Asia Mid-Session Market Update: China official manufacturing returns to expansion; AUD rallies as Australia CapEx outlook brightens
***Economic Data***
- (CN) CHINA AUG CAIXIN PMI MANUFACTURING: 50.0 V 50.1E
- (CN) CHINA AUG MANUFACTURING PMI (GOVT OFFICIAL): 50.4 (22-month high) V 49.8E; NON-MANUFACTURING PMI (SERVICES): 53.5 (3-month low) V 53.9 PRIOR
- (JP) JAPAN Q2 CAPITAL SPENDING Y/Y: 3.1% V 5.5%E; EX-SOFTWARE Y/Y: 3.1% V 5.5%E
- (JP) JAPAN AUG FINAL PMI MANUFACTURING: 49.5 V 49.6 PRELIM; confirms 6th consecutive month of contraction
- (AU) AUSTRALIA Q2 PRIVATE CAPITAL EXPENDITURE (CAPEX) Q/Q: -5.4% V -4.0%E
- (AU) AUSTRALIA AUG AIG MANUFACTURING INDEX: 46.9 V 56.4 PRIOR; 1st contraction in 14 months
- (AU) AUSTRALIA JULY RETAIL SALES M/M: 0.0% V 0.3%E; 7-month low
- (AU) AUSTRALIA AUG CORELOGIC RPDATA HOUSE PRICES M/M: 1.1% V 0.8% PRIOR
- (KR) SOUTH KOREA AUG CPI M/M: -0.1% V 0.2%E; Y/Y: 0.4% (16-month low) V 0.7%E; CPI CORE Y/Y: 1.1% V 1.6%E
- (KR) SOUTH KOREA AUG TRADE BALANCE: $5.3B V $5.4BE; Exports Y/Y: +2.6% v -0.5%e, first increase in 20 months; Imports Y/Y: +0.1% v -2.2%e
- (KR) SOUTH KOREA AUG PMI MANUFACTURING: 48.6 V 50.1 PRIOR; 1-year low
- (NZ) NEW ZEALAND Q2 TERMS OF TRADE INDEX Q/Q: -2.1% V -1.5%E
- (BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC RATE UNCHANGED AT 14.25%; AS EXPECTED
- (CO) COLOMBIA CENTRAL BANK LEAVES OVERNIGHT LENDING RATE UNCHANGED AT 7.75%; AS EXPECTED
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.1%, S&P/ASX -0.1%, Kospi -0.5%, Shanghai Composite -0.2%, Hang Seng +0.6%, Sep S&P500 +0.4% at 2,174
***Commodities/Fixed Income***
- Dec gold +0.1% at $1,313/oz, Oct crude oil +0.6% at $44.97/brl, Dec copper +0.5% at $2.09/lb
- GLD: SPDR Gold Trust ETF daily holdings fall by 12.2 tonnes from 943.2; 3rd straight decline, lowest since June 24th
- SLV: iShares Silver Trust ETF daily holdings rise to 11,189 tonnes from 11,130 tonnes prior; multi-year high
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6784 V 6.6908 PRIOR; strongest Yuan setting since Aug 26th
- (CN) PBOC to inject CNY20B in 7-day reverse repos and CNY10B in 14-day reverse repos
- JGB: (JP) Japan MoF sells ¥2.17T in 10-yr 0.1% JGBs; Avg yield: -0.046% v -0.047% prior; bid to cover: 3.74x v 3.16x prior
***Market Focal Points/FX***
- Asian equity markets are mixed with uneasy sentiment persisting going into Friday's payrolls and potential Fed rate hike implications as soon as September if theNFPs follow a decent ADP report in US hours today. August PMI data in the region have also been mixed, though the rebound in China official manufacturing to expansion stands out above other figures. S&P500 futures, Copper, and Crude Oil prices have seen a bounce since the PMI release. In FX majors, AUD/USD saw the most pronounced volatility following upward Australia CapEx revisions for the current and next year, rising about 30pips toward $0.7550. USD/JPY fell as much as 35pips below 103.10, while NZD/USD traded in a 30pip range around $0.7250.
