Modest bounce-back for Asian equities amid several macro data drops

Asia Market Update: Modest bounce-back for Asian equities amid several macro data drops; Focus on US July Core PCI tonight.

General trend

- After recent days of risk-off behavior, Asian stocks bounced back somewhat with all indices higher, led by the Hang Seng +1.7%. Overnight promises of more support from PBOC Gov Pan as well as unsubstantiated reports of a $5T rescue package for residential mortgage refinancing; HK Mainland Properties +6%.

- All measures of Tokyo CPI for August came in above estimates, with Core CPI at its highest since March of this year. However, Retail Sales for July disappointed, coming in below estimates.

- Japan Industrial Production for July also came in one Big Figure less than expected. METI warned that August production could also fall m/m (even though any impact from Typhoon Shanshan will not be taken into account for the August release). September is also expected to fall m/m on lower production of semiconductor production equipment and electronic component devices.

- Australia Retail Sales for July came in flat, below the positive estimates. Recent tax cuts yet to show any real effect. AUD/USD barely reacted to the data. The disappointing release was foreshadowed earlier by home retailer Harvey Norman’s falling profits for FY24 being attributed to “a challenging discretionary retail environment in Australia” . Consumer discretionary -0.5%.

- Australian resources and energy shares gained amid higher commodity and metals prices.

- Korea industrial production for July disappointed, although y/y figure outperformed estimates.

- New Zealand consumer confidence was up several points in August, following on from the decade-high Business Confidence figures yesterday.

- The writing may be on the wall for struggling chip-maker Intel, having missed the AI wave, with reports that the company is ‘discussing options’ with Morgan Stanley and Goldman, that may include splitting off its foundry and product units, and potentially scrapping factory projects.

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian time zone)

- Friday Aug 30th, (Friday eve various European prelim Aug CPI, Fri night India Q2 GDP, CA Q2 GDP,
US Core PCE, Michigan Consumer Sentiment).

- Sat Aug 31st CN Aug National PMIs.

Holidays in Asia this week

- Mon Aug 26th Philippines.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,051.

- Australia July Retail Sales M/M: 0.0% V 0.3%E.

- Australia July Private Sector Credit M/M: 0.5% v 0.5%e; Y/Y: 5.7% v 5.6% prior.

- Australia sells A$700M vs. A$700M indicated in 2.75% Nov 2029 bonds; Avg Yield: 3.6368% v 4.0938% prior; bid-to-cover: 3.66x v 3.10x prior.

- New Zealand Aug ANZ Consumer Confidence: 92.2 v 87.9 prior.

- New Zealand July Building Permits M/M: +26.2% v -13.8% prior.

- Fonterra: Reports Jul NZ Milk Collections Y/Y: 20.6M kg, +9% y/y.

China/Hong Kong

- Hang Seng opens flat at 17,794; Shanghai Composite opens -0.1% at 2,819.

- China govt said to consider refinancing $5.4T of mortgages - financial press, sources not cited.

- China NDRC's Wang: China to impose special market access rules on AI and new energy - financial press.

- China National Team Stock ETFs see Jan-Aug inflows of CNY700B – Chinese press.

- ASML.NL Reportedly Netherlands govt to place more curbs on company's China chip business, including limiting ASML's ability to repair and maintain its semiconductor equipment in China – press [overnight update].

- Barclays analysts: Chinese exporters may be prompted to convert more dollars into Chinese yuan if USD/CNH falls below the key 7.10 level [overnight update].

- PBOC Gov Pan Gongsheng: Monetary policy to remain supportive; vows to study more policies to boost economy [overnight update].

- China PBOC purchased CNY400B Special Treasury Bonds from primary dealers – press [overnight update].

- China Commerce Ministry (MOFCOM): Some Chinese experts proposed increasing import tariffs on large engine cars and argued that such duties are in line with WTO rules [overnight update].

- China PBOC sets Yuan reference rate: 7.1124 v 7.1299 prior (strongest since Jun 13th).

- China PBOC Open Market Operation (OMO): Sells CNY30B in 7-day reverse repos; Net drains CNY349B v net drains CNY208B prior.

Japan

- Nikkei 225 opens +0.1% at 38,388.

- Japan July preliminary industrial production M/M: 2.8% V 3.5%E; Y/Y: 2.7% V 2.7%E.

- Japan July Retail Sales M/M: 0.2% V 0.4%E; Y/Y: 2.6% V 2.8%E.

- Japan Aug Tokyo CPI Y/Y: 2.6% V 2.3%E; CPI (EX-FRESH FOOD) Y/Y: 2.4% V 2.2%E (Core highest since Mar, 2024); CPI (ex-fresh food and energy) Y/Y: 1.6% v 1.4%e.

