Yen rockets higher and CHF firmer on US Fri unemployment and safe-haven, lower UST yields

Asia market update: Yen rockets higher and CHF firmer on US Fri unemployment and safe-haven, lower UST yields; Asian stocks and bond yields plunge, with multiple circuit breakers triggered amid volatility levels not seen since 2008.

General trend

- Late Friday night Asia time the US “Sahm Rule” recession indicator was triggered in July for the first time since the pandemic, following a weak NFP jobs number in the US. Stocks fell heavily on top of the Asian equity losses earlier on Friday.

- USD/JPY Declined over 3% to as low as 142.25. or nearly 3%, levels not seen since January. JPY has now gained 20 Big Figures since July 11th (at 162).

- Asian stocks opened down heavily again, but even before that Nasdaq and S&P500 FUTs were down 1.3% and 0.9% respectively.

- Carnage then followed; Korea’s Kospi down 6.6% with Hynix -7.7% Samsung Electronics falling >8%, most since 2016; Taiwan’s Taeix down 7% with TSM -8.5%; Australia ASX -3.3%.

- Nikkei was the hardest hit, falling to the 32K handle or -10% on top of Friday’s steep drop; TOPIX -9%; Megabanks Mizuho down 12%, most since Mar 2020; MUFG 8306.JP Shares fall 21%, most ever; SMFG down 16%, touching daily lower limit; Financials worst hit, but carnage was widespread with Nintendo -12%, most since July 2016 and Toyota -7.4% on top of last week's steep losses.

- A number of volatility circuit breakers were hit in Japan and Korea [also Thailand]:

- Nikkei 225 FUTs suspended due to circuit breaker (First time since Oct 13th, 2008).

- Circuit breaker triggered for TOPIX index in Japan; Falls 20% since July peak.

- Circuit breaker triggered for JGB Futures ; 10-yr JGB yield falls to 0.785%.

- South Korea halts sell orders for program trading on the Kospi market.

- South Korea halts sell orders for program trading in Kosdaq market - financial press ** Reminder earlier (KR).

- South Korea halts sell orders for program trading on the Kospi market – US financial press -(TH) Thai FUTs Exchange: Temporarily halts USD/JPY FUTs on daily price limit.

- Japan's Nikkei 225 volatility index surges 132%, biggest one-day percentage jump since 19.

- UST 10-year yield falls to 3.77%, lowest since July 2023.

- Australia 3-yr bond FUTs surge to highest since June 2023.

- South Korea 10-yr Treasury bnod yield falls 10.5bps to 2.879%.

- US equity FUTs -1.8% to -3.7% during Asian trading.

Looking ahead (Asian time zone)

- Mon Aug 5th [Mon night US July Services PMI].

- Tue Aug 6th AU RBA rate decision & SOMP + Gov Bullock presser.

- Wed Aug 7th AU Group Industry Index.

- Thu Aug 8th JP Summary of Opinions (July 31st meeting), AU NAB July Bus Confidence, CN July Balance of Trade, RBI rate decision.

- Fri Aug 9th CN July CPI.

Holidays in Asia this week

- Mon

- Fri Aug 9th Singapore,

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 7,915.

- Australia July Melbourne Institute Inflation M/M: 0.4% v 0.3% prior; Y/Y: 2.8% v 3.2% prior.

- Australia July Final Services PMI: 50.4 v 50.8 prelim (confirms 6th month of expansion).

- Australia Bond Trading closed for NSW Bank Holiday, Futures still open for 3 and 10 Year bond futures.

- New Zealand July ANZ Commodity Price M/M: -1.7% v 1.5% prior [largest decline since 2023].

China/Hong Kong

- Hang Seng opens -1.6% at 16,676; Shanghai Composite -0.6% at 2,889.

- China July CAIXIN PMI services: 52.1 V 51.5E (19th month of expansion).

- China Securities Journal: Sees easing of yuan depreciation pressure [USD/CNH back to 7.11, strongest Yuan since Jan 2nd]; Yuan expected to see more two-way fluctuations – US financial press [update].

- US Commerce Dept said to consider banning Chinese software in autonomous vehicles (update) - financial press.

- China Anthrax outbreak closes at least one cattle farm in Shandong; 5 case of human infection also reported - Chinese state media [weekend update].

