Equity markets track Thursday’s US gains, US payrolls report and Fed Chair Powell on radar for later today

Asia Market Update: Equity markets track Thursday’s US gains, US payrolls report and Fed Chair Powell on radar for later today; China speculated to announce ‘full-scale’ RRR cut by as soon as this upcoming weekend

 

General Trend:

- Financials trade generally higher in Asia as government bond yields rise

- Australian equities outperform as energy and financial companies gain

- Hong Kong Exchanges rises after the company resumed trading on its derivatives market. The firm had disclosed certain connectivity issues on Thursday

- ZTE rises over 9% in HK, strength attributed to report related to the winning of 5G business in Europe and resumption of US/China trade talks

- Shanghai Telecom Services Index rises over 1.5%, tracks gains in ZTE

- Fitch downgraded Hong Kong’s sovereign rating due to the impact of the recent protests

- Berkshire Hathaway sold ¥430B in bonds in 6 tranches, debt offering is said to be the largest ever yen denominated bond sale by a non-Japanese issuer

- Fed Chair Powell due to speak after the release of the Aug US jobs report

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.3%

- (AU) Collins Food, Gold Road, Jumbo, Silver Lake, and Netweatlh to be added to S&P/ASX 200 Index on Sept 23; Ardent Leisure and Australian Pharma to be removed

- (AU) AUSTRALIA AUG AIG PERFORMANCE OF CONSTRUCTION INDEX: 44.6 V 39.1 PRIOR

- (AU) Australia Port Hedland Aug Iron Ore Exports: 45.4 Mt v 41.0 Mt m/m; Port Hedland Iron Ore Shipments to China +10%

- (NZ) ANZ Bank forecasts RBNZ will cut key rate to 0.25% by May 2020 (currently the Reserve Bank of New Zealand official cash rate is 1.00%); Sees rate cuts in Nov 2019, Feb 2020 and May 2020

China/Hong Kong

- Shanghai opened +0.4%, Hang Seng +1%

- (CN) China Daily: PBOC expected to release more capital, markets expect an overall cut in the reserve requirement ratio (RRR) by as soon as this weekend [China last announced a 'full-scale' RRR cut in January 2019]

- (CN) China Vice Premier Liu He: Reiterates that domestic economy faces increasing downward pressure but capable and confident to address any difficulties (comments from Sept 5th)

- (CN) China PBOC sets Yuan Reference Rate: 7.0855 v 7.0852 prior

- (CN) China PBoC Open Market Operation (OMO): Injects CNY40B v skips prior; Net CNY40B injects v drain CNY0B prior

- (CN) China State Administration of Foreign Exchange (SAFE) to allow 3 securities firms to participate in a pilot program related to foreign exchange settlement and sales; Says the move may help improve the market-based exchange rate formation for the yuan (CNY) – Xinhua

- (CN) Speaking to mid-career officials at the Central Party School, China Pres Xi on Tuesday listed Hong Kong, Macau and Taiwan as a major risk and challenge for the China Communist Party - SCMP

- (CN) China Premier Li: China will open its economy even more, also for foreign investment

- (HK) Fitch downgrades Hong Kong sovereign rating by 1 notch from AA+ to AA; outlook negative

- (HK) Protests expected this weekend at subway stations and government buildings on Friday and at the Hong Kong airport Saturday - US Financial Press

Japan

- Nikkei 225 opened +0.6%

- (JP) Bank of Japan (BOJ) Gov Kuroda: 20 and 30 year yields have fallen a bit too far; Reiterates lowering negative rate is always an option - Nikkei Interview

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Unchanged

- (JP) JAPAN JULY LABOR CASH EARNINGS Y/Y: -0.3% V 0.1%E; REAL CASH EARNINGS Y/Y: -0.9% V -0.7%E (7th straight decline in real wages)

- (JP) Japan Aug Official Reserve Assets: $1.33T v $1.32T prior

- (JP) Japan July Household Spending Y/Y: 0.8% v 0.8%e (8th consecutive rise, longest streak since data became available in 2000)

- (JP) Japan July Preliminary Leading Index CI: 93.6 v 93.2e; Coincident Index: 99.8 v 100.7e

Korea

- Kospi opened +0.6%

North America

- US Fed Chair Powell is scheduled to speak at the University of Zurich on Friday (Sept 6th) at 12:30 PM EST, expected to discuss US economic outlook and interest-rate policy; The comments are seen as being the last remarks by Powell before the Fed goes into silent mode ahead of its Sept 17-18 policy meeting -US financial press

-The US Aug nonfarm payrolls report is also due to be released on Friday (8:30 AM EST).

Europe

- (UK) UK Labour Party and SNP said to discuss calling for Oct 29 election - US financial press

- (US) Pres Trump and French Pres Macron spoke Thursday regarding the digital sales tax; Trump also noted that Iran sanctions would not be dropped at this time

- (DE) German Chancellor Merkel: Hopes US-China trade dispute will be over soon as it impacts the entire world; Germany is open for Chinese investment - comments from Beijing

 

Levels as of 1:20 ET

- Nikkei 225, +0.3%, ASX 200 +0.6%, Hang Seng +0.2%; Shanghai Composite +0.1%; Kospi +0.1%

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

- EUR 1.1040-1.1022 ; JPY 107.10-106.86 ; AUD 0.6825-0.6806 ;NZD 0.6392-0.6363

- Gold +0.1% at $1,526/oz; Crude Oil +0.1% at $56.34/brl; Copper -0.2% at $2.626/lb