Asian Mid-session Update: Greece votes YES to bailout conditions; ADB cuts Developing Asia GDP targets
***Economic Data***
- (NZ) NEW ZEALAND Q2 CPI Q/Q: 0.4% V 0.5%E; Y/Y: 0.3% V 0.3%E
- (NZ) NEW ZEALAND JUN BUSINESS MANUFACTURING PMI: 55.2 V 52.0 PRIOR; 4-month high
- (NZ) NEW ZEALAND JUL ANZ CONSUMER CONFIDENCE INDEX: 113.9 V 119.9 PRIOR; M/M: -5.0% V -3.2% PRIOR
- (AU) AUSTRALIA JUL CONSUMER INFLATION EXPECTATION: 3.4% V 3.0% PRIOR
- (SG) SINGAPORE JUN ELECTRONIC EXPORTS Y/Y: 7.6% V 2.4%E; NON-OIL DOMESTIC EXPORTS M/M: -2.4% V -1.2%E; Y/Y: 4.7% V 2.0%E
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX +0.5%, Kospi +0.3%, Shanghai Composite +1.1%, Hang Seng +0.2%, Sept S&P500 +0.2% at 2,109
***Commodities/Fixed Income***
- Aug gold -0.2% at $1,145/oz, Aug crude oil +0.9% at $51.90/brl, Sept copper +0.1% at $2.52/lb
- (CN) PBoC to inject CNY20B in 7-day reverse repos (7th consecutive injection); Drains net CNY45B this week v neutral position prior
- USD/CNY: PBoC sets yuan mid point at 6.1173 v 6.1152 prior setting; weakest Yuan setting since July 8th
- (CN) China State Council pledges to stabilize RMB exchange rate at a reasonable level; China's slowing economy has stabilized - financial press
- (JP) Japan investors bought net ¥163.1B in foreign bonds V bought ¥205.2B in prior week; Foreign investors sold net ¥851.2B in Japan stocks v sold ¥185.4B in prior week
- JGB: (JP) Japan MoF sells ¥2.28T in 0.1% coupon 5-year JGB bonds; Avg yield: 0.116% v 0.122% prior; Bid-to-cover: 3.20x v 2.87x prior
***Market Focal Points/FX***
- Asian indices are volatile after a late US session swoon, with Shanghai Composite trading especially wildly in the morning hours. After trading down over 2% in the opening minutes, Shanghai was up over 1% headed toward its midday break, closely followed by more modest gains in Australia, Japan, and Korea.
Asia Development Bank (ADB) cuts its developing Asia 2015 GDP outlook for the region to 6.1% from 6.3% and 2016 to 6.2% from 6.3%. China GDP target was cut to 7.0% from 7.2% in 2015 and 6.8% from 7.0% in 2016, while those of India were affirmed at 7.8% and 8.2% respectively. ADB chief economist noted slower growth in China is having a noticeable effect on the rest of the region through international value chain, adding the PRC's decline is driven by weaker-than-expected external demand, a declining working age population, and rising wages.
As expected, Greek Parliament voted in favor of reforms mandated by creditors that would unlock more bailout funds and unfreeze the nation's banking system. 229 out of 300 lawmakers voted YES, 6 (all Syriza members) abstained, and 64 voted NO. Out of 64 NOs, 32 were also Syriza MPs. Ahead of the vote, PM Tsipras delivered an impassioned address that railed against the imposed austerity, but still ended up casting a YES vote. Former Fin Min Varoufakis vote was a more principled NO.
Rio Tinto and Woodside Petroleum - Australia's top-tier miner and oil producer - put out their quarterly production reports. Rio's iron ore output fell short of consensus at 79.7Mt v 81.9Me, and the miner also cut its outlook for FY15 production to about 340MT from 350M prior guided. WPL Q2 Rev was $898M v $1.7B y/y and at production 20.1mmboe v 23.5mmboe y/y, though it also maintained its FY15 outlook at 86-94mmboe. Shares of WPL initially rose at the open on some vague chatter of potential takeover interest from BHP, but those talks were quickly dismissed, sending WPL lower.
Fed's Williams followed Chair Yellen's congressional address with similar rhetoric straddling both sides of the fence - clearly committed to a 2015 liftoff but also cautious in terms of low levels of inflation. Williams also added the Fed will not start shrinking its balance sheet before raising rates.
In FX, NZD remained particularly heavily sold following another sharp decline in Global Dairy Trade auction prices. Q2 CPI also missed q/q consensus by a decimal, and those two reports contributed to more brokers forecasting additional RBNZ easing. NZD/USD fell to fresh 6-year lows below 0.6520, down another 80pips in the session. In other USD majors, EUR/USD hit 6-week lows below 1.0920, while USD/JPY was contained to a 20pip range below 124.
***Equities***
US equities / ADRs:
- NFLX: Reports Q2 $0.06 v $0.04e, R$1.64B v $1.65Be; +10.0% afterhours
- INTC: Reports Q2 $0.55 v $0.50e, R$13.2B v $13.0Be; Cuts FY15 Rev and capex guidance; +1.4% afterhours
- HCA: Guides Q2 $1.18 (incl items) v $1.32e, R$9.90B v $9.75Be; -1.2% afterhours
Notable movers by sector:
- Consumer discretionary: China Eastern Airlines 670.HK +7.5% (H1 guidance); China Foods 506.HK +3.1% (H1 guidance); 361 Degrees International Ltd 1361.HK +1.6% (Q1 SSS); TCL Corp 000100.CN +5.0% (H1 guidance); Luk Fook Holdings 590.HK -0.9% (Q1 result)
- Consumer staples: Yuan Longping High-tech Agriculture Co 000998.CN +5.3% (H1 guidance)
- Financials: GF Securities 000776.CN +4.4% (H1 result); Founder Securities Co 601901.CN +1.6% (H1 guidance); China Overseas Land 688.HK +3.4% (June result); QBE Insurance Group QBE.AU +1.5% (sales of business)
- Industrials: Guangzhou Baiyun International Airport 600004.CN +6.4% (June result)
- Technology: Hundsun Technologies 600570.CN -1.4% (take measures amid probe); Inspur International 596.HK +2.4% (H1 guidance); Toshiba Corporation 6502.JP -2.0% (speculation on accounting scandal charges and sell certain assets)
- Energy: Woodside Petroleum WPL.AU -1.2% (Q2 result); Horizon Oil HZN.AU +6.9% (Seen on takeover radar)
- Materials: Metallurgical Corporation of China 1618.HK +1.5% (YTD new contracts); Iluka Resources ILU.AU -0.5% (Q2 result); Whitehaven Coal WHC.AU -5.2% (Q4 result); Paladin Energy Limited PDN.AU -2.0% (quarterly result); Rio Tinto Ltd RIO.AU -0.2% (Q2 result); Pangang Group Vanadium Titanium & Resources 000629.CN +4.1% (H1 guidance)
-Healthcare: Livzon Pharmaceutical Group 1513.HK +15.2% (proposes unit to be listed)
-Utilities: Huaneng Power International 902.HK +3.0% (H1 result)