Asian equity markets mixed as traders digest US Fed, BoJ left policy unchanged

Asia Market Update: Asian equity markets mixed as traders digest US Fed, BoJ left policy unchanged; Commodity currencies decline after Fed and macro data; Low-level US/China trade talks due to start today

General Trend:

- Japanese equities rise on gains in financials, markets pare gain after BoJ left policy unchanged

- Hang Seng underperforms amid broad-based selling and focus on US Fed rate outlook: HK officials see negative trend for Q3 growth after the Q2 contraction

- Shanghai Property index declines after recent outperformance

- PBoC utilized 14-day reverse repos for the first time since late June, left rate unchanged

- There remains speculation that the PBOC may cut the benchmark loan prime rate (LPR) by 5bps on Friday [The LPR will be set monthly on the 20th of each month]

- Most big Aussie banks now calling for easing by RBA at Oct meeting, comes amid disappointing unemployment rate data

- RBA Gov Lowe is due to deliver his ‘An Economic Update’ speech on Sept 24th (Tues)

- New Zealand Q2 GDP above ests, but annual growth rate hit multi-year low; RBNZ due to hold official cash rate decision (OCR) on Sept 25th

- Yen extended gain after BoJ decision; Commodity currencies underperform amid central bank decisions, data from Australia and New Zealand

- US/China due to hold working-level trade talks in Washington D.C from Sept 19-20 (Thursday-Friday)

- China Commerce Ministry (MOFCOM) sometimes holds its weekly news conferences on Thursday’s (generally seen during the European morning)

- Indonesia and Taiwan Central Banks due to hold rate decisions later today

- NY Fed to conduct third day of repo operations on Thursday, FOMC cut the Interest Rate on Excess Reserves (IOER) to 1.80% from 2.10% prior (below 1.85% estimate)

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.1%

- (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: +34.7K V +15.0KE; UNEMPLOYMENT RATE: +5.3% V 5.2%E

- (AU) Commonwealth Bank: Now expects Reserve Bank of Australia (RBA) to cut cash rate by 25 bps at Oct 2019 meeting [follows Australia's weaker than expected unemployment data in Aug]

- (NZ) NEW ZEALAND Q2 GDP Q/Q: 0.5% V 0.4%E; Y/Y: 2.1% V 2.0%E

- (AU) Australia 2019/19 underling cash deficit A$0.7B; Budget balance deficit A$690M v deficit A$4.2B forecasted

- BKW.AU Reports FY19 (A$) Net 154.6M v 175.4M y/y; Underlying EBIT 310M v 304Me; Cont Ops Rev 918.7M v 785.2M y/y

Japan

- Nikkei 225 opened +0.5%

- (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED

- (JP) Japan Foreign Min Motegi: Want to reconfirm with the US that there will be no additional tariffs placed on Japan automobiles before trade deal is signed - Nikkei

- (JP) Japan has negotiated with the US to set up 242Kt quota of US beef with lower tariffs - Japan press

- 4901.JP Guides FY19 health care segment rev ¥510B, op profit ¥44B; targeting by mid-2020s to have Rev of ¥1.0T – Nikkei

- (JP) Japan Foreign Min Kono: Not aware of any Iranian involvement in Saudi attack

- (JP) Japan Economy Min Nishimura: Prepared to support small business and farms if needed in light of US trade talks, working to avoid major impact from sales tax hike

Korea

- Kospi opened flat

- (KR) Bank of Korea (BOK) Gov Lee: Fed decision to cut rates eases pressure on BOK ahead of rate decision; swine fever not issues to consider yet in monetary policy

- (KR) South Korea President Moon approval rating falls to 42.8% (record low)

China/Hong Kong

- Hang Seng opened +0.3%; Shanghai Composite opened +0.2%

- (CN) China PBoC Open Market Operation (OMO): Injects CNY170B combined in 7-day and 14-day reverse repos v injects CNY30B in 7-day prior; Net drain CNY170B v CNY0B prior

- (HK) Hong Kong Monetary Authority Chief Chan: Sees downward pressure in Q3 growth citing political unrest and trade war; interest rate level not high in general; USFed cut may not have direct impact on rates in Hong Kong

- (CN) China has shortened its unified (includes both foreign and domestic investors) negative list for market access - press

- (HK) Hong Kong Fin Sec Chan: Sees negative trend in Q3 growth - Global Times

- (CN) China Aug Swift Global Payments CNY: 2.22% v 1.81% prior

- (CN) China PBOC sets Yuan Reference Rate: 7.0732 v 7.0728 prior

- (CN) China Ministry of Finance (MOF): Reiterates China tax and fee cut expected to exceed CNY2.0T in 2019

- 293.HK Cathay Pacific: Nearly 100 employees have been fired due to their participation in Hong Kong protests or their social media connections to Hong Kong protesters - Hong Kong Press

-1199.HK Cosco Shipping Ports: Announces disposals of interest in various port assets for ~CNY1.06B to Shanghai International Port Group

- 178.HK SA SA International: Profit warning, expects turnover to decline by 15%

- 5.HK Maintains best lending rate at 5.125%; cuts USD savings rate from 0.25% to 0.10% in Hong Kong (following HK cutting base rate)

Other

- (SA) Saudi Defense Ministry displays remnants of drones used in Aramco attack says it is evidence of Iranian weapons being involved in the attack and Iranian aggression (overnight)

- (SA) Saudi Arabia Crown prince: Attacks were aimed at destabilizing the region's security, damaging the global energy supply and the global economy - local press

- (US) US Energy Dept: Saudi Arabia must forgo uranium enrichment to secure nuclear reactor deal; US is committed to Westinghouse efforts to sell reactors

- (PH) Philippines Central Bank Chief Diokno: Committed to 'normalizing rates;' Negative rates would be tough on pensioners and investment; very comfortable with reserves level

North America

- (US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.75-2.00% (AS EXPECTED); SUSTAINED EXPANSION LIKELY, UNCERTAINTIES ABOUT ECONOMIC OUTLOOK REMAIN

- (US) Fed Chair Powell: Fed cut rates in order to provide insurance against risks and to keep US economy strong - post rate decision press conference

- (US) Fed Chair Powell: if the economy were to turn down, we could potentially see more extensive rate cuts; will continue to monitor developments in markets and outlook - post rate decision Q&A

- X Guides Q3 -$0.35 v -$0.11e, adj EBITDA $115M (previously declined to guide); expects 2.5K headcount reduction at U.S. Steel Europe

- (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 50BPS TO 5.5%; AS EXPECTED

- (US) New York Fed to conduct a third day of repo operations tomorrow morning

- (US) Speaker Pelosi to announces briefing related to announcement on drug cost bill for tomorrow

Europe

- (UK) DUP leader met with Ireland PM Varadkar in Dublin tonight to talk about backstop options

- (UK) House of Commons Leader Rees-Mogg rejected the idea of suspending Parliament a second time - UK press

- (UK) Brexit said to have cost 1.0K London finance jobs to date according to analysts, much lower than expected - financial press

Levels as of 1:20 ET

- Nikkei 225, +0.6%, ASX 200 +0.6%, Hang Seng -1.2%; Shanghai Composite flat; Kospi +0.3%

- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%, Dax -0.2%; FTSE100 -0.8%

- EUR 1.1041-1.1022 ; JPY 108.47-107.78; AUD 0.6833-0.6781 ;NZD 0.6334-0.6298

- Gold -0.9% at $1,502/oz; Crude Oil +0.3% at $58.22/brl; Copper flat at $2.612/lb