Australia building approvals better than expected

Asia Mid-Session Market Update: Geopolitical tensions ease leading to weaker USD; Australia building approvals better than expected

Asia Summary

- Asian equity markets opened mixed but mostly higher, as action on North Korea so far has been restrained from the global community. KCNA reported that the missile launching drill is the first step of the military operation in the Pacific and a "meaningful prelude" to containing Guam. China Foreign Min Wang said China will ‘fully and completely’ abide by UN Resolutions but was not in favor of unilateral sanctions against North Korea. In New Zealand, RBNZ Govt Wheeler comments that a lower NZD is needed to increase tradables inflation, sending the Kiwi down initially 0.2% to 0.7232 before reversing to 0.7260. Wheeler also noted that LVRS are not expected to be a permanent measure but their removal would require a degree of confidence that financial stability risks won’t deteriorate again. China yuan rose to a 14-month high to 6.5813, in its 4th consecutive day of gains, feeding off weaker USD, with risk off sentiment trickling back into the market. PBOC OMO drained a net CNY100B v injections the last several days.

- Saw several comments out of China govt officials from the bimonthly session of the National People's Congress Standing Committee. China National Development and Reform Commission (NDRC) chief He Lifeng: China can meet its 2017 targets on GDP, employment, inflation, fiscal revenue and trade, it may struggle to achieve investment and foreign investment goals. China Fin Min Xiao Jie: China will contain the growth of hidden debt with active, prudent steps to defuse local debt risk. Australia July building approves continue to fall though much lower than expected. Q2 construction works done came in at 9.3% v the expected 1%. AUD/USD rose on the building data, then continued its momentum into the second part of the session.

Key economic data

- (NZ) New Zealand Jul Building Permits m/m: -0.7% v -1.3% prior

- (JP) JAPAN JUL RETAIL SALES M/M: 1.1% V 0.3%E; RETAIL TRADE Y/Y: 1.9% V 1.0%E

- (AU) AUSTRALIA JUL BUILDING APPROVALS M/M: -1.7% V -5.0%E; Y/Y: -13.9% V -16.6%E

- (AU) AUSTRALIA Q2 CONSTRUCTION WORK DONE Q/Q: 9.3% V 1.0%E

Speakers and Press

China/Hong Kong

- (CN) Negotiable Certificate of Deposit (NCD) due to mature in Sept to have limited impact on liquidity in China - China Financial News

- (CN) China rust-belt provinces are driving the rapid growth in shadow lending - financial press

- (CN) China National Development and Reform Commission (NDRC) chief He Lifeng: China can meet its 2017 targets on GDP, employment, inflation, fiscal revenue and trade, it may struggle to achieve investment and foreign investment goals

Korea

- (US) Reportedly will not call for U.N. Security Council to impose oil embargo on N. Korea today – press

- (KR) North Korea test fired Hwasong-12 IRBM against US/South Korea drills, was guided by Kim – KCNA

Japan

- (JP) Japan said to be considering reducing 2018 budget request to ­¥98T - Nikkei

Other

- (NZ) CoreLogic assessment of New Zealand housing market for August and September: Market activity gauge is -30% y/y

Asian Equity Indices/Futures (00:00ET)

- Nikkei +0.6%, Hang Seng +0.8%; Shanghai Composite 0.0%, ASX200 -0.2%, Kospi +0.1%

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

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.1984-1.1963; JPY 109.92-109.54; AUD 0.7996-0.7948; NZD 0.7278-0.7232

- Dec Gold -0.1% at $1,318/oz; Oct Crude Oil -0.3% at $46.31/brl; Sept Copper +0.2% at $3.11/lb

- GLD SPDR Gold Trust ETF daily holdings higher by 2.07 tonnes to 816.43 tonnes

- (AU) Australia sells A$900M in 2.25% 2028 bonds; avg yield 2.7060%; bid-to-cover 2.76x

- (CN) China PBOC OMO injects CNY130B in 7-day and 14-day v injects CNY50B prior in 7-day reverse repo prior; Net drains CNY100B v injects CNY10B prior

- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6102 V 6.6293 PRIOR

Equities notable movers

Australia/New Zealand

- TLS.AU Comments on NBN monetization: NBN noted its position is not protected by the proposed monetization; +4.2%

- OMH.AU Reports H1 (A$) Net loss 21.3M v loss 82.2M y/y, Rev 263M v 183M y/y; +9%

- RFX.AU Reports FY17 (A$) Net -12.9M, -9% y/y, Rev 1.4M, +14% y/y -12.5%
Hong Kong/China

- 813.HK Reports H1 (CNY) Net 3.88B v 3.50B y/y; Rev 35.8B v 30.0B y/y; +16%

- 1813.HK Issues clarification to certain press articles; Says comments made by general manager Yang Huan regarding 2018-2020 outlook were his own personal comments; +11.4%