Asian Mid-session Update: Markets holding up despite US jobs report boosting odds of September liftoff
***Economic Data***
- (AU) AUSTRALIA AUG AIG PERFORMANCE OF CONSTRUCTION INDEX: 53.8 V 47.1 PRIOR (1st expansion in 5 months)
- (JP) JAPAN AUG OFFICIAL RESERVE ASSETS: $1.24T V $1.24T PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.4%, S&P/ASX -0.6%, Kospi -0.1%, Shanghai Composite +0.1%, Hang Seng -0.4%, Sept S&P500 +0.7% at 1,934
***Commodities/Fixed Income***
- Dec gold +0.1% at $1,122/oz, Oct crude oil -0.9% at $45.61/brl, Dec copper +0.5% at $2.32/lb
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs
***Market Focal Points/FX***
- Regional indices are down slightly with the exception of the most closely watched Shanghai Composite, which is holding up considerably well in a catch-up session after 2 days of holidays. Investors were especially keen on today's delayed reaction to Friday's release of non farm payrolls where expectations of a Fed rate hike in September were lifted by lower than expected unemployment rate in spite of a slight miss in employment change. Risk-on appetite was also felt in other markets - S&P emini futures were up by over 1% at one point, rising 20pts above 1,940. In FX, traders bid USD/JPY by as much as 70pips from the lows above 119.50 and AUD/USD by some 30pips toward $0.6950. Other majors were more subdued - EUR/USD trading in a 30pip range above 1.1140 and NZD/USD down about 30pips as low as 0.6260.
- Comments from various China govt officials have also been constructive. PBoC Gov Zhou noted the rapid decline in China equities is coming to an end, and that financial markets will become more stable. State planning agency NDRC also said the economy is stabilizing and improving. NDRC also cited data from the State Grid, estimated Aug power consumption at 508B kwh, +2.5% y/y - the highest rate of growth in 2015. China Stats Bureau revised the 2014 GDP to 7.3% from 7.4%, but Fin Min Lou remarked that China's new normal is 7% growth for next 4-5 years. Those comments are reassuring considering the rampant speculation of growth dipping well below 7% in Q3 and Q4. A separate press report also speculated Q3 would mark the trough in China slowdown.
- Japan's Toshiba has finally unveiled its FY14/15 results amid the accounting probe, posting a Net loss ¥37.8B v profit ¥60.2B y/y, Op profit ¥170B v ¥257B y/y, Rev ¥6.66T v ¥6.49T y/y. Company also revised FY13/14 net to ¥60.2B from ¥50.8B reported, FY12/13 net to ¥13.4B from ¥77.5B reported, and FY11/12 Net to ¥3.2B from ¥73.7B initially reported. Mixed revisions and signs of progress in the probe have actually helped Toshiba shares rise.
- IMF head Lagarde spoke at the G20 summit, urging member nations to accelerate efforts to boost growth to meet the growth targets set last year. For advanced economies, Lagarde saw activity picking up only modestly this year and next, while emerging markets' prospects have been weakened. Lagarde also reiterated that the Fed should not rush to a decision on rates but rather take a more methodical review in its impending policy shift. Note that the odds of Fed Funds reaching 0.25 in Sept following the US jobs report have risen above 80%.
***Equities***
Notable movers by sector:
- Consumer discretionary: Suning Appliance Co 002024.CN +8.3% (cooperation with Wanda)
- Financials: CIFI Holdings Group Co 884.HK +0.7% (Aug result); China Vanke Co 000002.CN -1.2% (Aug result); Bohai Leasing 000415.CN +4.0% (acquisition of Avolon); Westpac Banking Corp WBC.AU -1.0% (investor update)
- Industrials: Kanamoto 9678.JP -16.9% (9-month result)
- Technology: Hundsun Technologies Inc 600570.CN -2.4% (punishment by CSRC); Toshiba 6502.JP +4.9% (FY14/15 result, revises prior earnings); MediaTek Inc 2454.TW +1.2% (Aug result); Fiberhome Telecommunication Technologies Co 600498.CN +5.9%, Beijing Gehua CATV Network Co 600037.CN +10.0% (to boost integrated networks)
- Energy: AGL Energy AGL.AU -0.6% (asset sales)