Asia equities give back most of yesterday’s gains

Asia market update: AU RBA rates unchanged; CN Caixin PMI Services weaker than ests; Asia equities give back most of yesterday’s gains.

General trend

- The Australia RBA decision to leave rates unchanged at 4.10% saw little movement in the AUD, which had already lost ~0.5% during the morning session, with most of its losses coming after weak China PMI data..

- AU 10-yr yields +3.6bps to 4.131%, with AU equities -0.3%.

- Of note, this was the last decision by Gov Lowe before his retirement; Deputy Michele Bullock will take over leadership of the RBA on 18th Sept.

- CN Caixin PMI Services came in below estimates, still in expansion but the lowest read since Dec 2022 - putting pressure on commodity currencies AUD, NZD and the Yuan itself.

- In equities only the Nikkei was able to eke into positive territory during morning trading, briefly touching above 33,000 for the first time since Aug 2, 2023.

- Hang Seng Mainland Properties Index lost -2% soon after the open, giving back most of Monday’s gains after the weekend news of China authorities planned stimulus measures for the property market.

- Home sales were reported to have ‘spiked’ the past couple of days in Beijing and Shanghai following the easing of mortgage rules for Tier 1 cities.

- In China, Tesla sales m/m increased nearly 25% on the back of its further price cuts announced during August.

- US equity FUTs were slightly down in Asia trading.

Looking ahead (Asian time zone)

- Wed AU GDP.

- Wed night US ISM PMI.

- Thu AU & CN Balance of Trade.

- Fri JP GDP (final).

- Sat CN Inflation.

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,316.

- Australia Aug Final PMI Services: 47.8 v 46.7 prelim (confirms 2nd straight contraction).

- Australia Q2 Current Account (A$): 7.7B v 8.0Be.

- Australia ANZ/Roy Morgan Weekly Consumer Confidence: 78.7 v 78.1 prior.

- Chevron (CVX) Australia Union plans full strike at Chevron's Wheatstone and Gorgon LNG facilities in Australia for two weeks from Sept 14 if demands not met.

- New Zealand Aug ANZ Commodity Price M/M: -2.9% v -2.6% prior [3rd straight decline].

- New Zealand Treasury: Household consumption outlook remains subdued.

- S&P says it is 'reasonably comfortable' with New Zealand's AA+ Sovereign rating.

China/Hong Kong

- Shanghai Composite opens -0.2% at 3,169.

- Hang Seng opens -0.7% at 18,717.

- Hong Kong Aug PMI (whole economy): 49.8 v 49.4 prior.

- Hong Kong Financial Sec Chan says never excludes [equity market] stamp duty cut option.

- China Aug CAIXIN PMI services: 51.8 V 53.5E (8th straight expansion, but lowest since Dec 2022).

- China Vice Premier Lifeng: Will boost investment and consumption for affordable housing.

- Home sales ‘spike’ in Beijing and Shanghai amid easing of mortgage rules; cites comments from CGS-CIMB Securities – SCMP.

- China credit growth likely improved in Aug - Shanghai Securities News.

- Tesla Reports Aug China Deliveries 84.1K v 64.3K m/m - PCA prelim data (overnight update).

- Delivery of Model Y Long-Range in China extended to 6-8 weeks (overnight update).

- Hapag Lloyd (HLAG.DE) CEO: Freight rates out of China are down from slack demand while costs have risen (update).

- Russia considers speeding up of building China gas links.

- China Foreign Ministry Daily Briefing: Confirms Premier Li Qiang will attend G-20 on Sep 9-10 in India instead of Pres Xi (overnight update).

- US Commerce Sec Raimondo: Told China that patience is 'wearing thin' for US businesses (update) (overnight update).

- China PBOC sets Yuan reference rate: 7.1783 v 7.1786 prior.

- China PBOC Open Market Operation (OMO): Sells CNY14B in 7-day reverse repo; Net drains CNY371B v drains CNY320B prior.

Japan

- Nikkei 225 opens flat at 32,941.

- Japan Aug Final PMI Services: 54.3 v 54.3 prelim (confirms 11th month of expansion).

- Japan July Household Spending Y/Y: -5.0% v -2.5%e.

