Asian Mid-session Update: China flash PMI falls to 15-month lows; AUD hits 6-year lows after S&P warning
***Economic Data***
- (CN) CHINA JULY CAIXIN/MARKIT FLASH MANUFACTURING PMI: 48.2 V 49.7E (15 month low)
- (JP) JAPAN JULY MARKIT FLASH PRELIMINARY MANUFACTURING PMI: 51.4 V 50.5E; 5-month high
- (NZ) NEW ZEALAND JUN TRADE BALANCE (NZD): -60M V +100ME (first deficit in 6 months)
- (PH) PHILIPPINES MAY TRADE BALANCE: +$0.9B V -$0.1BE
- (KR) SOUTH KOREA JULY CONSUMER CONFIDENCE: 100 V 99 PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.6%, S&P/ASX -0.6%, Kospi -0.9%, Shanghai Composite +1.1%, Hang Seng -0.9%, Sept S&P500 flat at 2,099
***Commodities/Fixed Income***
- Aug gold -1.4% at $1,078/oz, Sept crude oil +0.7% at $48.78/brl, Sept copper -0.7% at $2.37/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 684.6 tonnes; lowest since Sept 2008
- GLD: Spot gold falls 1.5% below $1,075; fresh 5 year lows
- (CN) China MOF sells 30-year bonds, avg yield 3.94%
- (AU) Australia MoF (AOFM) sells A$900M in 3.25% 2025 Bonds; avg yield: 2.8239%; bid-to-cover: 2.42x
- (JP) Japan investors net ¥576B in foreign bonds V bought ¥163.1T in prior week; Foreign investors buy net ¥622B in Japan stocks v sold ¥851B in prior week
***Market Focal Points/Macro/FX***
- US markets suffered their 3rd straight day of losses, with 2,130-5 area in S&P500 having served as downward inflection area on 3 separate occasions in 3 months. Cautious sentiment is once again felt across much of Asia, even as Shanghai Composite continued to buck the trend. China's July preliminary manufacturing PMI as surveyed by Markit hit a 15-month low, remaining in contraction for the 5th straight month. Among the notable components, New Export orders decreased, input/output price decline accelerated, and employment continued to fall, albeit at a slower pace. The kneejerk market response was positive, presumably on expectation of continued implied easing bias at the PBoC.
- Also of note in China, local press citing officials with the State Council reiterated the govt is seeking to improve Yuan rate mechanism and expand the trading band. Chinese currency fell on the comments with offshore USD/CNH pair rising to a 2-week high of 6.22.
- Japan's Markit manufacturing prelim PMI continued to track in the opposite direction of China, hitting a 5-month high and well in expansion territory at 51.4. Resident economist said operating conditions in the Japanese manufacturing sector improved in July, with new orders growth at its 2nd best level this year. Employment was also notably strong, rising at its fastest rate since December 2014.
- In FX, AUD/USD saw the most trading volatility among USD majors, falling to a 6-year low below $0.7270. The initial spike lower was a 40pip move to $0.7310 on China PMI release. Later in the session, S&P affirmed Australia's AAA rating and stable outlook but warned it may cut its view if the budget does not improve, sending the Aussie down by another 30pips.
***Equities***
US equities / ADRs:
- SFG: Confirms Meiji Yasuda Life Insurance Company to Acquire StanCorp Financial Group fpr $115/shr or about $5B; +37.6% afterhours
- AMZN: Reports Q2 $0.19 v -$0.15e, R$23.2B v $22.3Be; +17.3% afterhours
- JNPR: Reports Q2 $0.53 v $0.40e, R$1.22B v $1.11Be; +10.5% afterhours
- P: Reports Q2 $0.04 v $0.03e, R$285.6M v $283Me; +10.2% afterhours
- V: Reports Q3 $0.74* v $0.59e, R$3.52B v $3.37Be; in talks with Visa Europe for combination; Confirms in discussions with Visa Europe about a business combination; +5.0% afterhours
- SBUX: Starbucks and PepsiCo to Accelerate Growth Within Latin Americas $4 Billion Ready-to-Drink Coffee and Energy Beverage Categories; +4.1% afterhours
- T: Reports Q2 $0.69 v $0.63e, R$33.0B v $33.1Be; +2.3% afterhours
- TRUE: Cuts FY15 R$252-258M v $283Me; Guides Q2 R$65-65.3M v $68.5Me, EBITDA -$20M to +$30M; -33.1% afterhours
Notable movers by sector:
- Consumer discretionary: BAIC Motor Corp Ltd 1958.HK -4.0% (enters into cooperation agreement); Coca-Cola Amatil CCL.AU +0.9% (potential merger)
- Consumer staples: Yashili International Holdings 1230.HK -0.9% (to buy Dumex China)
- Financials: AIA Group 1299.HK -1.5% (H1 result); Biostime International Holdings 1112.HK -14.3% (H1 guidance); Guosen Securities 002736.CN +0.9% (H1 result); Haitong International Securities Group 665.HK +4.8% (H1 guidance); Commonwealth Bank of Australia CBA.AU +0.3% (to raise investor home loans rates); KB Financial Group Inc 105560.KR -1.4% (Q2 result)
- Industrials: Cheung Kong Infrastructure 1038.HK +1.0% (H1 result); Sinosteel Engineering & Technology 000928.CN -1.9% (H1 result); Kia Motors Corporation 000270.KR -0.7% (Q2 result); Hyundai Motor C0 005380.KR +0.4% (Q2 result); Mazda Motor Corp 7261.JP -1.2% (Q1 speculation); Sumitomo Chemical Co 4005.JP +2.5% (Q1 speculation); Samsung Engineering Co 028050.KR -4.0% (Q2 result); Daelim Industrial Co Ltd 000210.KR -9.3% (Q2 result); Hyundai Mobis 012330.KR +0.3% (Q2 result)
- Technology: LG Display Co 034220.KR -2.2% (Q2 result)
- Materials: Rising Nonferrous Metals Share Co 600259.CN -0.9% (H1 guidance); Gansu Jiu Steel Group Hongxing Iron & Steel Co 600307.CN +2.6% (H1 guidance); Doray Minerals DRM.AU -2.3% (Q3 result)
- Energy: Power Assets 6.HK -0.2% (H1 result); China Oilfield Services 601808.CN +10.0%, Offshore Oil Engineering Co 600583.CN +10.0% (NDRC to focus on 6 sectors)