Nikkei later pares declines as financials gain after earnings, USD/JPY rises

Asia Market Update: Asian equities open lower after some characterized Fed rate cut as ‘hawkish’; Nikkei later pares declines as financials gain after earnings, USD/JPY rises; USD trades generally firmer following Fed

 

General Trend:

- Hang Seng underperform amid protests concerns, unexpected Q2 GDP contraction

- Standard Chartered H1 profits beat ests

- Macau casino revenues decline in July amid protests

- Financials rise in Japan; Nomura, Daiwa Securities, MUFJ and Mizuho all rise following their respective earnings reports

- Property index drops in Shanghai on reported PBoC warning

- China Caixin Manufacturing PMI beat ests, remained in contraction in July

- US and China agreed to hold more trade talks in Sept

- US companies continue to apply for licenses to resume sales to Huawei (US financial media)

- Bank of Korea (BOK) Chief said may consider more easing if downside risks grow (local press)

- South Korea exports decline for 8th straight month in July, chip exports -28.1% y/y; Imports decline amid dispute with Japan

- Australian export prices continued to be driven higher by ore prices in Q2

- CoreLogic said Aussie July house price data pointed to broader stabilization

- BoJ official Amamiya commented on topics including overseas risks and pre-emptive action

- Gold declines as USD strengthens after Fed

- BoE rate decision seen later today

- US companies expected to report during the NY morning include Cigna, GM, Kellogg, Oshkosh, Verizon, Yum

- Toyota Motor is due to report earnings on Friday

- Japan may decide on whether to remove South Korea from Japan’s trade ‘white list’ by as early as Friday (financial press)

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened -0.2%

- (AU) Australia July AIG Performance of Manufacturing Index: 51.3 v 49.4 prior

- (AU) Australia July CoreLogic House Price Index m/m: +0.1% v -0.1% prior (first rise in 22 months)

- NUF.AU Cuts FY19 underlying EBITDA A$420M (prior A$440-470M); Announces A$97.5M placement of preferred securities

- QAN.AU Australia competition regulator ACCC: Qantas' 19.9% stake in Alliance Airlines raises concerns

- (AU) AUSTRALIA Q2 IMPORT PRICE INDEX Q/Q: 0.9% V 1.5%E; EXPORT PRICE INDEX Q/Q: 3.8% V 2.8%E

Japan

- Nikkei 225 opened -0.7%

- (JP) Japan July Final PMI Manufacturing: 49.4 v 49.6 prelim

- (JP) Bank of Japan (BOJ) Dep Gov Amamiya: Rate cuts and increase in asset buying and acceleration of base money expansion among options for BOJ easing

- (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.1% 10-year JGBs: avg yield: -0.152% v -0.139% prior, bid to cover 3.76x v 3.92x prior

Korea

- Kospi opened -0.5%

- (KR) SOUTH KOREA JULY CPI M/M: -0.3% V 0.0%E; Y/Y: 0.6% V 0.8%E

- (KR) North Korea fired this morning new multiple rocket launcher under leader Kim's supervision – Yonhap

- (KR) Bank of Korea (BOK): May consider further rate cuts if downside risks continue to grow – Yonhap

- (KR) Bank of Korea (BOK) Gov Lee: Authorities are not defending a specific USD/KRW level; reiterates will take additional policy steps if conditions worsen, Fed was less Dovish than expected

- (KR) South Korea July Trade Balance $2.44B v $4.6Be; Semiconductor exports Y/Y: -28.1% v -25.5% prior

- (KR) South Korea July PMI Manufacturing: 47.3 v 47.5 prior (lowest level since Feb, 3rd consecutive month of contraction)

- (KR) South Korea Ministry: There has been no big change to Japan position; there is a big gap between the Japanese and Korean positions; chances are considerable for Japan to remove South Korea from the whitelist - Yonhap

China/Hong Kong

- Hang Seng opened -0.7%; Shanghai Composite opened -0.4%

- (CN) CHINA JULY CAIXIN PMI MANUFACTURING: 49.9 V 49.5E

- (HK) Hong Kong Monetary Authority (HKMA) cuts base rate 25bps to 2.50% (inline with its policy to follow Fed policy)

- (CN) Xinhua Op Ed: China and the US will be able to keep pushing forward trade talks, as long as both sides take a pragmatic approach and the negotiation is conducted on the basis of equality and mutual respect – Xinhua

- (HK) Hong Kong Q2 Advance GDP Q/Q: -0.3% v +0.9%e; Y/Y: 0.6% v 1.5%e (overnight)

- (CN) China PBoC Open Market Operation (OMO): Skips for 8th consecutive session; Net CNY0B drained v CNY0B drained prior

- (CN) China PBOC sets yuan reference rate: 6.8938 v 6.8841 prior

- (HK) Hong Kong Monetary Authority (HKMA) Chief Chan: No noticeable signs of capital outflows from Hong Kong; financial markets and currency not clearly affected by social incidents; US rate cut should impact property market much
- (HK) Macau July Gaming Rev (MOP) 24.5B v 23.8B prior; Y/Y: -3.5% v +5.9% prior

- (CN) China Army Hong Kong Chief : China army is ready to protect China's sovereignty

- (CN) China and US said to have next round of trade talks in US in Sept 2019 - Xinhua

- (CN) White House official: China trade meetings were constructive; China confirmed plan to buy more agricultural products from the US; Confirms expects talks on deal to continue in early Sept

Other

- (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 50BPS TO 6.00%; MORE-THAN-EXPECTED

- (TH) Thailand PM Deputy Sec General Kobsak: Continued Thailand inflows expected after Fed cut; Central Bank will need to monitor inflows closely

- (SG) Singapore Trade Min Chan: Singapore is quietly confident in long term outlook

North America

- (US) FOMC CUTS TARGET RANGE BY 25BPS TO 2.00-2.25% (AS EXPECTED); REITERATES FED WILL ACT AS APPROPRIATE TO SUSTAIN EXPANSION; TWO MEMBERS DISSENT

- (US) Fed Chair Powell: Sees 25bps rate cut as a 'midcycle policy adjustment' - Q&A

- (US) Fed Chair Powell: This is not the beginning of a long series of rate cuts but it's not necessarily just one cut; clarifies earlier was ruling out a long cutting cycle

- (US) Pres Trump: Fed Chair Powell 'let us down'

- (IR) US White House National Security Adviser Bolton: Confirms US will extend Iran nuclear waivers for 90 days; still waiting to hear from North Korea on resumption of working level talks - US media

Europe

- (UK)Treasury: No Deal Brexit fund now £6.3B, immediate £1.1B injection, £2.1B to prepare for no deal Brexit

 

Levels as of 1:20 ET

- Nikkei 225, -0.1%, ASX 200 -0.3%, Hang Seng -0.8%; Shanghai Composite -0.8%; Kospi +0.1%

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

- EUR 1.1082-1.1033 ; JPY 109.32-108.70 ; AUD 0.6859-0.6828 ;NZD 0.6564-0.6534

- Gold -1.1% at $1,410/oz; Crude Oil -1.1% at $57.93/brl; Copper flat at $2.662/lb