Asia Mid-Session Market Update: BoJ Gov Kuroda indicates can take rates more negative; Dollar strengthens across the region
***Economic Data***
- (HU) Hungary Aug Business Confidence: 1.2 v 5.6 prior (lowest level since 2013); Consumer Confidence Index: -18.6 v -16.1 prior
- (TW) TAIWAN JUL UNEMPLOYMENT RATE: 4.0% V 4.0%E
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX -0.1%, Kospi -0.7%, Shanghai Composite -0.6%, Hang Seng -0.3%, Sep S&P500 -0.2% at 2,178
***Commodities/Fixed Income***
- - Dec gold -0.7% at $1,337/oz, Oct crude oil -1.1% at $48.55/brl, Sep copper -0.3% at $2.16/lb
- (CN) PBOC to inject CNY110B in 7-day reverse repos
- (CN) PBOC SETS YUAN MID POINT AT 6.6652 V 6.6211 PRIOR; weakest Yuan setting since June 27th
- (KR) South Korea sells 20-yr bonds at 1.515%
- (CN) According to research note China NDRC may start to grant exemption to high quality coal producers in China to ease production restrictions in order to cool down coal prices - financial press
***Market Focal Points/FX***
- Another large typhoon expected to make landfall today in Japan, causing Japan Airlines to cancel over 100 flights impacting 33.7K passengers. Markets were mixed, the USD strength the major driver of the session, gaining ~0.5% or more across the currencies in the region (USD/KRW 1,126; USD/TWD 31,78, NZD/USD 0.7217 and AUD/USD 0.7585). USD/JPY gapped open at the start of Asia to 100.69 from New York close on Friday of 100.25 after BOJ Gov Kuroda said there is room to take rates further negative; sees sufficient chance of more easing in September. Later in the session USD/JPY rose to 100.82. Dollar strength came on the back of Fed member comments over the last few days, Fed's Dudley and Williams on Thursday both said that they wouldn't completely rule out a hike in September and then Sunday, Fed Vice Chairman Fischer said the US economy is close to Fed targets and a 2016 hike is still under consideration.
- The PBoC adjusted down its yuan fix rate by 441 pips to 6.6652, the largest fall since June 27th. Talk in the Chinese press calling for stimulus measures has slowed down some, compared to previous weeks, however today, China PBoC official Sheng Songcheng said that lower taxes can be more effective than rate cuts for economic stimulus.
***Equities***
US equities / ADRs:
- ISIL: Renesas Electronics in final negotiations to acquire Intersil for an expected $3.0B - Nikkei, Renesas followed up to deny the report
- HOT: Marriott said to feel buyers remorse in Starwood merger deal - NY Post
Notable movers by sector:
- Consumer discretionary: Aeon Stores Hong Kong Co 984.HK +2.7% (H1 result); Ryohin Keikaku 7453.JP +0.3% (H1 result); APN Outdoor APO.AU -9.1% (H1 result); SEEK SEK.AU +1.1% (FY16 result)
- Consumer staples: WH Group 288.HK +0.2% (H1 result)
- Financials: Haitong International Securities Group 665.HK -1.4% (H1 result); Guotai Junan International Holdings 601211.CN -2.2% (H1 result); Bank of Chongqing 1963.HK -0.7% (H1 result); China Vanke 000002.CN +1.3% (H1 result)
- Industrials: GWA Group GWA.AU +25.1% (FY16 result); UGL UGL.AU +4.9% (FY16 result)
- Technology: Kingsoft Corp 3888.HK +2.3% (Q2 result); Tech Pro Technology Development 3823.HK -1.6% (H1 result)
- Materials: Fortescue Metals Group FMG.AU -1.4% (FY16 result); LG Chem 051910.KR +3.8%, Samsung SDI 006400.KR +4.2% (China removed clause for battery makers); Spark Infrastructure SKI.AU +1.4% (H1 result); Boart Longyear BLY.AU -5.6% (H1 result); Fortescue Metals Group FMG.AU -1.4%(FY16 result); Bluescope Steel BSL.AU +3.8% (FY16 result)
- Energy: Huadian Fuxin Energy Corp. 816.HK -2.8% (H1 result)
- Healthcare: Ono Pharmaceutical Co 4528.JP +1.2% (UBS upgraded to Neutral); Japara Healthcare JHC.AU -9.2% (FY16 result)