AUD declines ahead of RBA minutes

Asia Market Update: Asia trades lower after declining on Wall St; Oil prices and travel-sensitive firms decline amid press focus on Delta variant; gov’t bond yields drop; AUD declines ahead of RBA minutes.

General Trend

- US equity FUTS decline.

- Asian equity markets have generally pared declines.

- Financials track drop on Wall St. amid lower yields.

- Nikkei extended declines but currently trades off of the session lows [Topix Air Transportation, Banks, and Electric Appliances indices are among the decliners; Automakers also drop].

- Hang Seng and HK TECH indices have declined by over 2%; Financial, Property and Airline cos. also drop.

- Shanghai Composite ended the morning session modestly lower, pared loss [Decliners included Property, Financial and Consumer indices].

- S&P ASX 200 has pared declines [Resources index has declined over 2% after production update from Rio Tinto, BHP is due to report production on Tues.; Energy and Financial indices also drop ].

- Taiwan Semi continues to decline after recently reported financial results.

- Five9 to be acquired by Zoom for ~$14.7B in stock.

- Companies due to report during the NY morning include Cal-Maine, ProLogis.

- RBA minutes are due on Tuesday (Jul 20).

- China PBOC is also due to set loan prime rates (LPRs) on Jul 20th [consensus is unchanged].

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened 0.0%.

- SGP.AU To acquire land lease community operator, Halcyon Group, for A$620M plus transaction costs.

- (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$335.7B v A$334.6B prior (record high).

- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$110M in government bonds in QE auction v NZ$110M sought.

Japan

-Nikkei 225 opened -1.2%.

- (JP) Japan PM Suga and South Korea President Moon to meet July 23rd in Tokyo - Japan press.

- (JP) Tokyo officials confirm a positive Covid case at Olympic athlete's village (Saturday).

- (JP) As of Sunday morning 2 South African soccer players at the Olympics have tested positive for COVID.

Korea

-Kospi opened -0.6%.

- 1015Z.KR Temporarily suspended its sole plant in Busan due to lack of semiconductor parts – Yonhap.

- (KR) Follow Up: South Korea Presidential Office: Meeting between President Moon and Japan PM Suga is still uncertain.

- (KR) South Korea sells KRW1.02T in 5-year bonds: avg yield 1.700% v 1.675% prior.

China/Hong Kong

-Hang Seng opened -0.8%; Shanghai Composite opened -0.3%.

- (CN) China State Planner (NDRC) Approved CNY38.9B in fixed asset investments in June, total CNY246.4B in H1, fully confident in reaching annual economic and social development targets despite recovery still facing difficulties and challenges.

- (CN) China has signaled that Hong Kong is the preferred place for Chinese companies to IPO (not New York) and will exempt any Chinese company from requiring approval from cybersecurity regulatory body if they IPO in Hong Kong v other offshore markets – press.

- (CN) China said to consider trial program that would allow foreign institutions to invest offshore yuan (CNH) in stocks listed on the Shanghai Star Board - Chinese press.

- (TW) China Army and Navy held joint drill on beach assault near Taiwan, the day after the 2nd US military aircraft landed in Taiwan - press.

- (HK) Macau Responsible Gaming Association President Wai-kit: Recent closure of satellite casinos does not imply the start to more wide spread closures; but there will be some difficulty in reaching MOP130B in gaming rev in 2021 - HK press.

- (CN) China PBOC sets Yuan reference rate: 6.4700 v 6.4705 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net CNY0B prior.

Other

- Reportedly OPEC+ agreed to ease oil output cuts from Aug 2021 and to extend supply agreement until the end-2022 – press.

North America

- FIVN To be acquired by Zoom in $14.7B all-stock transaction.

- (US) Treasury Sec Yellen: Some tariffs have hurt customers, doubts the overall results of China Trade deal signed under President Trump - Interview in NYT.

- (US) President Biden: Social media is "killing people" with false information about COVID; separately a group of Senators calls to make platforms liable for misinformation spread on COVID – press rehashing earlier comments.

- (US) Several US cities now looking to allow Bitcoin to be used to pay tax bills as well as a method to pay employees of the city – press.

- (US) US Democrats weigh supporting Powell as Fed Chairman; President Biden to decide whether to reappoint Powell to second 4-year term [starting Feb 2022] as progressives seek change - FT.

- (US) Fed's Kashkari (dove, non-voter): Not seeing evidence that there will be sustained inflation beyond the re-opening period; reiterates expect people to return to labor market in the fall (update).

Europe

- (UK) PM Johnson and Chancellor Sunak to self isolate after coming in contact with health Sec Javid (who tested positive for COVID); reversing their earlier plan to continue on as normal - press.

- (UK) According to analysts Chancellor of the Exchequer Sunak (Fin Min) will see the cost of UK debt rise by £10B due to debt tied to inflation - UK press.

Levels as of 01:15ET

- Hang Seng -2.0%; Shanghai Composite -0.1%; Kospi -0.9%; Nikkei225 -1.3%; ASX 200 -0.8%.

- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.2%, Dax -0.4%; FTSE100 -0.5%.

- EUR 1.1814-1.1798; JPY 110.10-109.85; AUD 0.7410-0.7373; NZD 0.7005-0.6976.

- Commodity Futures: Gold -0.1% at $1,812/oz; Crude Oil -1.0% at $70.83/brl; Copper -0.5% at $4.28/lb.