Asian Mid-session Market Update: BOJ's Iwata still sees inflation trends on track to reach objective; Aussie retail sales miss estimates; BOE decision on tap
***Economic Data***
- (AU) AUSTRALIA JUNE RETAIL SALES M/M: 0.1% V 0.3%E; Q2 CORE Q/Q: 0.4% V 0.5%E
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX +0.4%, Kospi +0.2%, Shanghai Composite -0.2%, Hang Seng +0.6%, Sep S&P500 flat at 2,158
***Commodities/Fixed Income***
- Dec gold -0.4% at $1,358/oz, Sep crude oil +0.8% at $41.16/brl, Sep copper -0.3% at $2.19/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 0.3 tonnes to 969.7 tonnes
- (CN) NDRC to cut fuel prices in current cycle; to cut both gasoline and diesel
- JGB: Japan Ministry of Finance (MOF) sells ¥400B in 0.1% CPI-linked 10-yr JGB auction, bid-to-cover ratio 2.85x
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6444 V 6.6195 PRIOR
- (CN) PBOC to inject CNY50B in 7-day reverse repos
- (CN) China NDRC: China to further increase income to boost consumption - Chinese press
- (JP) Japan investors bought net ¥312B in foreign bonds v bought ¥679B in prior week; Foreign investors sold net ¥95.5B in Japan stocks v sold ¥272B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian equity markets are mostly positive with the exception of mainland China where prescient concerns over extreme financial system leverage are keeping investors at bay. With economic data limited to some soft Aussie retail numbers, macro sentiment is in a holding pattern as traders await the high-profile post-Brexit BOE decision in today's European session and post June-gloom NFP report out of the US on Friday. Findings from today's ADP report as well as Conference Board online ads would imply a more healthy US jobs outlook, and the greenback slide has indeed been halted. Among key FX majors, USD/JPY traded in a 40pip range around 101.10, EUR/USD in a 20pip range around 1.1150, AUD/USD in a 30pip range around 0.76 despite a brief downtick on Retail Sales, and NZD/USD in a 40pip range above 0.7150.
- Among notable Chinese press reports, banking regulator CBRC was said to request that banks work with high-debt companies by rolling over their loans or offering new credit after payment of principal. CBRC officials were reportedly looking to more actively help companies solve their debt issues, maintaining that top banks should not stop credit flow. Likewise in the overheating China property market, CASS researcher called for more proactive tax and credit policy to manage the expanding property bubble rather than relying on administrative measures such as home purchasing restrictions.
- USD/JPY hit its lowest levels of the session below ¥101 after comments from Dep Gov Iwata echoed the BOJ's latest "glass-half-full" outlook. Specifically, Iwata forecast fiscal stimulus to play a big role in reviving economic growth. On the monetary front, Iwata remained confident that QQE is contributing to progress on inflation which has been stalled by Yen gains and lacking improvement in expectations. He added that CPI will start to rise because of the strong labor market and low unemployment, reaching the 2% BOJ target within the FY17 timeframe, but also noted there is still significant uncertainty related to that forecast.
***Equities***
US equities / ADRs:
- SQ: Reports Q2 -$0.08 v -$0.11e, R$439M v $407Me; +15.3% afterhours
- JACK: Reports Q3 $1.07 v $0.87e, R$368.9M v $367Me; +7.7% afterhours
- HLF: Reports Q2 $1.29 v $1.17e, R$1.20B v $1.19Be (1 est); +1.7% afterhours
- ALL: Reports Q2 $0.62 v $0.53e, R$9.16B v $8.10Be; -0.3% afterhours
- MRO: Reports Q2 -$0.23 v -$0.24e, R$1.3B v $1.19Be; -0.4% afterhours
- TSLA: Reports Q2 -$1.06 v -$0.56e, Rev Non-GAAP $1.56B v $1.52Be; -0.8% afterhours
- CP: Announces Pershing Square to sell its remaining 9.8M shares (6.4% stake); Pershing to use proceeds for one or more new investments; -2.2% afterhours
- PRU Reports Q2 $1.84 adj v $2.49e, R$11.2B v $11.5Be; authorizes $500M increase to share repurchases (1.5% of market cap); -2.3% afterhours
- CTL: Reports Q2 $0.63 v $0.59e, R$4.40B v $4.40Be; -2.7% afterhours
- MET: Reports Q2 $0.83 v $1.36e, R$17.0B v $17.1Be; -4.3% afterhours
- FOXA: Reports Q4 $0.45 v $0.37e, R$6.65B v $6.66Be; Raises semiannual dividend by 20% to $0.18 from $0.15 (indicated yield 1.33%); -4.3% afterhours
- CF: Reports Q2 $0.33 v $0.68e, R$1.13B v $1.09Be; -4.6% afterhours
Notable movers by sector:
- Consumer discretionary: Kangwon Land Inc 035250.KR +2.1% (new casino law unlikely to pass, suspends issuance); Olympus Corp 7733.JP -5.6% (Q1 result)
- Financials: China Vanke Co 2202.HK -1.1% (July result); Evergrande Real Estate Group 3333.HK +5.1% (July result); Mitsui & Co 8031.JP +4.3% (Q1 result)
- Industrials: Geely Automobile Holdings 175.HK +3.5% (July result); Suzuki Motor Corp 7269.JP +5.8% (Q1 result); Downer EDI DOW.AU +8.6% (FY16 result)
- Technology: Car Inc 699.HK -0.7% (momentum for Uber-Didi merge)
- Materials: Xingye Copper International Group 505.HK +7.7% (profit alert); Metals X MLX.AU +7.9% (to demerger unit); Rio Tinto RIO.AU flat (H1 result); St Barbara SBM.AU -1.9%; Saracen Mineral SAR.AU -2.9% (gold falls )
- Energy: Beach Energy BPT.AU +4.8%; Santos STO.AU +5.8% (oil rises)