Australia employment comes in strong

Asia Market Update: Australia employment comes in strong, BoJ cuts JGB purchases; China co's purchase more yuan in June; PBOC sets yuan weaker again

General Trend:

- Asian equity markets trade mixed, in line with US session

- Shanghai Composite moves between gains and losses after 4 straight declines

- Australia June job adds were the most since Nov 2017, rose for 21st straight month; Participation rate also rose

- Japan June exports to the US drop for the first time in 17-months

- BoJ trims daily purchases of longer-term JGBs

- USD/CNY fixed above 6.70, 6th straight weaker fix for the yuan

- There is speculation that the PBoC might conduct another medium-term lending facility (MLF) in July

- Chinese banks purchased less foreign currency in June amid recent yuan weakness; Banks were more willing to purchase yuan versus foreign currencies in H1, according to fx regulator

- Indonesia Central Bank expected to leave rates unchanged at upcoming rate decision

- Upcoming earnings from Taiwan Semi in focus

- US and European companies which may report earnings on Thursday include Microsoft, Philip Morris, Nucor Publicis, Rec Silicon, SAP, The Blackstone Group, Unilever, Union Pacific and Volvo.

- US Commerce Dept is expected to hold hearing on Section 232 auto probe on Thursday

 

Headlines/Economic Data

Japan

- Nikkei 225 opened +0.3%

- TOPIX Retail Trade index -0.9%, Real Estate -0.7%; Marine Transportation +0.9%, Iron & Steel +0.8%, Securities +0.6%

- Japanese megabanks outperform

- Asahi Kasei [3407.JP] speculated to plan to pay ~¥100B to acquire Sage Auto Interiors (Japanese Press)

- (JP) Some Japan oil companies said to be considering halting imports of oil from Iran - Nikkei

- (JP) JAPAN JUN TRADE BALANCE: ¥721B V ¥531.2BE; ADJ TRADE BALANCE: ¥66.2B V ¥115.0BE

- (JP) BoJ announcement related to daily bond buying operation: Cuts buying of 10-25 yr and over 25-yr JGBs

Korea

- Kospi opened +0.4%

- (RU) Russia Envoy to North Korea: Possible to denuclearize NK in a year's time

- (KR) South Korea seizes ship carrying coal from North Korea - Korean press

- (KR) South Korea and Canada have agreed to jointly deal with the United States' move to levy tariffs on foreign autos and put on a united front against the rising protectionism in global trade - Korean press

China/Hong Kong

- Hang Seng opened +0.5%, Shanghai Composite +0.1%

- Hang Seng Consumer goods index -1.3%, Industrial Goods -0.7%, Info Tech -0.5% Services -0.4%; Financials +0.3%

- (CN) China planning to raise certain salaries and increase its middle-class population - Chinese Press

- (CN) China PBoC said to consider the introduction of incentives aimed at improving the liquidity of commercial banks and helping banks increase lending and bond investments - Japanese Press

- (US) White House Economic Adviser Kudlow: believe China Pres Xi is personally holding up a trade deal, talks are stalled

- (CN) China PBoC set yuan reference rate at 6.7066 v 6.6914 prior (6th consecutive weaker setting)

- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7-day and 14-day reverse repos v CNY80B prior; Net: CNY70B injects v CNY80B injection prior

- (CN) China govt survey found that China's leading industrial enterprises are almost completely reliant on imports for top-end computer chips and crucial components – SCMP

- (CN) China FX Regular SAFE: June China Banks bought net Forex CNY13.1B ($2.0B v $19.4B m/m); China companies are less willing to hold forex in H1 as they were more willing to purchase yuan versus foreign currencies

- (CN) China PBOC gives a window guidance for commercial banks that it would make available additional funding via its medium-term lending facility (MLF) in a bid to support lending and bond investment

- (CN) China to adopt measures to curb online finance violations - China news

Australia/New Zealand

- ASX 200 opened 0.0%

- ASX 200 Financials index +0.7%, Resources +0.5%; Utilities -0.9%, Telecom -0.2%

- Santos, STO.AU Reports Q2 production 14.2 MMBOE v 14.7 MMBOE y/y; Sales 19.1 MMBOE v 21.5 MMBOE y/y

- Woodside, WPL.AU Reports Q2 production 22.1 MMBOE v 20.7 MMBOE y/y; Sales volumes 21.0 MBOE v 20.3 MMBOE y/y

- (AU) AUSTRALIA JUN EMPLOYMENT CHANGE: +50.9K V +16.5KE (21ST STRAIGHT MONTH OF GAINS); UNEMPLOYMENT RATE: 5.4% V 5.4%E

- (AU) Australia Jun RBA Govt FX Transactions (A$): -1.84B v -672M prior

- (NZ) New Zealand sells NZ$150M v NZ$150M indicated in April 2.75% 2037 bonds, avg yield 3.1730% v 3.2631% prior, bid to cover 4.57x v 1.2x prior

- CIMIC, [+13.5%], CIM.AU Reports H1 (A$) Net 363M v 322.9M y/y; EBITDA 794.3M v 713.3M y/y; Rev 6.9B v 6.3B y/y

North America

- US equity markets ended mixed: Dow +0.3%, S&P500 +0.2%, Nasdaq flat, Russell 2000 +0.3%

- S&P500 Financials +1.6%, Industrials +1.1%; Consumer Staples -0.7%

- (US) Fed Chair Powell: reduction of Fed balance sheet will take 3 or 4 years; goal is to return it to mostly Treasury holdings; Not made a decision on rate corridor or floor but will come back to that discussion soon - House committee testimony

- (US) Pres Trump: I hold Pres Putin personally responsible for election meddling; do not want to get into whether Putin is lying or not - CBS News interview

- (MX) Mexico Econ Min Guajardo: moving from NAFTA to bilateral talks would be difficult, like starting from zero; still want a 3-party NAFTA deal

- (US) DOE CRUDE: +5.8M V -3.5ME; GASOLINE: -3.2M V -0.5ME; DISTILLATE: -0.3M V +1ME; US production reaches 11M bpd for first time in history

Europe

- (JP) Japan Chief Cabinet Sec Suga: Welcomes the UK interest in joining the TPP

- (UK) EU negotiators reportedly are discussing Ariticle 50 extension. The UK invoked Article 50 of the Treaty on European Union on 29 March 2017, begging the United Kingdom's withdrawal from the European Union (Brexit). The UK govt has repeatedly said it will leave the EU on March 29th, 2019

 

Levels as of 01:30ET

- Hang Seng -0.1%; Shanghai Composite -0.6%; Kospi -0.5%; Nikkei 225 -0.0%; ASX 200 +0.4%

- Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax +0.1%; FTSE100 +0.1%

- EUR 1.1637-1.1657; JPY 112.65.-112.91; AUD 0.7394-0.7441;NZD 0.6781-0.6805

- Aug Gold -0.3% at $1,223/oz; Sept Crude Oil -0.1% at $67.69/brl; Sept Copper -0.4% at $2.75/lb