Asia Mid-Session Market Update: S&P hints Australia could be headed for a downgrade; markets weaker heading into key global economic figures
***Asia Summary***
- Equities markets opened slightly lower across the region. AUD/USD saw some weakness falling to 0.7915 after June trade balance figures came in at a lower than expected surplus or A$856M, exports also fell 1%. China Caixin services PMI slightly fell m/m to 51.5 while composite rose to 51.9 form 51.1. The PBOC adjusted its open market operations (OMO) by just injecting 7-day reverse repos and skipped 14-day operations. Costco SSS, ex-gas rose 5.3%. S&P warned that there is more risk to Australia's sovereign rating than in the past; reminder S&P Has Australia sovereign rating at AAA, outlook negative.
- Markets seem to be cautious ahead of BOE rate decision later today and US jobs report Friday morning. In tomorrow’s session Australia will release RBA’s statement on monetary policy, with the key focus to be on the wording about the A$ and its impact on the economy and inflation.
***Key economic data***
- (AU) AUSTRALIA JUN TRADE BALANCE (AUD): 856M V 1.8BE (8TH CONSECUTIVE SURPLUS)
- (CN) CHINA JULY CAIXIN PMI SERVICES: 51.5 V 51.6 PRIOR; PMI COMPOSITE: 51.9 V 51.1 PRIOR
- (KR) South Korea Jun Current Account Balance: $7.0B v $5.9B prior; Balance of Goods (BOP): $9.7B v $8.8B prior
- (AU) AUSTRALIA JULY AIG PERFORMANCE OF SERVICES INDEX: 56.4 V 54.8 PRIOR
- (JP) JAPAN JULY PMI SERVICES: 52.0 V 53.3 PRIOR; PMI COMPOSITE: 51.8 V 52.9 PRIOR
- (NZ) New Zealand July ANZ Commodity Price: -0.8% v 2.1% prior
***Speakers and Press***
China
- (CN) China insurance regulator CIRC: No plan for Anbang to sell overseas assets
- (CN) China Finance Ministry (MOF) has become concerned public-private partnerships (PPPs) for infrastructure investment are being used to disguise local government borrowing – FT
- (CN) China may accelerate debt to equity swaps in H2 - Financial News
- (CN) China Commerce Ministry (MOFCOM) Gao: Hope China and the US can continue on a path of cooperation; Reminder: Am un-named US government official said President Trump’s administration may be on the cusp of increasing its threats against China on trade
Japan
-(JP) Japan Fin Min Aso: The economy is not bad, oil prices are bringing down inflation
***Asian Equity Indices/Futures (00:00ET)***
- Nikkei -0.2%, Hang Seng -0.1%, Shanghai Composite -0.2%, ASX200 -0.4%, Kospi -1.5%
- Equity Futures: S&P500 -0.1%; Nasdaq100 0.0%, Dax -0.1%, FTSE100 -0.2%
***FX ranges/Commodities/Fixed Income (00:00ET)***
- EUR 1.1858-1.1834; JPY 110.83-110.57; AUD 0.7967-0.7914; NZD 0.7430-0.7392
- Aug Gold -0.8% at 1,261/oz; Sept Crude Oil -0.3% at $49.44/brl; Sept Copper +0.2% at $2.89/lb
- USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6. 7211 V 6.7205 PRIOR
- (CN) China PBOC OMO injects CNY60B in 7-day reverse repos v CNY120B prior in 7-day and 14-day reverse repos
- JGB (JP) Japan MoF sells ¥400B v ¥400B indicated in 10-yr 0.10% inflation-indexed bonds, bid to cover 3.19x
***Equities notable movers***
Hong Kong/China
- Standard Chartered, 2888.HK, Reports H1 adj pretax profit $1.92B v $1.81Be, op income $7.2B v $7.23Be; Declares no dividend; -6.9%
Japan
- Furukawa Electric, 5801.JP Reports Q1 Net ¥6.8B v ¥2.3B y/y; Op ¥10.4B v ¥4.7B y/y; Rev ¥224.9B v ¥196.2B y/y; +12.6%
Korea
-GS Retail,007070.KR Reports Q2 (KRW) Net 42.0B v 59.8Be; Op 53.1B v 74.4Be; Rev 2.09T v 2.09Te; -12.8%
Australia
- Suncorp, SUN.AU Reports FY17 Net profit A$1.08B v A$1.13Be, Cash profit A$1.15B v A$1.20Be; -6.5%
-Commonwealth Bank of Australia, CBA.AU Austrac initiated civil penalty proceedings in federal court against CBA for “serious and systemic non-compliance” with anti-money laundering and counter-terrorism financing laws; +0.5%
***US markets on close: Dow +0.2%, S&P500 +0.1%, Nasdaq flat, Russell -1.1% ***