- US and UK are stepping up quantum computing programs after apparent China breakthrough, creation and observation of room-temperature time crystals [weekend update].

- China PBOC sets Yuan reference rate: 7.1345 v 7.1376 prior.

- China PBOC Open Market Operation (OMO): Sells CNY0.67B in 7-day reverse repos; Net drains CNY300.9B v net drains CNY357B prior.

Japan

- Nikkei 225 opens -1.8% at 35,249.

- Nikkei 225 FUTs suspended due to circuit breaker (First time since Oct 13th, 2008).

- Japan July Final Services PMI: 53.7 v 53.9 prelim.

- Japan Jun BOJ Minutes (2 decisions ago): Many members agreed BOJ should raise rates if April outlook was realized.

- Japan Chief Cabinet Sec Hayashi: Will not comment on daily stock price moves; reiterates closely watching moves with 'sense of urgency'.

- (JP) Honda, Nissan and Mitsubishi Motors announce Strategic Alliance on AI and EVs to better compete with BYD, Tesla and other global EV companies [weekend update].

South Korea

- Kospi opens -2.4% at 2,611.

- South Korea July Foreign Reserves: $413.5B v $412.2B prior.

- South Korea halts sell orders for program trading on the Kospi market – US financial press.

- South Korea Finance Ministry: Will take measures to respond to 'heightened' market volatility if needed - financial press.

- (KR) South Korea said to consider selling Won-denominated FX stabilization bonds in Q4; First time in 21 years - South Korean press.

- (KR) North Korea's Kim Jong Un says stockpiling and improving nuclear weapons is the best way to counter the US - North Korea state media.

Other Asia

- India July Final PMI Services: 60.3 v 61.1 prelim (confirms 36th month of expansion).

- Singapore Jun Retail Sales M/M: -3.7% v 2.4% prior; Y/Y: -0.6% v 3.9%e.

- Indonesia Q2 Advance GDP Q/Q: 3.8% v 3.7%e (v -0.8% prior); Y/Y: 5.1% v 5.0%e.

- Singapore July PMI (whole economy): 57.2 v 55.2 prior.

- Hong Kong July PMI (whole economy): 49.5 v 48.2 prior.

- (VN) US Commerce Dept: Determined that Vietnam will continue to be classified as a 'non-market economy' country [weekend update].

North America

- Bitcoin plunges $9,000 in 24 hours, to 52K handle.

- US Pres Biden to speak with Jordan's King Abdullah on Aug 5th on Middle East developments - US press.

- (US) NHC: Tropical Storm Debby becomes a Hurricane: Will bring a major flood threat to South East US this week; To make landfall in the Florida big bend area on Monday.

- Nvidia Spokesperson: Broad Blackwell chip sampling has started and production is on track to ramp in H2.

- Apple: Berkshire discloses it cut its stake in Apple by 49%, reducing its holdings to about 400M shares (valued at $84.2B) as of June 30th.

- (US) Fed’s Barkin (voter): We will get a lot of data between now and Sept meeting; Feel a little more confident on inflation in the near term - Carolina Business Review.

Europe

- UK PM Starmer calls for Emergency Meeting following riots across the UK - financial press.

- (UR) Ukraine Pres Zelenski announces F-16 fighter jets arrival; Ukraine air force pilots have started flying the jets for operations within the nation - financial press.

- (IL) Reportedly some US and Israeli officials said they expect Iran to attack Israel as early as Monday, Aug 5th - Axios.

- (UK) BOE’s Pill (chief economist; hawk dissenter): Wages and price margins are expanding strongly; Can not be complacent on inflation.

Levels as of 01:20 ET

- Nikkei 225 -12.0%; ASX 200 -3.5%; Hang Seng -1.7%; Shanghai Composite -0.8%; Kospi -8.4%.

- Equity S&P500 FUTs -1.80%; Nasdaq100 FUTs -3.7%, Dax -1.5%; FTSE100 -1.5%.

- EUR 1.0903-1.0940: JPY 142.25-146.63; AUD 0.6479-0.6522; NZD 0.5927-0.5964.

- Gold +0.7% at $2,485/oz; Crude Oil -0.9% at $72.91brl; Copper flat at $4.1235/lb.