RBA stands pat at 1.50%

Asia Mid-Session Market Update: RBA stands pat at 1.50%; Abe advisor Hamada urges restraint on further BOJ easing

Economic Data

- (AU) AUSTRALIA Q2 CURRENT ACCOUNT BALANCE (A$): -15.5B V -20.0BE; NET EXPORTS OF GDP: -0.2% V 0.0%E

- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 114.3 v 118.4 prior

- (NZ) NEW ZEALAND AUG QV HOUSE PRICES Y/Y: 14.6% V 14.1% PRIOR

- (NZ) New Zealand Q2 Adj Wholesale Sales q/q: 1.7% v -0.4% prior

- (NZ) New Zealand Aug ANZ Truckometer Heavy (heavy traffic) M/M: 6.7% v -5.3% prior

- (TW) TAIWAN AUG CPI Y/Y: 0.6% V 1.0%E; WPI Y/Y: -4.1% V -2.5%E

- (PH) PHILIPPINES AUG CPI M/M: 0.1% V 0.2%E; Y/Y: 1.8% V 2.0%E; CPI CORE Y/Y: 2.0% V 2.0%E

- (UK) AUG BRC LFL SALES VALUE Y/Y: -0.9% V 1.4%E; RETAIL SPENDING Y/Y: -0.3% v +1.9% PRIOR (lowest since Sept 2014)

- (CO) COLOMBIA JULY CPI M/M: -0.3% V +0.2%E; Y/Y: 8.1% V 8.6%E

Index Snapshot (as of 03:30 GMT)

- Nikkei225 +0.2%, S&P/ASX -0.2%, Kospi flat, Shanghai Composite -0.1%, Hang Seng +0.3%, Sep S&P500 +0.1% at 2,180

Commodities/Fixed Income

- Dec gold +0.3% at $1,330/oz, Oct crude oil +2.1% at $45.36/brl, Dec copper +0.2% at $2.09/lb

- (CN) PBOC to inject CNY20B in 7-day reverse repos and CNY10B in 14-day reverse repos

- (CN) PBOC SETS YUAN MID POINT AT 6.6676 V 6.6873 PRIOR; strongest Yuan setting since Aug 26th

- JGB: (JP) Japan MoF sells ¥725B in 0.5% (0.3% prior) 30-yr bonds; Avg yield: 0.500% v 0.424% prior; Bid to cover: 3.13x v 3.07x prior

Market Focal Points/FX

- Asian equity markets are less volatile and more mixed after yesterday's rally on perceived caution by the FOMC following Friday's non-farm payrolls data. The biggest macro ripple in the past 24 hours has been the announcement that Saudi Arabia and Russia have signed an agreement to cooperate on oil production, even though analysts remain skeptical that a production freeze could take place in the near term. Oct WTI crude oil had risen as high as $45.60's earlier, but retreated in late electronic trade. In FX, JPY strengthened after comments by PM Abe advisor Hamada calling for caution in terms of further BOJ policy easing, with USD/JPY falling about 30pips to 103.40. AUD/USD was down marginally, falling about 10pips below $0.7620 on RBA interest rate hold and policy statement that was little from the prior month.

- After a set of mixed commentary by BOJ Gov Kuroda overnight, acknowledging the pressure on financial sector from negative rates while reiterating commitment to achieving inflation target with more easing if needed, PM Abe's advisor Hamada said the central bank should wait until the Fed to decide on whether to expand its policy easing. Note that the FOMC meets on Sept 21st, while the next BOJ decision is hours ahead of that. Hamada says the BOJ easing could be overshadowed if the Fed subsequently holds rates, potentially erasing any JPY decline, adding that Japan will still have an opportunity to add to monetary stimulus later this year. With recent economic data out of Japan underwhelming, the case for expanded BOJ easing has been on the rise.

- RBA left rates on hold at 1.50%, and its policy statement - the last under Gov Stevens - was also little changed. RBA reiterated that its current stance is "consistent with sustainable growth in the economy and achieving the inflation target over time" and also repeated that inflation remains low. On FX, RBA said appreciating exchange rate could complicate economic adjustments in the economy. The subtle changes in the policy statement were in assessment of economy with "growth continuing", removing that the rate was "at moderate pace". RBA also removed the passage that "domestic demand, as well as exports, have been expanding at a pace at or above trend" after the recent disappointing Retail Sales and Trade prints.

Equities

US equities/ADRs:

- MON: Bayer confirms they are in advanced talks with Monsanto on proposed transaction, consideration said to be $127.50/shr (prior $125/shr), implied value of $55.79B

Notable movers by sector:

- Consumer discretionary: ABC-MART 2670.JP +2.3% (Aug result)

- Financials: Evergrande Real Estate Group 3333.HK +0.4% (Aug result); CITIC Securities 6030.HK +0.3% (speculation to sell CLSA brokerage unit)

- Industrials: Great Wall Motor 2333.HK +3.2% (Aug result); Geely Automobile Holdings 175.HK +1.1% (Aug result); Guangzhou Auto 2238.HK +3.7% (Aug result); Cathay Pacific Airways 293.HK -0.4% (fuel surcharge); Hanjin Shipping Co 117930.KR +18.7% (granted financial support)

- Technology: Samsung SDI Co 006400.KR +2.4% (rebound after Samsung to suspend battery use); NS Solutions 2327.JP +3.4% (Goldman raised to buy)

- Materials: LG Chem 051910.KR -3.2% (said to absorb LG Life Sciences); Doray Minerals DRM.AU -5.0% (production guidance)