Asian Mid-session Market Update: Services PMIs mixed; Japan fiscal stimulus found underwhelming
***Economic Data***
- (CN) CHINA JULY CAIXIN PMI SERVICES: 51.7 V 52.7 PRIOR
- (HK) HONG KONG JULY COMPOSITE PMI: 47.2 V 45.4 PRIOR (17th consecutive month of contraction)
- (JP) JAPAN JULY SERVICES PMI: 50.4 V 49.4 PRIOR; COMPOSITE PMI: 50.1 V 49.0 PRIOR
- (AU) AUSTRALIA JULY AIG PERFORMANCE OF SERVICE INDEX: 53.9 V 51.3 PRIOR
- (NZ) NEW ZEALAND Q2 AVERAGE HOURLY EARNINGS Q/Q: 0.8% V 0.9%E; PRIVATE WAGES EX-OVERTIME Q/Q: 0.4% V 0.5%E; PRIVATE WAGES INCL OVERTIME Q/Q: 0.4% V 0.4%E
- (NZ) NEW ZEALAND JULY ANZ COMMODITY PRICE M/M: 2.0% V 3.7% PRIOR
- (UK) JULY BRC SHOP PRICE INDEX Y/Y: -1.6% v -2.0% PRIOR (39th month of decline)
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -0.9%, S&P/ASX -1.1%, Kospi -0.7%, Shanghai Composite +0.3%, Hang Seng -1.7%, Sep S&P500 -0.1% at 2,151
***Commodities/Fixed Income***
- Dec gold -0.2% at $1,369/oz, Sep crude oil +0.7% at $39.77/brl, Sep copper flat at $2.20/lb
- (US) Weekly API Oil Inventories: Crude: -1.3M v -0.8M prior; 3rd straight draw
- GLD: SPDR Gold Trust ETF daily holdings rise 6.0 tonnes to 970.0 tonnes; highest since July 11th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,911 tonnes from 10,915 tonnes prior; First fall since June 24th
- (CN) PBOC to inject CNY55B in 7-day reverse repos
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6195 V 6.6451 PRIOR; strongest Yuan fix since Jun 24th
- (CN) China MoF sells 1-year and 10-year bonds
- (JP) BOJ offers to buy ¥430B in 5-10yr JGBs, ¥200B in 10-25yr JGBs and ¥120B in JGBs with maturity over 25-yr
- (AU) Australia sells A$900M 2.75% in 2027 bonds; avg yield 2.0054%; bid-to-cover 2.31x
***Market Focal Points/FX***
- Asian equity markets are trading with a negative bias, tracking a more pronounced selloff on Wall St. Traders are turning increasingly cautious going into the NFP US jobs release on Friday while also taking note of soft US auto sales and persistent pressure in the energy space. Services/Composite PMI figures in Asia have also been mixed, with China weakening somewhat while Japan and Hong Kong improved. In FX majors, NZD/USD took a tumble of about 50pips below 0.72 after soft New Zealand wage data, USD/JPY traded in a 50pip range above 100.80, AUD/USD was in 20pip range around 0.76, and Yuan fex was set much stronger as USD succumbed to broad selling in the past 24 hours.
- China Services Caixin PMI remained in expansion at 51.7 but fell a full point from the prior month. Companies reported employment falling in Services for the first time in 4 months even though overall rate of job shedding eased to its weakest for six months. Input prices were also a positive surprise for both components, portening a more healthy increase in CPI next week. In Hong Kong, July composite PMI Contracted for the 17th straight month, even as "rates of contraction in some key variables such as output and new orders eased since the end of Q2." Hong Kong employment also remained under pressure, though input costs rose modestly after a slight decline in June. Separately, China state planner NDRC recommended that China cut rates and RRR further as appropriate, adding that the downward pressure on investment should not be ignored.
- Bearish sentiment has been more pervasive in Japan since yesterday when the govt announced the makeup of its fiscal stimulus. A critical Nikkei report today highlighted the lack of labor reform measures such as little effort on productivity improvement and lowering the barrier of entry for top industries. Japan Services PMI returned to expansion after a 1-month dip into contraction, as new orders declined at weaker pace. Staffing numbers were reportedly lower last month however, as participants also pointed out risks related to Brexit.
- New Zealand avg hourly earnings were underwhelming, sending NZD/USD below $0.72. ASB subsequently cut is Q2 employment forecast to 0.3% from 0.7% prior guided, adding the survey "reinforce the downside risks to the inflation outlook and the need for further RBNZ OCR cuts." The case for more RBNZ easing was also built up by latest report from real estate agency Barfoot & Thompson, which saw Auckland July avg house price -4.5% m/m v +3.9% prior and +4.9% y/y v +9.9% prior.
***Equities***
US equities / ADRs:
- FIT: Reports Q2 $0.12 v $0.11e, R$586.5M v $573Me; +6.2% afterhours
- ETSY: Reports Q2 -$0.06 v -$0.03e, R$85.3M v $83.2Me (2 est); +5.0% afterhours
- AIG: Reports Q2 $0.98 v $0.91e; P&C Net Premiums Written $4.42B v $5.58B y/y; to add $3B to buyback program (5% of market cap); +3.0% afterhours
- CAR: Reports Q2 $0.63 v $0.74e, R$2.24B v $2.21Be; +1.6% afterhours
- CERN: Reports Q2 $0.57 v $0.57e, R$1.22B (adj) v $1.21Be; -0.5% afterhours
- BIIB: Sources say Allergan is unlikely to pursue a Biogen takeover - CNBC; -2.0% afterhours
- EA: Reports Q1 +$0.07 v -$0.02e, R$1.27B v $1.20B y/y; -2.5% afterhours
- CYH: Reports Q2 $0.09* adj v $0.58e, R$4.59B v $4.54Be; -13.1% afterhours
- CRAY: Reports Q2 -$0.33 v -$0.20e, R$100.2M v $103Me (2 est); -20.5% afterhours
Notable movers by sector:
- Consumer discretionary: FamilyMart Co. 8028.JP +14.6% (to be added to Nikkei 225 index); Adastria Holdings Co 2685.JP -14.9% (JPMorgan Chase cuts to Neutral); Sega Sammy Holdings Inc 6460.JP +10.0% (Q1 result); Seven Group Holdings SVW.AU +5.7% (Credit Suisse cuts to Neutral, FY16 result); Kangwon Land Inc 035250.KR -3.1% (lawmaker proposes new casino law)
- Financials: Genworth Mortgage Australia GMA.AU +6.6% (H1 result); Seven & I Holdings 3382.JP -1.1% (guidance)
- Industrials: Iriso Electronics Co 6908.JP -9.5% (Q1 result); Yamaha Corp 7951.JP +11.4% (Q1 result); Xinyi Glass Holding Co 868.HK +4.3% (H1 result)
- Technology: HTC Corp 2498.TW -1.2% (Q2 result)
- Materials: Furukawa-Sky Aluminum Corp 5741.JP +7.6% (Q1 result); Stella Chemifa Corp 4109.JP +4.8% (Q1 result); Itochu Corp 8001.JP -0.7% (Q1 result)
- Energy: Xinyi Solar 968.HK +3.0% (H1 result); Beach Energy BPT.AU -3.7% (sells oil assets); Idemitsu Kosan Co 5019.JP -4.9% (Q1 result)
- Telecom: Hutchison Telecom Hong Kong 215.HK -3.5% (H1 result); KDDI Corp 9433.JP +5.2% (Q1 result)
- Utilities: Huaneng Power International 902.HK -2.7% (H1 result)