AUD drops on RBA comments

Asia Market Update: Equities trade mixed; AUD drops on RBA comments; Central banks remain in focus [ECB, Powell].

General trend

- Reserve Bank of Australia (RBA) Gov Lowe said: Case for slower rate hikes clearer as rates rise.

- AU trade data looked terrible, exports to CN declined.

- JPY extended decline, later pared drop; USD trades generally firmer.

- CNH dropped [(US) President Biden delays decision on Trump era tariffs on China, notes China's upcoming leadership Congress [starts on Oct 16th] - US financial press].

- KRW also continues to decline.

- UST yields extend drop.

- Why did the US equity markets rally on Wed? [oil price declines?; lower bond yields?; hopes for less aggressive central bank tightening?; short-covering?].

- Japanese equities outperform amid Yen weakness, Softbank Group rises after gains on the Nasdaq.

- Chinese markets lag as property firms decline.

- Interest-rate sensitive sectors outperform in Australia on the Lowe comments [Consumer Discretionary; REITs].

- Australian ex-dividends [ASX, Perpetual, Reliance Worldwide, Sky Network TV, Woodside Energy].

- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thurs.

- Taiwan Semi to issue monthly sales figures.

- Malaysia Central Bank is expected to raise rates.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened flat.

- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Case for slower rate hikes clearer as rates rise; Sharp global slowdown would make it hard for a soft landing in Australia; Additional rate hikes will be required.

- (AU) Australia July Trade Balance (A$): 8.7B v 14.7Be.

- (NZ) New Zealand sells N$400M in 2026, 2029, and 2051 bonds.

- (NZ) New Zealand Q2 Manufacturing Activity Q/Q: -3.8% v +0.9% prior; Manufacturing Volume Y/Y: -4.9% v -3.4% prior.

Japan

- Nikkei 225 opened +1.1%.

- (JP) Japan Q2 final GDP Q/Q: 0.9% V 0.7%E; GDP annualized Q/Q: 3.5% V 2.9%E.

- (JP) Japan July BoP Current Account: ¥229.0B v ¥759.0Be; Adj Current Account: -¥629.0B v +¥65.3Be.

- (JP) Japan Aug Bank Lending Y/Y: 1.9% v 1.7% prior; Bank Lending (ex-trusts) Y/Y: 2.2% v 2.0% prior.

- (JP) Japan Investors Net Buying of Foreign Bonds: +¥149.1B v -¥79.2B prior ; Foreign Net Buying of Japan Stocks: -¥704.2B v ¥28.5B prior.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Japan Aug Tokyo Avg Office Vacancies: 6.5% v 6.4% prior.

- (JP) Japan Chief Cabinet Sec Matsuno: Aware of hacker group statement on cyberattack, No disruption to Govt websites since previous issue.

- (JP) Japan Fin Min Suzuki: Says as I commented yesterday [asked about yen weakness]; Declines comment on timing of govt intervention in FX market.

- (JP) Japan Aug Eco Watchers Current Survey: 45.5 v 43.8 prior; Outlook Survey: 49.4 v 42.8 prior.

Korea

- Kospi opened +0.7%.

- (KR) South Korea Aug Bank Lending to Households (KRW): 1,060.8T v 1,060.5T prior.

- (KR) Bank of Korea Dep Gov Lee: Recent KRW weakness fast, will take policy response if needed.

China/Hong Kong

- Hang Seng opened flat; Shanghai Composite opened flat.

- (CN) China PBOC sets Yuan reference rate: 6.9148 v 6.9160 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B in 7-day reverse repos v CNY2.0B prior; Net CNY0B v Net CNY0B prior.

- (CN) China Zehngzhou: Orders that halted home construction projects must resume by Oct 6th.

- (CN) Shenzhen has temporarily reduced the entry quota for Hong Kong travelers amid COVID cases - SCMP.

-*(CN) China Aug foreign reserves: $3.0549T V $3.060TE.

North America

- (US) Fed's Daly (non-voter): reiterates policy must slow economy in order to cool inflation - US financial press.

- (US) President Biden delays decision on Trump era tariffs on China, notes China's upcoming leadership Congress [starts on Oct 16th] - US financial press.

- (US) Goldman Sachs said to warn that the US housing market decline will worsen in 2023, expects home price growth to completely stall; cites memo to clients - NY Post.

Europe

- (UK) Aug RICS House Price Balance: 53% v 60%e (Lowest level since Jan 2021).

- (RU) Russia Media: The Yuan (CNY) is the main alternative the the USD and EUR.

- (UK) UK govt to drop fracking ban in announcement of energy plans tomorrow - Telegraph.

- (RU) Russia Media: Nord Stream Bankruptcy has been suspended until Jan 2023 - Russia Media [it was previously reported that the owner of Nord Stream 2 was considering insolvency amid sanctions].

Levels as of 01:20 ET

- Nikkei 225, +2.2%, ASX 200 +1.6% , Hang Seng -0.5%; Shanghai Composite -0.1% ; Kospi +0.5%.

- Equity S&P500 Futures: +0.1%; Nasdaq100 +0.2%, Dax +0.2%; FTSE100 +0.2%.

- EUR 1.0013-0.9979 ; JPY 144.56-143.69 ; AUD 0.6773-0.6713 ;NZD 0.6087-0.6036.

- Gold -0.1% at $1,726/oz; Crude Oil +0.9% at $82.69/brl; Copper +0.4% at $3.4577/lb.