Equities open lower after US declines

Asia Market Update: Equities open lower after US declines, trade-related uncertainty will not disappear; Markets cautious ahead of FOMC minutes ; Declines in iron ore futures weigh on Aussie miners

General Trend:

- Asian financials trade generally lower after declines in the US on lower bond yields

- Property shares outperform in China amid recent cut in the loan prime rate (LPR)

- Wanhua Chemical reports ~46% decline in H1 profits [co. is the world’s largest producer of MDI]

- Smartphone company Xiaomi declines in HK on weaker than expected results

- Alibaba said to postpone HK IPO due to recent protests

- Air China and China Construction Bank are expected to report earnings after the HK close

- Australia’s Brambles [supply-chain logistics co.] declines over 9 % on outlook

- Australia sells 2031 bonds at lower yield and bid to cover

- Yen weakens after gains on Tuesday, Nikkei Futures pare losses; Bond yields and FOMC minutes in focus

- Fed’s Quarles does not comment on monetary policy ahead of FOMC minutes release on Wed

- Offshore yuan (CNH) rises amid stronger yuan fixing

- Some Japanese companies have reported being granted permits to resume exports to South Korea

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.3%

- (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: monetary policy is still effective, latest rate cut gave inflation best chance to lift earlier, reducing probability unconventional tools needed

- BXB.AU Reports FY19 Underlying net $803.7M v $826.1M y/y; Rev $4.6B v $4.5B y/y; Guides FY20 Rev growth at lower end of mid-single digit growth objective

- (AU) Australia sells A$800M v A$800M indicated in 1.50% June 2031 bonds, avg yield 0.9753% v 1.056% prior, bid to cover 2.46x v 3.38x prior

- (AU) Australia July Skilled Vacancies M/M: +0.4% v -0.6% prior

Japan

- Nikkei 225 opened -0.9%

- (JP) Convenience stores in Japan are expected to offset increase in sales tax with discounts - Japanese Press

- (KR) Japan Defense White Paper alleges that North Korea has already made nuclear warheads - Japanese Press

- 7203.JP Planning to charge auto part companies more for steel in H2 - Japan press

- (JP) Japan Foreign Min Kono: Agreed with China and South Korea to aim for a Regional Comprehensive Economic Partnership (RCEP) agremeent by end of the year

Korea

- Kospi opened -0.3%

- (KR) South Korea July PPI M/M 0.0% v -0.3% prior, Y/Y: -0.3% v +0.1% prior

- (KR) South Korea Aug 1-20th Exports -13.3% y/y; Chip Exports -29.9% y/y; Imports -2.4% y/y

- (KR) South Korea Q2 Short Term External Debt: $140.0B v $129.4B prior

China/Hong Kong

- Hang Seng opened -0.3%; Shanghai Composite opened -0.2%

- BABA Follow Up: Said to be postponing HK$15B IPO in Hong Kong to October due to protesting (was expected in late August) - press

- (US) Pres Trump: Reiterates the US is not ready to make a deal with China

- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY50B prior; Net drain CNY40B v drain CNY10B prior

- (CN) China PBoC sets yuan reference rate: 7.0433 v 7.0454

- 2202.HK Reports H1 (CNY) Net 11.8B v 9.1B y/y , Rev 139.3B v 104.9B y/y

- 1810.HK Reports Q2 (CNY) adj Net 3.64B v 2.1B y/y, Op 2.34B v -7.59B y/y; Rev 52.0B v 45.2B y/y

- (CN) China Foreign Exchange Trade System: On Aug 20th conducted CNY3.0B in LPR based interest rate swaps - WeChat

- (HK) US Senate Majority Leader McConnell Op Ed: Senate to reconsider Hong Kong status is autonomy eroded; China's actions in HK will shape US relationship

North America

- (CN) Sec of State Pompeo: thinks a US-China deal could be reached by the 2020 election – CNBC

- (US) Pres Trump: we are looking at possible tax cuts all the time; not talking about doing anything at this moment on tax cuts but it's something I'm thinking about

- (US) Fed's Quarles (hawk, voter): No comments on monetary policy

- (US) Fed's Daly (dove, non-voter): sees solid domestic momentum that points to a continued economic expansion; don’t think we're headed towards a recession right now

- (VE) Venezuela President Maduro: Authorized 'secret' meetings with the Trump Administration, notes his gov't had secret contacts with the Trump Admin

- (US) Weekly API Oil Inventories: Crude: -3.5M v +3.7M prior

Europe

- (IT) Italy PM Conte: confirms will meet with President to tender resignation later today; will stop govt experience here

- (UK) UK budget reportedly could be delayed until 2020 if general election is called; could delay decision on BOE governor until after Brexit

- (DK) US President Trump to postpone meeting with leader of Denmark over Greenland - US financial press

Levels as of 1:20 ET

- Nikkei 225, -0.3%, ASX 200 -0.9%, Hang Seng flat; Shanghai Composite +0.1%; Kospi flat

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

- EUR 1.1105-1.1090; JPY 106.55-106.22 ; AUD 0.6791-0.6772 ;NZD 0.6424-0.6406

- Gold -0.2% at $1,512/oz; Crude Oil +0.4% at $56.34/brl; Copper +0.2% at $2.580/lb