- Japan July jobless rate: 2.7% V 2.5%E.

- Japan Econ Min Saito: Denies media speculation that the govt will fund Japanese chip-maker Rapidus – press.

- Japan Fin Min Suzuki: FY25 budget will address priority issues (includes wage gains and defense).

- Japan sells ¥4.9T vs. ¥4.9T indicated in 3-month Bills; Avg Yield: 0.0946% v 0.0974% prior; bid- to-cover: 3.57x v 3.46x prior.

- Follow up: Japan FSA to tighten rules on insurer's cross-holdings - Nikkei.

- Japan govt said to become equity investor in Japanese chip-maker Rapidus – press [overnight update].

- Japan Cabinet Office (Govt) Monthly Report: Raises overall economic assessment (1st time in 15 months) [overnight update].

South Korea

- Kospi opens +0.5% at 2,676.

- South Korea July Industrial Production M/M: -3.6% v 0.5% prior; Y/Y: 5.5% v 3.8% prior.

- South Korea to issue KRW150B in retail bonds in Sept.

- South Korea Court: Government emissions law is ‘unconstitutional’; the government now plans to implement follow up measures [overnight update].

Other Asia

- Bank Indonesia (BI), Bank of Korea (BOK), and Ministry of Economy and Finance (MOEF) today announced the launching of the framework for cooperation to promote the use of local currencies for cross-border trade transactions between Indonesia and Korea.

- Philippines Fin Min Recto: Philippines may return to international bond market later this year - financial press.

- Thailand Central Bank (BOT) and Thai Fin Min to meet in Sept on 2025 inflation target - financial press.

North America

- (US) WSJ Poll: Harris leads Trump by margin of 48% to 47% - update.

- Intel: *Said to explore options with Goldman, Morgan Stanley; Mulls splitting off foundry and product units, scrapping factory projects - financial press.

- (US) Democratic Presidential Candidate VP Kamala Harris & VP Candidate Tim Walz (D-MN Gov) in pre-taped interview with CNN's Dana Bash.

- (US) Fed's Bostic (hawk, voter for 2024; non-voter for 2025): Inflation is still far from target.

- (US) Biden said to consider price support for US critical minerals – US press.

- (US) July advance goods trade balance: -$102.7B V -$97.9BE.

- (US) Initial jobless claims: 231K V 232KE; continuing claims: 1.868M V 1.87ME.

- (US) Q2 Preliminary GDP annualized Q/Q: 3.0% V 2.8%E; personal consumption: 2.9% V 2.2%E.

- (US) Q2 Preliminary GDP price index: 2.5% V 2.3%E; core PCE price index Q/Q: 2.8% V 2.9%E.

- (CA) Canada Q2 Current Account: -$8.5B v -$6.0Be.

- (US) Weekly EIA natural gas inventories: +35 BCF VS. +37 BCF TO +39 BCF indicated range.

- (US) Fed’s Barkin (voter for 2024; non-voter for 2025): Inflation is down, not there yet, we're making progress - radio interview.

Europe

- (IL) Israel and Hamas said to have agreed to three separate and zoned 3-day pauses in Gaza Strip fighting for Polio vaccinations - China state media, citing WHO.

- (UK) Aug Lloyds Business Barometer: 50 v 46e.

- (IE) Ireland Aug Preliminary CPI EU Harmonized Y/Y: 1.1% v 1.5% prior.

- (EU) ECB's Lane (Ireland, chief economist): Pay growth for workers in the Euro Zone will slow sharply in 2025 and 2026.

- (DE) Germany Aug preliminary CPI M/M: -0.1% V 0.0%E; Y/Y: 1.9% V 2.1%E.

- (UK) Govt reportedly to delay bank capital reforms until at least Jan 2026 - financial press.

- (IQ) Iraq said to cut oil output to 3.85-3.9M boe/d.

Levels as of 01:20 ET

- Nikkei 225 +0.3%; ASX 200 +0.5%; Hang Seng +1.9%; Shanghai Composite +1.3%; Kospi +0.9%.

- Equity S&P500 FUTs +0.2%; Nasdaq100 FUTs +0.4%, Dax flat; FTSE100 flat.

- EUR 1.1069-1.1084: JPY 144.66-145.07; AUD 0.6789-0.6809; NZD 0.6255-0.6274.

- Gold -0.5% at $2,547/oz; Crude Oil +0.3% at $76.16/brl; Copper +0.7% at $4.2408/lb.