RBA pushes review of taper to February

Asia Market Update: US braces for another hurricane landing in the Gulf Coast, RBA pushes review of taper to Feb, squashes any rate hike before 2024, expectations of tourism boost Korea travel names.

General trend

- Markets remain mixed today with a light data session. Tomorrow will receive the remainder of China’s August data, which is expected to show continued slowdown.

- Hurricane Nicholas making landfall in Texas and Louisiana Gulf Coast, expected to impact LNG movement and some oil operations in the region and could hit some areas still recovering from Ida. Shell announced they were moving workers out of some locations.

- China Evergrande warns of deteriorating conditions and warns of pressures on cash flows and liquidity, also not seeing much progress in attempts to sell some assets to improve position.

- RBA Gov Lowe warned that Q3 GDP could be -2% or worse, but expects recovery and growth to start in Q4 and continue into 2022. Also pushing back taper review to Feb, as Delta variant is delaying recovery. Still does not expect conditions for a rate hike to be met until 2024.

- China continues to contain Delta outbreaks. Locks down city of Xiamen. Analysts as of now don’t think the pockets of virus will impact Macau too much.

- Business confidence in Australia improves despite extended lockdowns.

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened 0.0%.

- (AU) Reserve Bank of Australia (RBA) Gov Lowe: Q3 GDP likely down 'at least' 2%, could be significantly lower; Delay in taper review to Feb due to delayed recovery, Likely to stop bond buying in 2022 - Delta, the Economy and Monetary Policy.

- (AU) RBA Assist Gov (Economic) Ellis and Head of Economics Jones: Should make it harder for people to own a house in Australia, rather than increasing supply - Appearance before the Standing Committee on Tax and Revenue.

- (AU) AUSTRALIA Q2 HOUSE PRICE INDEX Q/Q: 6.7% V 6.1%E; Y/Y: 16.8% V 7.5% PRIOR.

- (AU) Australia Aug NAB Business Confidence: -5 v -7 prior; Conditions: 14 v 10 prior.

- (NZ) New Zealand Aug REINZ House Sales Y/Y: -26.5% v -11.7% prior.

- WBC.AU Updates on sale of Pacific Businesses: Papua New Guinea regulator denies sale of Westpac Fiji 89.9% stake in Westpac Bank PNG to Kina Securities.

- (AU) Australia sells A$100M v A$100M indicated in 2030 indexed bonds, avg yield -0.84% v -0.9102% prior; bid to cover 4.04x v 4.27x prior.

Japan

-Nikkei 225 opened +0.5%.

- (JP) Japan Min Koizumi reportedly will support Kono in the LDP leadership election; Ishiba will not run for PM - Japanese press.

- 7974.JP Cuts Switch price in EU 9% due to FX – Nikkei.

- (JP) Japan Chief Cabinet Sec Kato: making arrangements for PM Suga to attend the quad meeting and visit to the US.

- (JP) Japan Fin Min Aso: For economy to grow, more consumer spending is needed; If corporations do not raise worker income, GDP won't grow, need to ease virus restrictions when and however possible.

Korea

-Kospi opened +0.3%.

- (KR) South Korea Aug Export Price Index Y/Y: 18.6% v 16.9% prior; Import Price Index Y/Y: 21.6% v 19.2% prior.

- (KR) US and South Korea Trade Mins have spoken on supply chain resiliency including chip market.

- 039130.KR Talk that employees on leave since last year will return to work in Oct, on an expected resumption of overseas trips - Korean press.

China/Hong Kong

-Hang Seng opened +0.1%; Shanghai Composite opened -0.2%.

- (CN) China Sec Daily: China PBoC May roll over MLF or lower than amount that is due in Sept.

- 3333.HK Expects continuing significant decline in contract sales in Sept.

- (CN) China PBOC sets Yuan reference rate: 6.4500 v 6.4497 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY0B v Net drain CNY0B prior.

Other

- (TW) Taiwan Central Bank is conducting special investigations into certain banks in loans of real estate sector over rules of credit control and property market overheating - Commercial times.

- DBS.SG Expect crypto trading platform to grow 20-30%/yr for the next 3 years - press.

North America

- HLF Cuts Q3 and FY21 guidance on 'lower than expected levels of activity amongst its independent distributors'; Guides Q3 Rev +14-18% vs Q3'19; Guides FY21 Rev +19-23% vs FY19.

- ORCL Reports Q1 $1.03 v $0.97e, Rev $9.73B v $9.77Be; Guides Q2 Non-GAAP EPS $1.09-1.13 ($1.09-1.13 cc) v $1.10e, Rev +3-5% (+3-5% cc) v +4.1%e - earnings call.

- INTU To acquire Mailchimp for ~$12B in cash and shares.

Europe

- (UK) Brexit negotiator Frost: EU should take UK's warning over Northern Ireland protocol seriously; There must be a real negotiation with EU over Northern Ireland.

Levels as of 01:15ET

- Hang Seng -0.4%; Shanghai Composite -0.6%; Kospi +0.8%; Nikkei225 +0.9%; ASX 200 -0.1%.

- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax -0.0%; FTSE100 +0.1%.

- EUR 1.1814-1.1805; JPY 110.08-109.96; AUD 0.7373-0.7358; NZD 0.7129-0.7111.

- Commodity Futures: Gold -0.1% at $1,792/oz; Crude Oil +0.5% at $70.78/brl; Copper -0.2% at $4.36/lb.