Geopolitical jitters persist with Gaza ground war

Asian Market Update: Geopolitical jitters persist with Gaza ground war, Ukraine crash site tensions at the forefront

Economic Data

- (NZ) NEW ZEALAND JUN CREDIT CARD SPENDING M/M: 0.7% V 3.2% PRIOR; Y/Y: 7.0% V 7.6% PRIOR

- (NZ) NEW ZEALAND JUN NET MIGRATION: 4.3K V 4.0K PRIOR (highest since Feb 2003)

- (UK) UK JUL RIGHTMOVE HOUSE PRICES M/M: -0.8% (first decline in 7 months) V 0.1% PRIOR; Y/Y: 6.5% V 7.7% PRIOR

Index Snapshot (as of 02:30 GMT)

- Nikkei225 closed, S&P/ASX +0.2%, Kospi +0.2%, Shanghai Composite -0.1%, Hang Seng flat, Sept S&P500 -0.1% at 1,970

Commodities/Fixed Income/Currencies

- Aug gold +0.2% at $1,313, Aug crude oil -0.2% at $102.88/brl, Sept Copper flat at $3.18/lb

- (KR) South Korea sells KRW1.91T in 10-yr govt Bonds; bid-to-cover: 4.01x; avg yield: 2.995%

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1547 v 6.1568 prior setting (1st firmer setting in 7 sessions)

- GLD: SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 805.1 tonnes (first rise since Jul 14th)

Market Focal Points/Key Themes

- UN Security Council convened an emergency session Sunday night after the bloodiest day in the 2-week long Israel IDF incursion into Gaza. 13 Israeli soldiers and over 100 Palestinians have reportedly been killed on the day dubbed as "Black Sunday", and there are few signs that violence will abate. Amid the loss of life and reports of a kidnapping of an Israeli soldier by Hamas, PM Netanyahu defended the IDF assault on rocket launch sites alleged to be operating from densely populated locations. Attempts at a humanitarian ceasefire between the two sides were also reported to have broken down.

- Dollar majors are flat from Friday close levels with the exception of NZD/USD which is up about 20pips above the $0.87 handle. Outside of 2nd-tier economic data today, traders are also expected to adjust positioning going into the RBNZ rate decision on Wednesday. Local press report citing a survey of economists sees about a 75% chance of RBNZ raising interest rates again this week to 3.5%, but all respondents expect the central bank to pause until at least December.

- East Ukraine conflict between Kiev troops and pro-Russian separatists remains complicated by the tragic downing of Malaysian airlines flight which brought further condemnation on alleged Russian involvement from Western leaders. France's Hollande, Germany's Merkel, and UK's Cameron warned of more consequences against Russia if it remains uncooperative in securing crash site access for international inspectors. Earlier reports indicated a Swiss team of inspectors was only given crash site access to about 200 square meters and for about 75 minutes. US State Sec Kerry presented a set of "extraordinary circumstantial evidence" to implicate pro-Russian rebels in the crash, including an alleged video that the missile launcher was transported back into Russia after the crash, with "at least one missing missile." Late on Sunday, Russian Pres Putin said his govt will do everything possible to end the Ukraine conflict and endorsed the presence of international inspectors on the ground, while the rebels had reportedly agreed to hand over the discovered black boxes to investigators.

- Among notable speakers out of China, State Council Development & Research Department official Liu said the housing market poses a significant uncertainty factor for economy in next two years. Liu added the cooling investment could reduce China's annual GDP to around 6% from the current 7-8%.

Equities

US markets:

- GSJK: Announces Transformational $825M Acquisition of Compressor Systems, Inc. From Warren Equipment Company

- RAI: Florida jury awards $23.6B in punitive damages in a case against RJ Reynolds brought by the widow of a longtime smoker who died in 1996 - press

- MCD: China Food and Drug Administration (CFDA) Shanghai Branch launches investigations and orders McDonald's, KFC, and other fast food restaurants to take off meat supply from local supplier Husi Food - Chinese press

Notable movers by sector:

- Materials: Arrium Ltd ARI.AU -2.5% (production results)

- Energy: Shanghai Tongji Science & Technology Industrial 600846.CN +5.7%, Jiangsu Huachang Chemical 002274.CN +10.1%, Beijing Dynamic Power 600405.CN +4.7% (China state council on new energy vehicles); China Coal Energy 1898.HK -1.5% (H1 guidance); Caltex Australia Limited CTX.AU +3.9% (provides refining update)

- Technology: Semiconductor Manufacturing International Corp 981.HK +4.0% (Q2 guidance); Xi'An Longi Silicon Materials 601012.CN +2.8% (H1 guidance)