Australia Q2 Inventories Q/Q: +0.1% v -0.1%e.

- Australia Aug Final PMI Manufacturing: 48.5 v 48.7 prelim (confirms 7th month of contraction).

- Australia Aug ANZ-Indeed Job Advertisements M/M: -2.1% v -2.7% prior (down 29.8% v Nov 2022 peak).

- Australia Aug Melbourne Institute Inflation M/M: -0.1% v 0.4% prior; Y/Y: 2.5% v 2.8% prior.

- Former RBA Research Head Simon warns inflation could become entrenched in Australia - AFR.

- Australia Aug CoreLogic House Prices M/M: 0.5% v 0.5% prior (update).

- New Zealand PM Luxon; Malaysia and NZ pledge to boost trade value by 50% by 2030 - joint press conference with Malaysia PM.

- Follow up: New Zealand govt said to begin consultation on open banking and electricity markets - NZ press.

- RBA's Dep Gov Hauser said Australia interest rates are likely to stay unchanged in the near future – Press [weekend update].

China/Hong Kong

- Hang Seng opens -0.7% at 17,862; Shanghai Composite opens -0.4% at 2,832.

- (CN) China Aug CAIXIN PMI Manufacturing: 50.4 V 50.0E (moves back into expansion after one month contraction).

- Follow up: China warns Japan of retaliation over potential new chip curbs – US financial press.

- China PBOC's sovereign bond trading in the open market "strengthens monetary and fiscal policy coordination" - state-run Securities Times front page article.

- (HK) Macau Aug (MOP) Casino Rev Y/Y: 19.8B patacas, +14.8% y/y - update.

- (CN) China AUG Manufacturing PMI (GOVT official): 49.1 V 49.5E (4th month of contraction and a 6-month-low) [weekend update].

- China Real Estate Information: China home sales -22% m/m (further accelerating July's fall) [weekend update].

- China FX Regulator: To launch foreign currency NDFs on Sept 2nd in interbank market – press [weekend update] Foreign Exchange Non Deliverable Forwards (NDF) | Bank of China@UK (boc.cn).

- The major currencies that we can provide for NDF are: Chinese Renminbi (CNY), Euro (EUR), British Pound (GBP), Hong Kong Dollar (HKD), U.S. Dollar (USD).

- Alibaba: China State Administration for Market Regulation (SAMR) ends antitrust review of Alibaba's monopolistic behavior; To 'guide' Alibaba' to continue to regulate operations and improve efficiency [weekend update].

- China PBOC sets Yuan reference rate: 7.1027 v 7.1124 prior (strongest since May 16th).

- China PBOC Open Market Operation (OMO): Sells CNY4B in 7-day reverse repos; Net drains CNY468B v net drains CNY349B prior.

Japan

- Nikkei 225 opens +1.0% at 39,025 (first time to trade over 39K since July 31st).

- Japan Aug Final Manufacturing PMI: 49.8 v 49.5 prelim (confirms 2nd contraction contraction).

- Follow up: China warns Japan of retaliation over potential new chip curbs; Toyota reportedly told officials that Beijing could react by cutting Japan's access to minerals for automotive production – US financial press.

- Japan Q2 capital spending (CAPEX) Y/Y: 7.4% V 10.0%E [weekend update].

South Korea

- Kospi opens +0.4% at 2,683.

- South Korea Aug PMI Manufacturing: 51.9 v 51.4 prior [4th straight expansion].

- TELEGRAM: South Korea police launch investigation into Telegram over "deep fake crimes" - South Korean press.

- South Korea reportedly cuts FX stabilization fund by record amount - Korean press.

- South Korea Min for Trade: South Korea signs MOU with Western Australia Premier for collaboration on clean energy, critical mineral supply chains - South Korea press.

- South Korea Aug Trade Balance: $3.8B v $3.9Be [weekend update].

Other Asia

- Taiwan Aug PMI Manufacturing: 51.5 v 52.9 prior [5th month of expansion].

- Indonesia Aug PMI Manufacturing: 48.9 v 49.3 prior [2nd straight contraction].

- Philippines Aug PMI Manufacturing: 51.2 v 51.2 prior [12th month of expansion].

- Thailand Aug PMI Manufacturing: 52.0 v 52.8 prior [4th month of expansion].

- Malaysia Aug PMI Manufacturing: 49.7 v 49.7 prior [3rd month of contraction].

- Philippines July Money Supply Y/Y: 7.2% v 6.5% [weekend update].

North America

- US Pres Biden said to discuss efforts to release Gaza hostages on Monday, 09:15am ET (01:15 GMT) - financial press.

- (US) Aug Chicago purchase manager’s index (PMI): 46.1 V 44.8E [weekend update].

- (US) Aug final University of Michigan confidence: 67.9 V 68.1E [weekend update].

- (US) July PCE deflator index M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.5%E [weekend update].

- (US) July personal income: 0.3% V 0.2%E; personal spending: 0.5% V 0.5%E [weekend update].

- (CA) Canada Ju GDP M/M: 0.0% V 0.1%E; Y/Y: 1.2% V 1.4%E [weekend update].

Europe

- (IE) Ireland Aug PMI Manufacturing: 50.4 v 50.1 prior (2nd straight expansion).

- (EU) ECB's Villeroy (France): Market's view on rates at 2.0-2.5% in 2025 is reasonable; 'Fair and wise' for ECB to cut rates in September - press interview [weekend update].

- (RU) Reportedly some Russian companies facing growing delays and rising costs on payments with trading partners in China, leaving transactions worth tens of billions of yuan in limbo; Intermediaries' fees have risen to 6% from near zero – press [weekend update].

Levels as of 01:20 ET

- Nikkei 225 +0.1%; ASX 200 +0.51; Hang Seng -1.9%; Shanghai Composite -0.7%; Kospi +0.4%.

- Equity S&P500 FUTs -0.1%; Nasdaq100 FUTs -0.2%, Dax +0.1%; FTSE100 -0.1%.

- EUR 1.1042-1.1056: JPY 145.78-146.60; AUD 0.6757-0.6779; NZD 0.6230-0.6253.

- Gold +0.1% at $2,530/oz; Crude Oil -0.6% at $73.11/brl; Copper -0.7% at $4.1877/lb.