Asia Mid-Session Market Update: New Zealand terms of trade fall into deficit; Oil pares gains on API inventories build
***Economic Data***
- (NZ) NEW ZEALAND JULY TRADE BALANCE (NZ$): -433M (first deficit in 7 months) V -325ME
- (AU) AUSTRALIA Q2 CONSTRUCTION WORK DONE Q/Q: -3.7% V -2.0%E; 4th consecutive decline
- (AU) AUSTRALIA JULY SKILLED VACANCIES M/M: -0.6% V +0.1% PRIOR
- (US) NORTH AMERICA JULY SEMI BOOK/BILL RATIO: 1.05 V 1.00 prior
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.7%, S&P/ASX +0.2%, Kospi -0.3%, Shanghai Composite flat, Hang Seng -0.7%, Sep S&P500 -0.1% at 2,184
***Commodities/Fixed Income***
- Dec gold -0.3% at $1,341/oz, Oct crude oil -1.1% at $47.56/brl, Sep copper +0.1% at $2.12/lb
- (US) Weekly API Oil Inventories: Crude: +4.5M v -1M prior; largest build since Apr
- USD/CNY: (CN) SWIFT: CNY use in international transactions: 1.90% of total in July v 1.72% prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6420 V 6.6586 PRIOR; 2nd straight firmer Yuan setting
- (CN) PBOC to inject CNY90B in 7-day reverse repos and CNY50B in 14-day reverse repos
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥420B in 3-5yr JGBs, ¥200B in 10-25yr JGBs, and ¥120B in JGBs with maturity over 25-yr
- (AU) Australia MoF (AOFM) sells A$1B in 2.75% 2027 Bonds; avg yield: 1.9459%; bid-to-cover: 1.98x
***Market Focal Points/FX***
- Asian equity markets are mixed after modest gains on Wall St, with Nikkei225 outperforming amid weaker JPY and Hang Seng dragged down by financials and insurance names. Strong housing data and earnings from Toll Brothers bode well for the US property sector, which until recently appeared to be under strain. Focus remains on Fed Chair Yellen's Jackson Hole address as the key risk event for the week, though Fed funds futures saw a slight increase in probability of a rate hike before the end of 2016 as it broke above 50%. Fed's Kaplan (non-voter) also expressed support for a tightening if recovery in jobs can be sustained. Oil prices rose earlier in US hours after reports that Iran has informed OPEC it will attend the producers' meeting next month before giving up some of the gains after a large build in API inventories. In FX, most active dollar majors saw USD/JPY rise over 30pips from the lows as high as 100.50 and NZD/USD fall about 20pips to 0.7270 on soft New Zealand trade numbers.
- New Zealand July trade registered its first deficit in 7 months, and it was also wider than expected. Exports came in short of ests at 3.96B v 4.07Be, while imports were roughly in line at 4.40B v 4.45Be. Shipments to China fell 4.3% after last month's 17.9% rise, though export value to Australia rose 5.2% after last month's 8.5% drop. Otherwise light economic calendar also saw Australia's value of construction falling for the 4th straight quarter in Q2, with a 25% decline in Engineering segment overshadowing a 9.4% rise in Residential. Australia's earnings season also remained heavy. Qantas was the most notable gainer as company announced its first dividend in 7 years after growing sales by 2.5%, even as earnings narrowly missed expectations. Wesfarmers was down about 2% after net profit fell to A$407M v A$2.44B y/y.
***Equities***
US equities / ADRs:
- LCI: Reports Q4 $0.73 v $0.60e, R$168.9M v $162Me; +14.5% afterhours
- OSUR: Awarded up to $16.6M to advance rapid Zika tests; +11.1% afterhours
- DY: Reports Q4 $1.64 v $1.56e, R$789.2M v $773Me; -4.3% afterhours
- INTU: Reports Q4 +$0.08 v -$0.02e, R$754M v $724Me; raises dividend by 13% to $0.34 from $0.30 (indicated yield 1.19%); -4.6% afterhours
- LZB: Reports Q1 $0.28 v $0.29e, R$340.8M v $359Me; -15.6% afterhours
Notable movers by sector:
- Consumer discretionary: Ajisen China Holdings 538.HK +3.7% (H1 result); Car Inc 699.HK +3.2% (H1 result); China Foods 506.HK -0.3% (H1 result); Qantas Airways QAN.AU +2.4% (FY16 result); Slater & Gordon SGH.AU -11.0% (guidance); Bega Cheese BGA.AU +2.1% (FY16 result)
- Financials: WesFarmers WES.AU -2.3% (FY16 result); Steadfast Group SDF.AU -2.8% (FY16 result); Biostime International 1112.HK -4.4% (H1 result)
- Industrials: Boral BLD.AU -4.2% (FY16 result); Sinotrans 598.HK +8.1% (H1 result); Worley Parsons WOR.AU -3.2% (FY16 result); Ardent Leisure Group AAD.AU +13.2% (FY16 result)
- Materials: Jiangxi Copper Company 358.HK -1.7% (H1 result); Alumina AWC.AU +0.5% (H1 result)
- Energy: ENN Energy Holdings 2688.HK +2.6% (H1 result)
- Healthcare: Shanghai Fosun Pharmaceutical Group Co 2196.HK +6.0% (H1 result); China Traditional Chinese Medicine Co 570.HK +4.1% (H1 result);
- Telecom: China Telecom Corp.728.HK +1.2% (H1 result)
- Utilities: Tokyo Electric Power Co 9501.JP +2.2% (may pass safety checks by March)