Japan trade deficit wider than expected

Asian Market Update: Japan trade deficit wider than expected; RBA Gov Stevens jawboning AUD

Economic Data

- (JP) JAPAN JULY MERCHANDISE TRADE BALANCE: -¥964.0B V -¥713.9BE (25th consecutive trade deficit); ADJ TRADE BALANCE: -¥1.0T V -¥761.3BE

- (AU) AUSTRALIA JUL SKILLED VACANCIES M/M: 0.9% V 1.6% PRIOR (3rd consecutive increase)

- (AU) AUSTRALIA JULY WESTPAC LEADING INDEX M/M: -0.1% V +0.1% PRIOR (1st decline in 3 months)

- (NZ) NEW ZEALAND JUL ONLINE JOBS VACANCIES M/M: -5.0% v +7.5% y/y

- (CN) China Finance Ministry: China July YTD state-owned enterprises (SOEs) Net CNY1.43T, +9.2% y/y, Rev CNY27.2T, +5.8% y/y

Index Snapshot (as of 02:30 GMT)

- Nikkei225 flat, S&P/ASX -0.1%, Kospi -0.1%, Shanghai Composite -0.2%, Hang Seng flat, Sept S&P500 -0.1% at 1,975

Commodities/Fixed Income/Currencies

- Dec gold flat at $1,297, Oct crude oil flat at $92.84/brl, Sept Copper flat $3.09/lb

- GLD: SPDR Gold Trust ETF daily holdings rise 1.5 tonnes to 799.2 tonnes (2nd consecutive increase)

- (US) API PETROLEUM INVENTORIES: CRUDE: -1.4M v -1Me, GASOLINE: -2.1M v -1.5Me, DISTILLATE: -0.6M v -1Me

- (JP) BOJ offers to buy ¥300B in 1-3yr JGB, ¥200B in 3-5yr JGB, ¥100B in 10-25yr JGB and ¥30B in JGB with maturity over 25-yr

- (AU) Australia MoF (AOFM) sells A$700M in 2.75% Bonds due 2024; Avg yield: 3.4164%; Bid-to-cover: 2.57x

- (CN) China MoF sells 10-yr bonds at average yield of 4.23%

- USD/CNY: (CN) PBoC sets yuan mid point at 6.1580 v 6.1548 prior setting (2nd consecutive weaker Yuan setting, weakest setting since Aug 6th)

Market Focal Points/Key Themes

- Japan posted its 25th consecutive month of trade deficit and the shortfall was wider than expected, even though exports rose for the first time in 3 months. Rising imports contributed to continued shortfall -- despite the falling prices, imports of crude oil rose to 16.4M kls from 15.1M kls prior. Exports to Asia, China, and US were all up in low-single digits, while Europe shipments rose 10%. Japanese Yen sold off amid overall USD strength in the afternoon session, with USD/JPY pair hitting fresh 4-month highs above ¥103.15.

- RBA Gov Stevens delivered his semi-annual address to Australia's House Economic Committee with a slightly more upbeat view on fundamentals interspersed with a healthy dose of jawboning of the exchange rate. Stevens said economic forecasts may ultimately prove too conservative, with some evidence that productivity may be improving and recent data suggesting Sept quarter has started off well. On AUD, Stevens said it is not helping the economy, and the risks of further decline are underappreciated. He also said that while a currency intervention is not being considered at this time, it remains a part of the central bank's tool kit and would be considered if the exchange rate was much higher. AUD/USD fell as low as $0.9285 on the comments.

- Australia earnings calendar was particularly concentrated on the resources sector. Woodside Petroleum was up over 0.5% on rising H1 revenue, even though the company affirmed its FY output target. Fortescue Metals was marginally lower as net profit was in line with estimates and production rate for FY15 was forecasted at 155-160MT v 155MT in FY14. Wesfarmers is up over 2%, posting a 19% growth in profit and 4% increase in revenue.

- Ceasefire in Gaza expired without an extension as negotiators in Cairo remain unable to make much progress in talks and after a rocket was fired by Hamas targeting Ben Gurion airport. In Iraq, ISIS posted a video of executing an American journalist and threatening execution of another as recourse for bombings by the US airforce.

Equities

US markets:

- PETM: Reports Q2 $0.98 v $0.94e, R$1.73B v $1.73Be; Confirms exploring strategic alternatives; to acquire Pet360 for $130M; +5.4% afterhours

- QCOM: Samsung Electronics said to have developed a smartphone chips that would replace one made by Qualcomm - Korean press; -0.6% afterhours

- LZB: Reports Q1 $0.20 (adj) v $0.21e, R$327M v $321Me; Increases share buyback for up to 5M additional shares (15% of outstanding); -4.1% afterhours

- YOKU: Reports Q2 -$0.07 v -$0.07e, R$154.5M v $156Me; -8.2% afterhours

- TEDU: Reports Q2 $0.12 v $0.07e, R$31.9M v $31.4Me (only 2 est.), guides Q3 R$38.5-39.5M v $41Me, guides FY14 $134.5-136M v 138Me; -9.2% after

- HTZ: Now expects to be well below low end of 2014 guidance, citing weakness in rental markets; could see delay in spin off of equipment rental business - filing; -11.7% afterhours

Notable movers by sector:

- Consumer Discretionary: APN News APN.AU -3.6% (H1 results); SEEK Ltd SEK.AU -3.0% (FY14 results); Coca-Cola Amatil CCL.AU -3.3% (H1 results)

- Consumer staples: Biostime International Holdings 1112.HK -10.1% (H1 results)

- Financials: Challenger Financial Services Group CGF.AU +3.1% (FY14 results); WesFarmers Limited WES.AU +2.1% (FY14 results); Cedar Woods Properties CWP.AU -2.5% (FY14 results); Bank of China 3988.HK -0.3% (H1 results); Ping An Insurance 2318.HK -0.1% (H1 results); Gemdale Corp 600383.CN -0.9% (H1 results)

- Industrials: MacMahon Holdings MAH.AU +22.7% (FY14 results); Decmil Group DCG.AU -4.5% (FY14 results); NRW Holdings NWH.AU +3.9% (FY14 results); Shenzhen Expressway 548.HK +3.6% (H1 results)

- Technology: NEC Corp 6701.JP -2.3% (to partner with Mexico); Brambles BXB.AU -1.5% (FY14 results)

- Telecom: China Unicom 600050.CN -1.5% (July operating data)

- Materials: BHP BHP.AU -3.9% (FY14 results); Fortescue Metals FMG.AU -0.2% (FY14 results)

- Energy: Woodside Petroleum WPL.AU +0.6% (H1 results)