- China official manufacturing PMI hit a 22-month high, even as non-manufacturing PMI retreated to a 3-month low of 53.5. Among notable components in manufacturing, New Export Orders rose to 49.7 v 49.0 m/m while Input Prices rose to 57.2 v 54.6 m/m, showcasing more pronounced external demand and inflationary pressure. SME-oriented private Caixin PMI index was just shy of estimates at 50.0, and accompanying commentary noted "sustained job shedding in August." Resident economist remarked that "stagnation that follows tentative signs of recovery in July may have been caused by a temporary tightening of proactive fiscal policies", adding that "downward pressure on Chinas economy remains and government support to stabilize growth must continue."
- In Japan, August final manufacturing PMI was confirmed to remain in contraction for the 6th straight month. Markit economist said that while output rose for the first time since Feb, New Orders and New Export Orders continued to fall. Japan quarterly Capex figures were also softer than expected. The biggest declines were seen in Petroleum, Iron/Steel, and Business Machinery components, all of which hit double-digit declines.
- Economic data out of Australia were mixed - retail sales came in flat and failed to grow for the first time in 7 months. Among retail components household goods and department stores saw declines while restaurants and food retailers saw modest gains. Australia Q2 private capex missed expectations on the headline, but upward revisions for projected spending in FY15/16 (to A$127.5B from A$126.8B prior forecast) and FY16/17 (to A$105.2B v A$89.2B prior forecast), sending AUD/USD higher. The yield on the Aussie 3-year bond rose about 2bps to 1.44%.
***Equities***
US equities / ADRs:
- CYNA: Halted; Sunovion Pharmaceuticals to acquire Cynapsus Therapeutics for $40.50/shr in cash ($624M deal); +112% afterhours
- OXM: Reports Q2 $1.48 v $1.38e, R$283M v $274Me; +9.6% afterhours
- OLLI: Reports Q2 $0.21 v $0.18e, R$211.3M v $207Me; +7.8% afterhours
- CHTR: Charter Communications to be added to S&P500 Index; +3.4% afterhours
- SMTC: Reports Q2 $0.35 v $0.33e, R$135.9M v $136Me; +1.9% afterhours
- CTRP: Reports Q2 -$0.17 v -$0.21e, R$664M v $664Me; -0.7% afterhours
- BOX: Reports Q2 -$0.14 v -$0.20e, R$95.7M v $94.6Me; -1.5% afterhours
- FIVE: Reports Q2 $0.18 v $0.17e, R$220.1M v $219Me; Guides Q3 $0.09-0.10 (GAAP) v $0.10e, R$199-202M v $204Me; -5.1% afterhours
- CRM: Reports Q2 $0.24 v $0.22e, R$2.04B v $2.02Be; -6.8% afterhours
- SCVL: Reports Q2 $0.22 v $0.27e, R$230.9M v $236Me; -8.7% afterhours
Notable movers by sector:
- Consumer discretionary: Clarion Co 6796.JP +10.1% (Mitsubishi UFJ raised to overweight)
- Consumer staples: Aderans Co 8170.JP -5.2% (BNP Paribas cuts to Reduce)
- Financials: Melco International Development 200.HK +6.7% (H1 result); China Merchants Holdings International 144.HK +2.7% (H1 result)
- Industrials: SMC Corp 6273.JP -1.8% (JPMorgan adds to Most Preferred stocks)
- Technology: Samsung Electronics 005930.KR -3.2% (Galaxy Note 7 delays); Makita Co 6586.JP -4.4% (JPMorgan cuts to Neutral)
- Energy: Beach Energy BPT.AU -3.5%, Origin Energy ORG.AU -2.9% (oil declines)