Semi-relateds fall on potential stricter US chip export rules to CN

Asia market update: Semi-relateds fall on potential stricter US chip export rules to CN; ASX sole equities gainer; NZ headline CPI falls but mixed overall; More JP calls for higher rates; Focus on UK Jun CPI.

General trend

- Shares of semiconductor stock Tokyo Electron fell over -7% on breaking news via US financial press that the US is considering stricter rules in further China chip crackdown. Tokyo Electron and ASML from Holland were specifically named. However, shares of Korea’s SK Hynix also down -4.7%. The timing of the release was just ahead of ASML’s Q2 earnings, and back in April ASML said that it expected China sales to continue to be strong this year.

- Australia ASX was the only market in Asia to go up and stay up today, impervious to the US chip news above, +0.9% (Nikkei +0.5% to start, but fell to -0.4% after the chip news).

- New Zealand headline CPI provided some relief at least at the headline level, coming in a tenth less than the estimates, with headline y/y firmly in the lower 3 handle, down from the 4 handle prior. However, non-tradeable q/q came in slightly higher than estimates. NZ 2-yr yields +4bps and kiwi dollar +0.4%. NZ banks brought forward their rate cut forecasts to October/November. One US investment bank even called for a cut in August (v October prior). New Zealand stock market hit a 2-year high after the data.

- Later in the day, the RBNZ quarterly sector factor model also showed a fall into the 3 handle, with non-tradeable Core falling below 5% for its lowest read since Q1 of 2022.

- Japan Accounts Data suggests the BOJ intervened in JPY again on Friday by ~$13B, adding to the apparent intervention of ~$22B the day before.

- BHP Q4 production reported record Q4 production iron ore figures for the second year running, beating estimates, with copper production +6% y/y for its highest levels in 15 years. However, the stock was not rewarded, -0.8% soon after the release but ended around flat on the day. (BHP numbers were in contrast to yesterday’s Q4 numbers out of Rio Tinto (-2%) after guiding FY24 at lower end for iron ore and copper).

- Japan's LDP Minister Kono, who is competing for the ruling party’s leadership election in September, called on Japan’s BOJ to raise interest rates in order to to lift the Yen.

- After surging overnight in NY trading, Spot Gold kept its levels in Asian trading to nudge a further record high as the metal nears $2,500/oz.

- US Pres Biden announced that he is looking to support major changes to the Supreme Court, including term limits, an enforceable ethics code and ending the recent SCOTUS decision on Presidential immunity.

- US equity FUTs +0.2% to 0.3% during Asian trading.

Looking ahead (Asian time zone)

- Wed July 17th (Wed eve UK Jun CPI, & ID Interest Rate Decision, Wed night CA Jun CPI).

- Thu July 18th Japan Jun Balance of Trade, AU Jun Employment (Thu night July 13th US initial jobless, ECB Rate Decision).

- Fri July 19th Japan Jun National CPI, (Fri eve GB Retail Sales).

Holidays in Asia this week

- Mon July 15th Japan.

- Wed July 17th India.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,003.

- Australia Jun Westpac Leading Index M/M: 0.00% v 0.00% prior (revised higher).

- Australia sells A$500M v A$500M indicated in 3.00% Nov 2033 bonds: Avg Yield: 4.2151% v 4.2409% prior; bid-to-cover 4.26x v 2.97x prior.

- (NZ) New Zeland Q2 CPI Q/Q: 0.4% V 0.5%E; Y/Y: 3.3% V 3.4%E.

- Reserve Bank of New Zealand (RBNZ) Q2 Sectoral Factor Model Inflation Index Y/Y: 3.6% v 4.3% prior.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.4% v -6.9% prior.

China/Hong Kong

- Hang Seng opens flat at 17,741; Shanghai Composite opens -0.2% at 2,970.

- China PBOC said to question banks regarding bond holdings in a push to cool bond rally - financial press.

