China and US talk on phone about trade; Japan inflation in line

Asia Market Update: Markets stronger in the wake of Fed Williams comments increasing expectations on easing; China and US talk on phone about trade; Japan inflation in line

General Trend:

- Early Asia session the USD strengthened against the majors and gold fell after the New York Fed clarified that Fed’s Williams comments in earlier speech were not about possible Fed policy action but based on research, academics (commented: central banks should move quickly when they see signs of economic trouble)

- Overall the session was quiet with little economic catalyst or details on US/China trade, Australia production reports continue to come out, generally mixed results

- Japan national CPI for June, were again weak but in line with analysts’ expectations, not likely to prompt any action from BOJ

- Japanese semiconductor names all higher after Taiwan Semi reported stronger results yesterday

-China PBoC weekly open market operations saw total injection of CNY460B a 6-week high

- China and US confirmed trade parties spoke on the phone Thursday, though did not given any details

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened flat

- NAB.AU Appoints Ross McEwan as CEO, to start no later than April 2020 (concludes 5 month search)

- MVP.AU Should be in a position to address clinical hold issues raised by FDA during Q1 2020

- Analysts note they expect Aussie healthcare names to have strong results

Japan

-Nikkei 225 opened +0.5%

- 7238.JP To meet with bankers on Sept 18th on debt waiver - Nikkei

- (JP) JAPAN JUN NATIONAL CPI Y/Y: 0.7% V 0.7%E; CPI EX-FRESH FOOD (CORE) Y/Y: 0.6% V 0.6%E

- (JP) Japan Investors Net Buying of Foreign Bonds: ¥950.0B v ¥297.0B prior week; Foreign Net Buying of Japan Stocks: -¥93.1B v ¥192.2B prior week

- (JP) Fitch's Head of Asia Pacific Structured Finance McCarthy: Bank of Japan may need to ease policy more

Korea

-Kospi opened +0.5%

- (KR) South Korea Jun PPI M/M: -0.3% v 0.0% prior; Y/Y: 0.1% v 0.4% prior

- (KR) South Korea Official: We are considering "various scenarios" for what to do about an escalating row over Japan's wartime forced labor, depending on how Tokyo reacts after its deadline for an arbitration panel on the issue expired on Thursday – Yonhap

- (KR) Senior Cheong Wa Dae official: South Korea till review whether to renew a pact with Japan on sharing military information, if needed – Yonhap

- (KR) South Korea Industry Min Lee: Cannot predict date and schedule of white list removal; Japan has not responded yet to request for another meeting on export curbs

China/Hong Kong

-Hang Seng opened +0.4%; Shanghai Composite opened +0.3%

- (CN) USTR Lighthizer and Treasury Sec Mnuchin discussed trade over the phone with Chinese trade officials; no additional details given - US Press

- 941.HK Reports Jun Subscribers 935M, net adds 3.0M v 0.5M prior

- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v injects CNY100B prior; Net CNY100B injected v CNY100B injected prior

- (CN) China PBOC sets yuan reference rate: 6.8635 v 6.8761 prior

- (CN) China Finance Ministry sells 30-year government bonds: yield 3.86% v 3.95564% prior, bid to cover: 2.35x

Other Asia

- TSM Reports Q2 (NT$) Net 66.8B v 65.9Be; Op 73.3B v 77.4Be; Rev 241.0B v 233.3B y/y

- SGX.SG Will solicit public feedback to consider eliminating minimum trade price rule for stocks listed on mainboard - Singapore press

- (TH) Fitch revises Thailand outlook to positive from stable; affirms at BBB+

North America

- (US) New York Fed Spokesperson: “This [Fed’s Williams’s speech] was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting"

- (US) Pres Trump: a US navy ship took defensive action against an Iran drone; USS Boxer destroyed an Iranian drone

- (IR) Iran Foreign Min Zarif: has no information about losing a drone

- BA To recognize $4.9B charge ($8.74/shr) and increased costs in Q2 due to 737 MAX grounding; to result in a $5.6B reduction of revenue and pre-tax earnings in the quarter

- (CA) Bank of Canada lowers rate used in mortgage stress tests (rate used by banks to make mortgage decisions); which could add a short term boost to housing market (update)

Europe

- (UK) UK Parliament votes 315-274 to accept Benn amendment, which seeks to prevent suspension of Parliament and impede a 'no-deal' Brexit

Levels as of 01:20ET

- Hang Seng +1.1%; Shanghai Composite +0.9%; Kospi +1.4%; Nikkei225 +1.9%; ASX 200 +0.7%

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

- EUR 1.1241-1.1282; JPY 107.22-107.61; AUD 0.7055-0.7082; NZD 0.6766-0.6791

- Commodity Futures: Gold +1.2% at $1,444/oz; Crude Oil +1.5% at $56.12/brl; Copper +1.8% at $2.77/lb