Chinese property shares track weakness in the Yuan

Asia Market Update: Chinese property shares track weakness in the Yuan; Upcoming US payrolls in focus

General Trend:

- Asian equity markets are trading mixed

- Chinese equities extend decline, property index remains weak

- Toyota Motors affirmed outlook

- Heineken announced investment agreement with China Resources Beef

- Japan said to consider a sovereign wealth fund focused on US infrastructure as a move to ease trade tensions (Japanese press)

- China PBoC set the yuan at the weakest level since May 2017

- China PBoC skipped open market operation for the 11th straight session

- China Caixin Services PMI confirms slowdown in the official PMI

- Rising US China trade tensions cited as a major concern among firms (HK PMI data)

- Australia retail sales beat ests, limited market reaction seen

- Australia PMI Services surveys slow in July

- US July labor data due for release on Friday

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened flat

- ASX 200 Financials index -0.7%, Resources -0.5%, Telecom -0.5%, Consumer Discretionary +0.7%, Energy +0.7%, REIT +0.6%

- (AU) AUSTRALIA Q2 RETAIL SALES (EX-INFLATION) Q/Q: 1.2% V 0.8%E

- (AU) AUSTRALIA JUN RETAIL SALES M/M: 0.4% V 0.3%E

- (AU) AUSTRALIA JUL AIG PERFORMANCE OF SERVICES INDEX: 53.6 V 63.0 PRIOR (weakest reading since Dec 2017)

- (AU) Australia Jul CBA PMI Services: 52.3 v 52.7 prior; Composite: 52.3 v 52.9 prior

- (NZ) New Zealand Jul ANZ Job Advertisements M/M: +3.1% v -1.6% prior

China/Hong Kong

- Shanghai Composite opened -0.2%, Hang Seng +0.1%

- Hang Seng Services index -2%, Materials -1.7%, Industrial Goods -1.4%, Consumer Goods -1.3%, Property/Construction -1%, Financials -0.3%; Info Tech +0.9%

- (CN) China State Council: Reiterates to make monetary policy transmission smoother, to make efficient use of fiscal policy; To make 'positive' use of fiscal policy

(CN) CHINA PBOC SETS YUAN REFERENCE RATE AT 6.8322 V 6.7942 PRIOR (weakest yuan fix since late May 2017)

- (CN) CHINA JUL CAIXIN SERVICES PMI: 52.8 V 53.5E (4-month low); COMPOSITE: 52.3 V 53.0 PRIOR

- (CN) China PBoC Open Market Operation (OMO): Skips OMO for the 11th straight session

-(CN) For the week, the PBoC drained a net of CNY210B in its OMOs v CNY370B drain w/w

- (HK) Hong Kong Jul PMI: 48.2 v 47.7 prior

Japan

- Nikkei 225 opened +0.3%

- TOPIX Iron & Steel index -1.3%, Marine Transportation -1% , Securities -0.5%

-(JP) Japan said to consider a sovereign wealth fund focused on US infrastructure as a move to ease trade tensions; the size of the fund has not yet been determined - Japanese Press

- (JP) Japan Fin Min Aso: No 'specific' plan to set up infrastructure fund for US investment; in various talks with the US on infrastructure development

- (JP) Bank of Japan (BOJ) June 14-15th Policy Meeting Minutes (2 meetings ago): Many members pointed out that it was important to continue to conduct a multifaceted monitoring and assessment of the positive effects and side effects that could arise from the continuation of powerful monetary easing, including those on the functioning of financial intermediation and the financial system.

- (JP) JAPAN JUL SERVICES PMI: 51.3 V 51.4 PRIOR; COMPOSITE: 51.8 V 52.1 PRIOR

Korea

- Kospi opened +0.4%

-(KR) South Korea Jun BoP Current Account Balance: $7.4B v $8.7B prior; BoP Goods Balance: $10.0B v $11.4B prior

- (KR) South Korea July Foreign Reserves: $402.5B v $400.3B prior (record high)

Other

- (MY) Malaysia Jun Trade Balance (MYR): 6.1B v 9.3Be; Exports to China +16.9% y/y, to the US -1.9% y/y

-(SG) Singapore Jul PMI: 53.0 v 56.0 prior

North America

-US equity markets ended mostly higher: Dow flat, S&P500 +0.5%, Nasdaq +1.2%, Russell 2000 +0.8%

-S&P500 Tech +1.3%, Consumer Staples +1%; Materials -0.7%

-Campbell Soup [CPB]: Follow Up: Said to have held exploratory talks with Kraft Heinz - NY Post

- (US) Weekly Fed Balance Sheet Total Assets for week ending Aug 1: $4.32T, -$16.8B w/w, -$193.3B y/y; Reserve Bank Credit: $4.23T, -$16.8B w/w, -$193.8B y/y
 

Levels as of 01:30ET

- Nikkei 225 flat, ASX 200 -0.1%, Hang Seng -0.1%; Shanghai Composite -0.2%; Kospi +0.6%

- Equity Futures: S&P500 flat; Nasdaq100 flat, Dax -0.2%; FTSE100 -0.3%

- EUR 1.1581-1.1594 ; JPY 111.60-111.80 ; AUD 0.7356-0.7375 ;NZD 0.6724-0.6747

- Aug Gold -0.3% at $1,215/oz; Sept Crude Oil +0.2% at $69.09/brl; Sept Copper +0.1% at $2.729/lb