- Shanghai Futures Exchange seeks opinions to launch nickel, zinc, lead, tin and alumina options – press [overnight update].

- China PBOC sets Yuan reference rate: 7.1318 v 7.1328 prior.

- China PBOC sets Yuan reference rate: 7.1318 v 7.1328 prior.

Japan

- Nikkei 225 opens +0.3% at 41,416.

- Japan LDP's Kono: Central Bank (BOJ) needs to raise interest rates to lift Yen - US financial press.

- Japan to contribute $3.3B to Ukraine aid using frozen Russian assets, approx 6% of total G7 package - Japanese press.

- Visa: Japan FTC conducts on-site probe in raid on Visa unit in Tokyo on suspected anti-monopoly violations - Japanese press.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years; 5-10 Years and 10-25 Years (lnline with prior purchases).

- (JP) Bank of Japan (BOJ) accounts data suggests ~¥2.1T (~$13B) of FX intervention on Fri, July 12th – Press (**Reminder: last week, Bank of Japan (BOJ) accounts data suggested ~¥3.5T (~$22B) of FX intervention on Thurs, July 11th – press) [overnight update].

South Korea

- Kospi opens flat at 2,865.

- South Korea reportedly mulls tripling National Pension Fund (NPS)'s advance dollar funding limit – press.

Other Asia

- Singapore May Non-Oil Domestic Exports M/M: -0.4% v +2.7%e; Y/Y: -8.7% v -1.3%e.

- Philippines Central Bank (BSP): Board approves further guidelines to FX regulations - press.

North America

- DIS (Disney) NBA Board of Governors reportedly approve new TV rights deal - NYT.

- US Pres Biden: There is more to do, and I am reluctant to walk away - BET interview.

- (US) Former Pres Trump: Would Not seek to remove Fed Chair Powell before his term ends - financial news interview.

- (US) Reportedly us pres Biden to announce support for major supreme court changes – WSJ.

- (US) Jun advance Retail Sales M/M: 0.0% V -0.3%E; Retail Sales (ex-auto) M/M: +0.4% V +0.1%E; Retail Sales (control group) rose highest since March.

- (CA) Canada Jun CPI M/M: -0.1% V 0.1%E; Y/Y: 2.7% V 2.7%E.

- (US) Jun import price index M/M: 0.0% V -0.2%E; Y/Y: 1.6% V +1.0%E.

- IMF World Economic Outlook (WEO): Raises 2025 global GDP growth forecast from 3.2% to 3.3%.

- (US) Jun NAHB housing market index: 42 V 43E.

- (US) Reportedly the US has obtained intelligence regarding Iranian plot to kill Former US President Trump - CNN.

- (US) Fed's Kugler (voter): Will be appropriate to begin easing monetary policy later this year if economic conditions continue to evolve favorably; Earlier cut appropriate if unemployment keeps rising.

Europe

- (RU) Reportedly Russia to extend gasoline exports ban through to Sept/Oct - press.

- (ES) Spain Budget Min Montero: Sets 2025 spending ceiling 3.2% above this year's.

- (PL) Poland Jun CPI Core M/M: 0.2% v 0.2%e; Y/Y: 3.6% v 3.7%.

- (TR) Turkey Pres Erdogan: Inflation will fall to desired level by the end of this year.

Levels as of 01:20 ET

- Nikkei 225 -0.4%; ASX 200 +0.9%; Hang Seng -0.3%; Shanghai Composite -0.5%; Kospi -0.8%.

- Equity S&P500 FUTs -0.2%; Nasdaq100 FUTs -0.4%, Dax -0.2%; FTSE100 +0.3%.

- EUR 1.0896-1.0905: JPY 158.13-158.62; AUD 0.6725-0.6742; NZD 0.6037-0.6182.

- Gold +0.3% at $2,475/oz; Crude Oil -0.1% at $79.64/brl; Copper -0.2% at $4.4500lb.