- Nikkei to remove Nippon Sheet Glass, Mitsui E&S and Matsui Securities from the Nikkei 225 index; To replace with Nitori, Mercari.

- Japan PM Kishida: Face-to-face talks with China not decided for visits, incl G20 Summit.

- Japan Foreign Ministry: Submitted counterargument to China's notification to WTO on suspending aquatic imports from Japan after Fukushima water release.

- Former BOJ board member Kataoka said the Spring 2024 wage talks to be key for the BOJ’s inflation mission.

- Japan PM Kishida: Confirms to provide additional ¥20.7B to support fisheries industry after China import ban (overnight update).

- Japan sells ¥2.7T in 10-year JGB bonds; AVG yield: 0.6570% V 0.5940% PRIOR; BID-to-cover: 4.02X V 3.64X prior.

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

South Korea

- Kospi opens -0.2% at 2,578.

- South Korea Q2 preliminary GDP Q/Q: 0.6% V 0.6%E; Y/Y: 0.9% V 0.9%E.

- South Korea Aug CPI M/M: 1.0% V 0.6%E; Y/Y: 3.4% V 2.9%E (fastest monthly pace since Jan 2017).

- South Korea Aug Foreign Reserves: $418.3B v $ 421.8B prior [lowest since Nov 2022].

- Bank of Korea (BOK): Sees Sept CPI at similar level with Aug or higher; inflation likely to stabilize again after Oct..

- South Korea Fin Min: CPI inflation to stabilize after Oct [comments after Aug CPI data].

Other Asia

- Vietnam Aug PMI Manufacturing: 50.5 v 48.7 prior (1st expansion in 7 months).

- Thailand Aug CPI M/M: 0.6% v 0.3%e; Y/Y: 0.9% v 0.6%e (4th month with annual pace below the target range).

- Thailand Commerce Ministry: Headline inflation seen steady or rising slightly in Sept..

- Thailand Central Bank Chief Sethaput: Economic recovery is intact, but weaker than expected; To revise down growth & inflation forecasts later in Sept..

- Thailand exports seen falling 1% this year (prior range +1.0% to -0.5%) - Shippers' group.

- Philippines Aug CPI M/M: 1.1% v 0.5%e; Y/Y: 5.3% v 4.7%e (16th month above target).

- Philippine Central Bank (BSP): Prepared to resume monetary policy tightening as necessary.

- India Food Sec Chopra: Sept monsoon rains to help Indian crops after dry Aug (overnight update).

North America

- Pres Biden: Not worried about an United Auto Workers (UAW) strike.

- Albermarle (ALB) Confirms non-binding agreement to acquire Liontown for $4.32B on equity value basis (pre-market update for US post-holiday).

- Pres Biden to travel to New Delhi, India to attend G20 Leaders Summit, Sept 7; To meet with India PM Modi on Friday, then travel to Hanoi, Vietnam Sept 10.

Europe

- Eurozone Sept Sentix investor confidence: -21.5 V -20.0E.

- ECB's Centeno (Portugal, dove): Reiterates view that Council runs the risk of doing 'too much' on rates.

- Germany July trade balance: €15.9B V €17.8BE.

- SWISS Q2 GDP Q/Q: 0.0% V 0.1%E; Y/Y: 0.5% V 0.5%E.

- (IT) Follow up: China Foreign Minister: On meeting with Italy counterpart - both countries should strive for bilateral relations to be at forefront of China-EU relations.

- Germany Govt Spokesperson: We regret the decision of China's Xi not to attend G20.

- Renault (RNO.FR): CEO considers €10B valuation for EV unit to be floated next year - FT.

Levels as of 01:20 ET

- Nikkei 225 +0.2%, ASX 200 -0.3% , Hang Seng -1.5%; Shanghai Composite -0.6% ; Kospi -0.2%.

- Equity S&P500 Futures: -0.1%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.1%.

- EUR 1.0781-1.0799 ; JPY 146.40-146.78 ; AUD 0.6417-0.6465 ; NZD 0.5913-0.5950.

- Gold flat at $1,964/oz; Crude Oil -0.1% at $85.87/brl; Copper flat at $3.8323/lb.