Nvidia and earnings sets off another weak day for Asian equities

Asia market update: Nvidia and earnings sets off another weak day for Asian equities; NZD 8-month high on turnaround in Biz Confidence; Big China banks down on BOCOM earnings, more CN banks to come; JP 5-year high BTC for 2-yr JGB auction.

General trend

- Nvida Q2 earnings and guidance beat expectations, yet again, taking the company from -2.5% during regular trading to be briefly up +0.5% on the after-hours drop. However, the stock then began to fall steadily, as much as -8% within an hour of the drop.

- Chip-relateds in Asia dropped in tandem upon opening in Asia; Hynix -6%, Samsung -3%, Advantest and Tokyo Electron -3% early on but both pared most of their losses after lunch.

- New Zealand economy may have turned a corner with the ANZ Aug Business Confidence soaring to a decade-high read of over 50, nearly double the previous read. Activity Outlook also more than double the prior read. ANZ said that the much higher confidence and activity reads were already apparent in early August, well before the RBNZ initial cut of the OCR last week. ANZ added "Things are looking up, albeit from a pretty dark place for many firms". Kiwi continued up another +0.8% in the hours after the data to its highest level since Dec 31st, 2023. NZ 10-yrs +6bps; NZD/JPY +1%; AUD/NZD -0.5%.

- Big China banks down on BOCOM (Bank of Communications) earnings miss. SSE Banking index -3.0%, HK Mainland banking index -4.2%. Bank of China reports later today and ICBC on Fri.

- Australia Capex for Q2 unexpectedly turned negative for its largest decline in 3 years. Buildings, Equipment and New capex all turned negative. [Construction Work reported yesterday, with Q2 GDP next Wed Sept 4th].

- ASX Consumer Discretionary index -1.9% in early trading amid Wesfarmers (-3.5%) FY24 earnings stating concern on rising costs in FY25, and travel company Webjet also -8%.

- Japan 2-year JBG auction saw a pre-COVID 5-year high BTC ratio of over 5.5X. Follows end-July BOJ hike; JP 2-yr yields -1bps.

- US Fed’s Bostic added no new flavor to monetary policy expectations.

- US equity FUTs -0.1% during Asian trading.

Looking ahead (Asian time zone)

- Thu Aug 29th (Thu night DE prelim Aug CPI, US Q2 GDP 2nd est).

- Friday Aug 30th, JP July Industrial Production & Retail Sales, AU Retail Sales, JP Aug Consumer Conf (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 8,061.

- Australia Q2 private capex: -2.2% V 1.0%E (largest decline since Q3 2021).

- New Zealand Aug ANZ Business Confidence: 50.6 v 27.1 prior (highest level in a decade); Activity Outlook: 37.1 v 16.3 prior.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2030, 2035 and 2051 bonds.

China/Hong Kong

- Hang Seng opens -0.4% at 17,614; Shanghai Composite opens -0.3% at 2,829.

- Local China governments target asset sales to repay debt; notes Bishan district [Chongqing] has created a ‘sell everything to save the day’ task force – Caixin.

- Tesla: (CN) Reportedly before Canada unveiled 100% duty on Chinese EVs Tesla asked for lower tariffs on its autos produced in China; Canada opted for 100% tariff on Tesla and others to account for all the advantages China-made vehicles have - press.

- Nvidia Exec: Expect China market will continue to be very competitive going forward - earnings call.

- EV maker BYD (1211.HK) Reported H1 (CNY) Net 13.6B v 11.0B y/y, Rev 301.1B v 260.1B y/y.

- China proposes halt to barley and sorghum purchases to lift prices – press [overnight update].

- (US) NSA Advisor Sullivan raised concerns about China's unfair trade policies; US to take necessary actions to prevent US technologies from undermining national security without limiting trade or investment [overnight update].

- China's Foreign Min Wang Yi: US should stop arming Taiwan - comments after talks with US National Security Adviser Sullivan [overnight update].

- China PBOC sets Yuan reference rate: 7.1299 v 7.1216 prior.

- China PBOC Open Market Operation (OMO): Sells CNY151B in 7-day reverse repos; Net drains CNY208B v net injects CNY19B prior.

Japan

- Nikkei 225 opens -0.7% at 38,119.

- *(JP) Japan sells ¥2.6T VS. ¥2.6T indicated in 2-year JGB bonds; AVG yield: 0.3850% V 0.4090% prior; bid-to-cover: 5.54X V 4.19X prior (highest BTC since 2019).

- Japan releases weekly flows data [period ended Aug 23rd]: Foreign buying of Japan equities: -¥438.3B v -¥47.5B prior; Japan buying of foreign bonds: ¥1.54T v ¥1.85T prior.

South Korea

- Kospi opens -1.2% at 2,657.

- South Korea Pres Yoon: To raise basic monthly pensions by KRW400K within his term - press conference.

North America

- ONEOK Inc -OKE To acquire Medallion and Controlling Interest in EnLink from Global Infrastructure Partners in Transactions Valued at $5.9B.

- Apple Said to order >10% more iPhones than last year amid AI bet; suppliers said to have been told to prepare for 88-90M smartphone units (vs 80M y/y) - Nikkei.

- (US) Federal Reserve Board announces final individual capital requirements for all large banks, effective on October 1st.

- (US) AI safety bill passed by California State Assembly to limit AI replicas.

- (US) Fed's Bostic (hawk, voter for 2024; non-voter for 2025): Inflation still has a distance to go.

- (US) MBA Mortgage Applications w/e Aug 23rd: +0.5% v -10.1% prior.

- (US) Nevada reports Jul casino gaming Rev $1.31B, -6.9% y/y, Las Vegas strip Rev $709.3M, -15.0% y/y.

- (US) Treasury $70B 5-year note auction draws 3.645% V 4.121% prior, BTC 2.41 V 2.40 prior and 2.42 over the last 12 (tailed WI by 0.3 bps).

Europe

- (IE) Ireland Aug Consumer Confidence: 72.0 v 74.9 prior.

- (UK) PM Starmer: Germany and UK aiming to sign cooperation treaty by early next year; Want a closer relationship with EU, needs a reset - follows meeting with German Chancellor Scholz.

- (IL) Israel central bank (BOI) leaves base rate unchanged at 4.50%; as expected.

Levels as of 01:20 ET

- Nikkei 225 -0.2%; ASX 200 -0.4%; Hang Seng -0.2%; Shanghai Composite -0.4%; Kospi -1.3%.

- Equity S&P500 FUTs -0.3%; Nasdaq100 FUTs -0.7%, Dax +0.1%; FTSE100 +0.2%.

- EUR 1.1119-1.1138: JPY 144.22-144.87; AUD 0.6781-0.6808; NZD 0.6241-0.6295.

- Gold +0.5% at $2,549/oz; Crude Oil +0.4% at $74.78/brl; Copper +0.2% at $4.2235/lb.