Equity markets open mostly higher after US gains

Asia Market Update: Equity markets open mostly higher after US gains; Hang Seng declines amid focus on earnings, Yen rises as Fed policy uncertainty remains after FOMC minutes

 

General Trend:

- Henderson Land and BYD decline in Hong Kong following earnings

- Trade-exposed Li & Fung may report results after the HK close

- Shanghai property index declines over 1% after recent gains

- Nikkei opened higher, but later pared gains as Yen strengthened

- Japanese construction/mining equipment firm Komatsu said to consider inventory reduction (Japanese press)

- Equities in Australia outperform amid focus on earnings; Santos rises after issuing results, drives energy index higher

- Qantas rises after announcing FY results and stock buyback

- South Korean chipmakers drop, Bank of Korea said chip exports decline likely to persist for the rest of 2019

- Aug PMI data in focus: Japan manufacturing PMI contracts for 4th straight month, Aussie services PMI sees first contraction in 5 months

- Offshore yuan (CNH) declines after weaker CNY fixing

- NZD declines ahead of retail sales data on Friday

- Markets now look ahead to Jackson Hole after Fed minutes release

- Fed Chairman Powell expected to deliver Jackson Hole speech on Friday morning (Aug 23rd)

- Indonesia Central Bank decision due later today (majority of analysts see rates unchanged)

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.1%

- (AU) Australia Aug Preliminary PMI Manufacturing 51.3 v 51.6 prior; PMI Services: 49.2 v 52.3 prior; PMI Composite: 49.5 v 52.1 prior

- QAN.AU Reports FY19 (A$) Underlying pretax profit 1.30B v 1.60B y/y, Rev 17.96B v 17.13B y/y

- CCL.AU Reports H1 (A$) Net 168.0M v 158.1M y/y; EBIT 289.9M v 301.4M y/y; Rev 2.43B v 2.31B y/y; declares special dividend of A$0.04/share

- (AU) Australia ACCC releases its seventh Gas Inquiry Report: Not likely to experience a shortfall in 2020 but supply remains tight and more development and production is needed

Japan

-Nikkei 225 opened +0.4%

- 6301.JP Said to reduce inventory by 10% from Q1 levels by end of FY – Nikkei

- (JP) Japan Aug Preliminary PMI Manufacturing: 49.5 v 49.4 prior (4th consecutive contraction)

- (JP) Japan Economy Min Motegi: Issues that need to be discussed with US at ministerial level have been narrowed down; Agreed to speed up discussions with USTR Lighthizer; Negotiations are 'pretty tough' but we were able to conduct discussions with mutual trust

Korea

-Kospi opened +0.1%

- (KR) Bank of Korea (BOK): Japan export curbs could be more damaging to local economy than tariff hikes; chip exports likely to continue to fall y/y for the duration of 2019

- (JP) South Korea is considering a conditional extension to defense pact with Japan - Japan Press

- (KR) South Korea to end the fuel tax cut at the end of Aug (as planned) - financial press

- 139480.KR To pay KRW130B to 1,000 suppliers and E-Mart Everyday KRW17.5B to 350 suppliers ahead of Sept 10th deadline - Korean press

-(KR) North Korea has carried out live fire drills by bombing replicas of South Korea's F-15K fighter jets, surface-to-air missiles and a radar - Korean press

China/Hong Kong

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

- (CN) China said to have threatened sanctions over US arm sales to Taiwan - financial press

- (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY60B prior; Net injection CNY30B v drain CNY40B prior (1st injection in 4 sessions)

- (CN) China PBoC sets yuan reference rate: 7.0490 v 7.0433 prior

- (CN) According to Xinhua 14 listed China banks reported H1, of which 13 reported double digit Rev growth, 11 reported net higher than 10% y/y

- 1910.HK Reports H1 Net $97M v $67.8M y/y, Rev $1.76B v $1.85B y/y
(CN) Major China state owned banks seen supporting yuan and receiving USD/CNY swaps

Other Asia

- (SG) Singapore Central Bank (MAS) offering S$2.9B in July 2029 bonds on Aug 28th (2nd highest on record going back to 1998)

North America

- (US) FOMC MINUTES FROM JULY 31 MEETING: MOST OFFICIALS SAW RATE CUT AS 'MID-CYCLE ADJUSTMENT' OR POLICY 'RECALIBRATION'; TWO POLICYMAKERS WOULD HAVE PREFERRED A 50BPS CUT IN JULY RATHER THAN 25BPS CUT

- (US) US Pres Trump tweets: our "only problem" is Powell and the Fed; urges a 'BIG CUT', but "don't count on him"

Europe

- (DE) German Finance Ministry: Early indicators point to sustained slowdown in industrial sector; labor market situation is still favorable

- (GE) Germany said to consider negative interest ban for retail savers (in line with earlier speculation from Wed)- German press

 

Levels as of 1:20 ET

- Nikkei 225, -0.1%, ASX 200 +0.4%, Hang Seng -1.2%; Shanghai Composite -0.4%; Kospi -0.4%

- Equity Futures: S&P500 +0.1%; Nasdaq100 -0.2%, Dax -0.4%; FTSE100 -0.2%

- EUR 1.1093-1.1084 ; JPY 106.65-106.40 ; AUD 0.6789-0.6757 ;NZD 0.6409-0.6371

- Gold -0.3% at $1,511/oz; Crude Oil +0.1% at $55.72/brl; Copper -0.3% at $2.571/lb