RBNZ talks down the kiwi dollar

Asian Market Update: RBNZ talks down the kiwi dollar; China flash Manuf PMI hits 18-month high; South Korea announces major stimulus

Economic Data

- (CN) CHINA JULY HSBC/MARKIT FLASH MANUFACTURING PMI: 52.0 V 51.0E (18-month high)

- (NZ) NEW ZEALAND CENTRAL BANK (RBNZ) RAISES OFFICIAL CASH RATE BY 25BPS TO 3.50%, AS EXPECTED

- (NZ) NEW ZEALAND JUN TRADE BALANCE (NZ$): 247M V 100ME (8th consecutive trade surplus)

- (KR) SOUTH KOREA Q2 PRELIM GDP Q/Q: 0.6% V 0.7%E; Y/Y: 3.6% V 3.7%E

- (JP) JAPAN JULY MARKIT/JMMA MANUFACTURING PMI: 50.8 V 51.5 PRIOR

- (JP) JAPAN JUN MERCHANDISE TRADE BALANCE: -¥822.2B V -¥642.9BE; ADJ TRADE BALANCE: -¥1.08T V -¥1.12TE

Index Snapshot (as of 02:30 GMT)

- Nikkei225 +0.1%, S&P/ASX +0.1%, Kospi +0.2%, Shanghai Composite %, Hang Seng +0.2%, Sept S&P500 flat at 1,980

Commodities/Fixed Income/Currencies

- Aug gold -0.4% at $1,302, Sept crude oil flat at $103.11/brl, Sept Copper +0.8% at $3.23/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 0.6 tonnes to 805.4 tonnes

- (CN) PBoC won't conduct open market operations (OMO) in today's session (2nd consecutive halt); Injects net CNY18B this week v injected 17B prior (11th consecutive week of net injection) (JP) BOJ offers to buy ¥400B in 5-10yr JGB, ¥100B in 10-25yr JGB, ¥30B in JGB with maturity over 25yr

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1579 v 6.1572 prior setting (weakest setting since July 8th)

Market Focal Points/Key Themes

- As widely expected, RBNZ raised its official cash rate for the 4th consecutive time to 3.50% and also signalled a resounding pause to its tightening campaign for a "period of assessment before interest rates adjust further towards a more-neutral level." NZD/USD is down over 100pips below $0.86, as Gov Wheeler noted "exchange rate level is unjustified and unsustainable and there is potential for a significant fall." Economist with ASB said this type of sentiment would give the central bank "carte blanche" to intervene. RBNZ also noted 2014 GDP is now seen at 3.7% (previously said GDP growing "by around 4% in year to June") and added wage inflation is subdued (previously said "moderate"). Also out of New Zealand, the trade balance was wider than expected, but exports to China fell 1.5% y/y - a break from consistent pattern of double-digit increases.

- China HSBC flash Manufacturing PMI hit an 18-month high of 52.0, well above 51.0 consensus, helping send Shanghai Composite to 3-month highs around 2,100 level. Among notable components, New Orders and Input Prices increased at a faster rate, while Employment decrease was slower. HSBC chief economist said improvement in activity is driven by the cumulative impact of mini-stimulus measures, forecasting "policy makers to maintain their accommodative stance over the next few months to consolidate the recovery." Note that the PBoC has once again deferred on open market operations, allowing for an overall weekly injection of CNY18B. AUD/USD hit 3-week highs on the release near $0.9470

- South Korea Ministry of Strategy and Finance released its biannual economic policy report, unveiling a KRW41T stimulus package in fiscal spending and financing. South Korea also lowered its 2014 GDP target to 3.7% from 4.1% as part of the announcement. Note that this follows Q2 prelim GDP of 3.6%, missing estimates of 3.7%.

- Economic data out of Japan remains worrisome. June merch trade deficit was wider than forecasted, and exports fell for the 2nd consecutive month against estimates. Imports of crude oil once again rose, weighing on the trade balance. Later in the day, JULY manuf PMI slowed to 50.8 from 51.5, although Markit economist said the rise in new exports is not enough to prevent output stagnating.

- South Korea's Hynix reported Q2 results, missing profit estimates as prices for DRAM and NAND fell sequentially, sending shares down nearly 3%. Out of Australia, Macquarie statement on Q1 saw operating groups' contribution and capital markets divisions down pcp and q/q. Newcrest Mining fell sharply after announcing a writedown of up to A$2.5B as part of its quarterly production numbers even though FY output of both gold and copper topped prior forecast.

Equities

US markets:

- SKX: Reports Q2 $0.68 v $0.41e, R$587M v $505Me; +8.5% afterhours

- FB: Reports Q2 $0.42 v $0.33e, R$2.91B v $2.80Be; CEO: Users spend about 40 min each day on average on Facebook - conf call comments; +5.5% afterhours

- CTXS: Reports Q2 $0.83 v $0.61e, R$782M v $774Me; +1.3% afterhours

- FFIV: Reports Q3 $1.39 v $1.35e, R$440M v $434Me; +0.5% afterhours

- GILD: Reports Q2 $2.36 v $1.80e, R$6.53B v $5.78Be; guides FY14 product sales $21.0-23.0B v $22.5Be; -0.4% afterhours

- T: Reports Q2 $0.62 adj v $0.63e, R$32.6B v $33.2Be; -1.1% afterhours

- CAKE: Reports Q2 $0.59 v $0.61e, R$496M v $502Me; Guides Q3 $0.55-0.58 v $0.60e, SSS +1-2%; Lowers FY14 $2.19-2.25 v $2.28e (prior $2.24-2.33) - conf call; -1.3% afterhours

- QCOM: Reports Q3 $1.31 v $1.22e, R$6.81B v $6.57Be; guides Q4 $1.20-1.35 v $1.39e; -4.0% afterhours

- INCY: Top-Line Results from RELIEF Trial of Ruxolitinib in Patients with Polycythemia Vera did not achieve statistical significance for the primary endpoint; -8.1% afterhours

- TRIP: Reports Q2 $0.55 v $0.61e, R$323M v $320Me; -11.1% afterhours

- ANGI: Reports Q2 -$0.31 v -$0.23e, R$78.9M v $80.3Me; -18.1% afterhours

Notable movers by sector:

- Consumer Discretionary: TransAsia Airways 6702.TW -5.1% (plane crash); SAIC Corp 600104.CN +1.0% (strategic alliance with Alibaba)

- Financials: China Vanke 000002.CN +3.1%, Poly Real Estate 600048.CN +3.6%, Xinhu Zhongbao 600208.CN +9.9% (HSBC China flash PMI); Macquarie Group Limited MQG.AU -2.1% (comments from CEO); Insurance Australia IAG.AU +2.2% (FY14 guidance)

- Materials: Newcrest Mining Ltd NCM.AU -3.9% (Q4 results/comments, Q1 production guidance); Atlas Iron AGO.AU +2.6% (Q4 shipment results)

- Energy: S-Oil Corp 010950.KR +3.3% (Q2 results, returns to profit)

- Industrials: Zhengzhou Yutong Bus 600066.CN +2.6% (MOU with Venezuela govt)

- Technology: Hynix Semiconductor 000660.KR -2.8% (Q2 results); Quickflix Ltd QFX.AU +19.2% (press reports on stake sale to Netflix); FujiFilm Holdings Corp 4901.JP +2.0% (press speculation on Q1 results)