Asia Mid-Session Market Update: Abe's advisor Hamada calls for FX intervention even as Japan economic data shine
***Economic Data***
- (JP) JAPAN JULY RETAIL SALES M/M: 1.4% V 0.8%E; RETAIL TRADE Y/Y: -0.2% V -0.9%E
- (JP) JAPAN JULY OVERALL HOUSEHOLD SPENDING Y/Y: -0.5% V -1.5%E; 4th straight decline
- (JP) JAPAN JULY JOBLESS RATE: 3.0% V 3.1%E; Lowest since 1995
- (AU) AUSTRALIA JULY BUILDING APPROVALS M/M: 11.3% (21-month high) V 1.1%E; Y/Y: +3.1% (9-month high) V -8.3%E
- (KR) SOUTH KOREA JULY DEPARTMENT STORE SALES Y/Y: 7.0% V +11.8% PRIOR; DISCOUNT STORE SALES Y/Y: 2.1% V +0.9% PRIOR
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 flat, S&P/ASX +0.5%, Kospi +0.7%, Shanghai Composite flat, Hang Seng +0.7%, Sep S&P500 flat at 2,179
***Commodities/Fixed Income***
- Dec gold flat at $1,327/oz, Oct crude oil +0.3% at $47.10/brl, Sep copper +0.2% at $2.09/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 11,130 tonnes from 11,100 tonnes prior
- JGB: Japan's MoF sells ¥2.08T in 0.1% (0.1% prior) 2-yr JGBs; avg yield -0.193% v -0.361% prior; bid-to-cover 4.44x v 3.95x prior
- (CN) PBOC to inject CNY06B in 7-day reverse repos and CNY40B in 14-day reverse repos
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6812 V 6.6856 PRIOR
***Market Focal Points/FX***
- Asian equity markets are modestly higher following more pronounced gains in the US session where traders are looking past the growing expectations of impending tightening by the FOMC, sending stocks higher and long-end Treasury yields lower. Instead, the focus now turns to this week's US jobs data out of Friday and its implications for near term policy - some analysts suggest that a non-farm payrolls figure above 150K will make September Fed decision a very close call and generally give the green light for a rate hike later this year. Volatility has remained compressed in an otherwise typically thin pre-US holiday week. Among FX majors, USD/JPY received a lift from local calls for FX intervention, rising about 50pips above 102.20. AUD/USD and NZD/USD traded in 20 and 30pip ranges above 0.7560 and 0.7235 respectively.
- Japan PM Abe's advisor Hamada called on the Finance Ministry to "courageously" intervene in FX markets to stem the yen appreciation, accusing the MOF of lost credibility on exchange rate. Govt cabinet Suga replied that the cabinet is closely watching FX markets and prepared to respond appropriately. Earlier, a set of economic data from Japan was increasingly brighter - unemployment rate fell to 21-year low, household spending decline was lower than anticipated, and retail sales growth was nearly flat y/y and topped consensus sequentially. A Nikkei report out today also cited a BNP Paribas economist stating that the latest comments from BOJ Gov Kuroda suggest the central bank is leaning more in favor of deeper negative interest rates as it considers whether to add to QE basket in its next month's decisions.
- In China, local press reported that the aggregate H1 results of 40 listed China fund companies saw their net profits down 13% and Rev down 2.9%. Earnings decline trend was similarly observed in a UBS note which saw H1 earnings decline for non-financial A-share companies widening to -5.2% y/y from -0.6% in Q1.
***Equities***
US equities / ADRs:
- UAL: Scott Kirby leaves post as President of American Airlines, named President of United Airlines, a newly created role; +1.2% afterhours
- SCSC: Reports Q4 $0.51 v $0.72e, R$877.5M v $911Me; Announces $120M share repurchase (11% of market cap); -11.6% afterhours
- HSY: Mondelez International no longer pursuing combination with Hershey; -11.7% afterhours
Notable movers by sector:
- Consumer discretionary: China Southern Airlines 1055.HK -6.6% (H1 result); Peak Sports Products Co 1968.HK -1.2% (H1 result); Gome Electrical Appliances 493.HK +2.2% (H1 result)
- Consumer staples: Labixiaoxin Snacks Group 1262.HK -2.1% (H1 result); Samsonite 1910.HK +5.9% (H1 result)
- Financials: Sunac China Holdings 1918.HK -1.3% (H1 result); China Minsheng Banking Corp 1988.HK +1.2% (H1 result); FlexiGroup FXL.AU +7.1% (FY16 result)
- Industrials: China Shipping Development Co 1138.HK +1.4% (H1 result); BBMG Corp 2009.HK +3.1% (H1 result); China Aluminum International Engineering Corp 2068.HK -0.6% (H1 result); Mitsubishi Motors 7211.JP -0.2% (more models overestimate fuel efficiency);
- Materials: Angang Steel 347.HK +2.2% (H1 result); Sandfire Resources SFR.AU +0.6% (FY16 result)
- Energy: Datang International Power Generation 991.HK +0.5% (H1 result)
- Healthcare: Estia Health EHE.AU -11.1% (FY16 result); Ramsay Health Care RHC.AU +5.9% (FY16 result)
- Telecom: Chorus CNU.AU -2.5% (FY16 result)