Asian Mid-session Update: Shanghai shrugs deleveraging calls as PBoC continues to inject liquidity
***Economic Data***
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 111.8 V 107.0 prior
- (CN) China Jun Foreign Direct Investment (FDI) Y/Y: 0.7% v 0.5%e
- (NZ) NEW ZEALAND JUL RETAIL CREDIT CARD SPENDING M/M: 0.3% V 1.9% PRIOR; Y/Y 6.5% V 7.1% PRIOR
- (NZ) New Zealand Jun Net Migration: 4.8K v 5.1K prior
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.4%, S&P/ASX +0.3%, Kospi flat, Shanghai Composite -0.6%, Hang Seng +0.3%, Sept S&P500 -0.1% at 2,120
***Commodities/Fixed Income***
- Aug gold -0.3% at $1,103/oz, Sept crude oil -0.3% at $50.30/brl, Sept copper +0.3% at $2.49/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 1.8 tonnes to 694.5 tonnes; lowest since Sept 2008
- USD/CNY: PBoC sets yuan mid point at 6.1199 v 6.1197 prior setting (weakest Yuan setting since Jun 8th)
- (CN) PBoC to inject CNY35B in 7-day reverse repos (8th consecutive injection); Offer yield at 2.5%, unchanged from prior
- (JP) BOJ offers to buy ¥70B in JGBs with maturity less than 1-yr and ¥400B in 5-10yr JGBs
***Market Focal Points/FX***
- Asia indices are mixed again in the absence of conviction in trading on Wall St or significant economic data. Shanghai Composite opened down by over 1% but has since come off those lows and approaching its midday break with an upswing above 4,000. Australia's ASX200 is also up about 0.4% halfway through its session, even though quarterly production metrics from some of its miners remain underwhelming.
- Among notable local press reports, PBoC official Sheng said the central bank would continued to maintain liquidity at a moderate level. To that end, in its latest OMO operation PBoC injected another CNY35B through 7-day reverse repos. Also of note, non-broker margin lenders in China had reportedly requested that clients sell off some of their stock holdings purchased with margin debt - further evidence regulators are looking to rein in some of the recent volatility fanned by runaway credit.
- RBA released the minutes of its July meeting and continued to straddle both sides of the fence, which is likely to keep expectations of further policy easing in check. On the one hand, RBA warned the strength in Q1 GDP had not carried over into Q2. On the other, the central bank notes significant labor demand which should succeed in lowering Australia's jobless rate further. RBA reiterated inflationary pressure is well contained and called for further AUD decline to assist economic recovery. After some initial volatility on the release, AUD/USD sold off by about 20pips toward $0.7350 following minutes release. In contrast, NZD/USD rallied about 50pips toward $0.66 on bargain hunting.
- The BOJ also put out a set of meeting minutes, though this release was outdated relative to the more recent decision when the central bank cut its GDP and inflation forecasts. In its June 18th meeting, many members agreed the easing is having intended effects, though a minority also remarked the effects might be diminishing given the recent runup in JGB yields. FX traders interpreted that sentiment as boosting the possibility of more aggressive policy response, and USD/JPY rose some 10pips following the comments toward 124.40 - a 1-month high.
***Equities***
US equities / ADRs:
- QCOM: Said to be preparing to conduct a large-scale strategic review that may lead to possible breakup; May also boost shareholder returns - financial press; +2.7% afterhours
- CNI: Reports Q2 C$1.15 v C$1.03 y/y, Rev C$3.13B v C$3.12B y/y; +0.9% afterhours
- STLD: Reports Q2 $0.22 v $0.22e, R$2.01B v $2.08Be; +0.6% afterhours
- IBM: Reports Q2 $3.84 v $3.80e, R$20.8B v $21.0Be; -5.3% afterhours
Notable movers by sector:
- Consumer discretionary: Spring Airlines Co 601021.CN -10.0% (private placement)
- Financials: China Pacific Insurance Group 2601.HK +3.9% (H1 guidance)
- Industrials: Tianjin Marine Shipping 600751.CN +5.5% (H1 guidance); Sinosteel Engineering & Technology Co L 000928.CN -4.0% (H1 result); CPI Yuanda Environmental-Protection Group 600292.CN +2.0% (H1 result); Dongfang Electric Corp 600875.CN -2.9% (H1 guidance); Macquarie Atlas Roads Group MQA.AU +5.1% (Q2 result); Daewoo Shipbuilding & Marine 042660.KR +17.1% (layoff speculation)
- Technology: Toshiba Corporation 6502.JP +3.7% (accounting irregularities update)
- Materials: Evolution Mining EVN.AU +2.6% (Q4 result); OZ Minerals OZL.AU -2.0% (Q2 result)
- Energy: China Shenhua Energy Co 1088.HK -1.0% (H1 result); Anton Oilfield Services Group 3337.HK +1.3% (Q2 result); Wintime Energy Co 600157.CN +1.0% (H1 result); Oil Search OSH.AU +3.1% (Q2 result)
- Utilities: Shanghai Electric Power 600021.CN -1.9% (H1 guidance)
- Telecom: China Telecom 728.HK +5.9% (June operational data); China Unicom 762.HK +7.5% (June operational data)