China PMIs, Japan inflation slow further

Economic Data

- (CN) CHINA JUN CAIXIN PMI MANUFACTURING: 48.6 V 49.2E; 16th straight contraction; 4-month low

- (CN) CHINA JUNE MANUFACTURING PMI (GOVT OFFICIAL): 50.0 (4-month low) V 50.0E; NON-MANUFACTURING (SERVICES) PMI: 53.7 (3-month high) V 53.1 PRIOR

- (JP) JAPAN Q2 TANKAN LARGE MANUFACTURING INDEX: 6 V 4E; MANUFACTURERS OUTLOOK: 9 V 3E; ALL-INDUSTRY CAPEX: 6.2% V 5.3%E

- (JP) JAPAN MAY NATIONAL CPI Y/Y: -0.4% (3rd straight decline, 3-year low) V -0.5%E; CPI EX FRESH FOOD (CORE) Y/Y: -0.4% (3-year low) V -0.4%E

- (JP) JAPAN JUN TOKYO CPI YOY: -0.5% V -0.4%E; CPI EX-FRESH FOOD YOY: -0.5% (6th straight decline, 3-year low) V -0.5%E

- (JP) JAPAN JUNE FINAL PMI MANUFACTURING: 48.1 V 47.8 PRELIM

- (JP) JAPAN MAY JOBLESS RATE: 3.2% V 3.2%E

- (JP) JAPAN MAY OVERALL HOUSEHOLD SPENDING Y/Y: -1.1% V -1.1%E; 3rd straight decline

- (AU) AUSTRALIA JUNE CORELOGIC RPDATA HOUSE PRICES M/M: 0.5% V 1.6% PRIOR

- (AU) AUSTRALIA JUNE AIG MANUFACTURING INDEX: 51.8 V 51.0 PRIOR; 12th month of expansion

- (KR) SOUTH KOREA JUNE TRADE BALANCE: $11.6B V $9.1BE; Exports Y/Y: -2.7% v -8.2%e (18th straight decline); Imports Y/Y: -8.0% v -10.0%e

- (KR) SOUTH KOREA MAY CURRENT ACCOUNT BALANCE: $10.4B V $3.4B PRIOR; GOODS BALANCE: $10.7B V $9.6B PRIOR

- (KR) SOUTH KOREA JUN CPI M/M: 0.0% V 0.1%E; Y/Y: 0.8% V 0.8%E; CPI CORE Y/Y: 1.7% V 1.6%E

- (ID) INDONESIA JUN CPI M/M: 0.7% v 0.5%e; Y/Y: 3.5% v 3.4%e; CPI CORE Y/Y: 3.5% v 3.5%e

 

Index Snapshot (as of 04:00 GMT)

- Nikkei225 +0.8%, S&P/ASX +0.5%, Kospi +1.0%, Shanghai Composite +0.2%, Hang Seng closed, Sep S&P500 -0.1% at 2,088

 

Commodities/Fixed Income

- Aug gold +1.0% at $1,333/oz, Aug crude oil +0.6% at $48.62/brl, Jul copper +0.1% at $2.20/lb

- USD/CNY: BOC SETS YUAN MID POINT AT 6.6496 V 6.6312 PRIOR; first weaker setting in 3 days

- (CN) PBOC to inject CNY50B in 7-day reverse repos; For the week, injects CNY180B v CNY340B in prior week

- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥430B in 5-10yr JGBs, and ¥2T in T-bills

- (AU) Australia MoF (AOFM) sells A$1.0B in 2.75% 2027 Bonds; avg yield: 2.065%; bid-to-cover: 2.27x

 

Market Focal Points/FX

- Asian equity markets are firmer yet again, entering the new quarter with momentum of 3 straight sessions of solid gains despite the mixed economic data. China manufacturing PMIs were disappointing, though the official Services print bounced higher. In Japan, the quarterly Tankan topped forecasts, but CPI dive into deflation territory persisted. Australia data were similarly mixed, with better AiG manufacturing against lower change in home prices. Among FX majors, USD/JPY fell about 50pips from the highs to 102.80, as improved Tankan diminished the likelihood of further BOJ easing next month. AUD/USD and NZD/USD traded within about a 30pip range above 0.7440 and 0.7120 respectively as traders eye Australia's national elections this weekend. After today's 200pip drop on BOE signal of policy easing, GBP/USD came off the US session lows of 1.3220 to rise above 1.3330.

- China official June manufacturing PMI slid to a 4month low of 50.0 as non-manufacturing rose to a 3-month high of 53.7. Among the key manufacturing PMI components, new orders fell to a 4-month low of 50.5 v 50.7 priorl, new export orders registered its first contraction in 4 months, input prices hit a 4-month low of 51.3 v 55.3 prior, and employment slowed to 47.9 from 58.2. Separate private survey Caixin PMI data saw manufacturing contract for the 16th straight month, missing expectations by the biggest margin since January. Caixin comments reflected on the fall in cost pressure faced by China producers, as employment in manufacturing has now fallen in each of the past 32 months. China Pres Xi spoke in the session, stating the economy is in transition. Fin Min Lou pledged continued use of fiscal policies to reduce overcapacity, help companies restructure debt, and reform tax system after yesterday's warning that the govt is struggling to meet annual fiscal targets.

- Japan saw 3-year lows in its national headline and core as well as Tokyo core CPI prints, with the upward inflection in JPY over the past 3 months weighing further on prices. Q2 Tankan data were resilient however, with weakness in machinery and energy balanced by strength in iron/steel segment. In non-manufacturing space, Real Estate and IT industries outpeformed while Hospitality and Utilities lagged. Japan spokesperson Hagiuda remarked that while the Tankan shows firms' cautious stance, the CAPEX component shows economy's firm footing.

 

Equities

US equities/ADRs:

- ARRY: Submits binimetinib New Drug Application to FDA; +5.1% afterhours

- NFLX: Afterhours strength attributed to positive comments from data intelligence firm 7Park Data that reportedly shows positive Q2 trend in international subscribers - financial press; +3.5% afterhours

- FC: Reports Q3 -$0.07 v +$0.08e, R$44.7M v $49.9Me; -2.5% afterhours

- TSLA: Model S vehicle in Autopilot mode has been involved in a fatal crash; US regulators to open investigation into automatic drive system - press; TSLA -2.8% afterhours; MBLY -3.1% afterhours

- ARNA: To shift focus on proprietary clinical stage pipeline; To cut 100 jobs; -6.4% afterhours

- MU: Reports Q3 -$0.08 v -$0.11e, R$2.90B v $2.95Be; To cut jobs; Guides Q4 -$0.24 to -$0.16 v $0.02e, Rev $2.9-3.2B v $3.2Be - earnings slides; -9.5% afterhours

Notable movers:

- ABC-Mart 2670.JP +1.5% (Q1 speculation)

- EVN.AU +9.0%, NCM.AU +4.5% (rising gold prices)

- MSB.AU +14.4% (update on heart failure trial and funding of operations)