Nikkei supported by Fast Retailing’s earnings

Asia Market Update: Nikkei supported by Fast Retailing’s earnings: China’s June Trade Surplus with the US widens; Upcoming US bank earnings in focus, China Q2 GDP due next week

General Trend:

- Asian equity markets trade mixed , indices in China and Australia lag

- Nikkei component Fast Retailing rises over 6%, Q3 op profit was above ests

- S&P500 E-Mini Futures trade at 5-month high during the Asian session

- China June trade surplus higher than expectations, surplus with US widens and hits record high

- China PBoC conducts medium-term lending facility (MLF) at unchanged rate, skips daily open market operation (OMO)

- New Zealand June PMI hits lowest level since Dec 2017

- Singapore Q2 GDP slows more than expected

- China Q2 GDP data due next week (July 16th)

- Upcoming US bank earnings in focus (Citi, JPMorgan, PNC, Wells Fargo)


Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.2%

- ASX 200 Financials index -0.6%; Energy +0.4%, Telecom +0.3%

- (NZ) New Zealand Jun Business NZ PMI: 52.8 v 54.5 prior (lowest level since Dec 2017)

China/Hong Kong

- Shanghai Composite opened -0.2%, Hang Seng +0.7%

- Hang Seng Consumer Goods index +1.9%, Services +1.3%, Info Tech +0.8%, Industrial Goods +0.6%, Utilities +0.6%, Financials +0.4%, Property/Construction +0.4%

- (CN) CHINA JUNE TRADE BALANCE: $41.6B V $27.7BE: Exports Y/Y: 11.3% v 9.5%e; Imports Y/Y: 14.1% v 21.3%e

-(CN) China Customs official Huang Songping comments after release of Jan-June trade data: China's rapid trade growth in H1 set solid foundation for full year growth, but faces some downward risks in H2; will not have special regulatory measures targeting US goods and will not delay US goods at ports

-(CN) Treasury Sec Mnuchin: many of our trade talks with China have broken down

-(CN) China PBoC set yuan reference rate at 6.6727 v 6.6726 prior

-(CN) CHINA PBOC CONDUCTS CNY188.5B 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY200B PRIOR AT 3.30% V 3.30% PRIOR; Confirms it has skipped daily open market operation (OMO)

-(CN) China Finance Ministry said to have implemented certain tax breaks for small companies- US financial press

-(CN) China said to have extended the period related to loss carry-forwards for certain high-tech companies


- Nikkei 225 opened +0.9%

- Topix Electric Appliances index +1.8%

- Nikkei 225 July options said to settle at ~22,452

-(JP) Japan Vice Finance Minister for International Affairs Asakawa (top currency official) said to be reappointed - financial press

-(JP) Japan Chief Cabinet Sec Suga: EU Juncker to visit Japan on Tuesday as part of the signing of the Japan-EU EPA

-(JP) Japan Fin Min Aso: To spend ¥2B of reserve funds for flood disaster areas to provide necessities

- (JP) Japan May Final Industrial Production M/M: -0.2% v -0.2% prelim; Y/Y: -4.2 v 4.2% prelim,


Kospi opened +0.4%

-(KR) South Korea companies said to delay foreign currency bond issuance; notes risks related to trade - Local Press

-(KR) South Korea June Export Price Index M/M: 0.9% v 0.9% prior; Y/Y: 1.6% v 0.1% prior


-(SG) SINGAPORE Q2 ADVANCE GDP Q/Q: 1.0% V 1.3%E; Y/Y: 3.8% V 4.1%E

North America

- US equity markets ended higher: Dow +0.9%, S&P500 +0.9%, Nasdaq +1.4%, Russell 2000 +0.4%

- S&P500 Technology +1.6%, Telecom +1.6%

- Apple [AAPL]: Announces investment fund in China aimed at connecting suppliers with renewable energy sources; to jointly invest ~$300M over 4 years into the China Clean Energy Fund

- (US) US Commerce Sec Ross says he plans to sell all of his equity holdings, made 'inadvertent' errors in divesting holdings; to put proceeds from equity sales into US Treasuries - US financial press


- (UK) Pres Trump reportedly warned PM May that soft Brexit would 'probably kill' potential for future trade deal with US - UK press


Levels as of 01:30ET

- Nikkei 225 +2%, ASX 200 flat, Hang Seng +0.4%; Shanghai Composite -0.4%; Kospi +1%

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

- EUR1.1655-1.1676 ; JPY 112.47-112.79 ; AUD 0.7398-0.7424 ;NZD 0.6764-0.6787

- Aug Gold -0.1% at $1,246/oz; Aug Crude Oil +0.1% at $70.39/brl; Jul Copper +0.2% at $2.781 /lb

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