Asian Mid-session Market Update: Japan stocks, Yen volatile amid more stimulus speculation; BOE's Weale talks down GBP
***Economic Data***
- (NZ) NEW ZEALAND JUNE TRADE BALANCE (NZ$): 127M (6th straight surplus) V 150ME; ANNUALIZED: -3.31B V -3.30BE
- (KR) SOUTH KOREA Q2 PRELIMINARY GDP Q/Q: 0.7% V 0.6%E; Y/Y: 3.2% V 3.0%E
- (JP) JAPAN JUNE PPI SERVICES Y/Y: 0.2% V 0.1% PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.5 v 114.9 prior
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.6%, S&P/ASX -0.2%, Kospi +0.3%, Shanghai Composite +0.5%, Hang Seng +0.9%, Sep S&P500 +0.1% at 2,164
***Commodities/Fixed Income***
- Dec gold -0.4% at $1,323/oz, Sept crude oil +0.3% at $43.24/brl, Sep copper -0.6% at $2.21/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.4 tonnes to 958.7 tonnes; 3-week low
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6778 V 6.6860 PRIOR
- (CN) PBOC to inject CNY130B in 7-day reverse repos
- JGB: (JP) Japan MoF sells ¥399.5B in 0.4% 40-year bonds, bid to cover: 2.89x v 3.07x prior
***Market Focal Points/FX***
- Asian equity markets are mixed despite the more negative sentiment on Wall St in US hours, though volatility is picking up ahead of the Fed and BOJ policy decisions later this week. Japan markets are especially unsettled with more headlines pertaining to the fiscal / monetary stimulus mix, with Nikkei225 falling over 1.5% and USD/JPY plunging some 150pips below 104.40. In other USD majors, NZD/USD was little moved by slightly softer than expected China trade surplus, trading in about a 20pips range around 0.70 handle, while AUD/USD was also in a 20pips range above 0.7460 prior to a late session bounce. S&P emini futures were flat after a 0.2% drop in early electronic trade, and gold remained little changed below 1,330.
- A Nikkei report before market open speculated the govt would double planned "extra spending" for 2016 in stimulus package to ¥6T, and Econ Min Ishihara later remarked it was important to take steps wot proceed with fiscal reform given the current situation. However, Fin Min Aso later said the size of economic stimulus is not yet decided and monetary policy is in BOJ's hands - comments which sent USD/JPY to a 1-week low around 104.30. Separately, PM Abe also maintained that the govt will not reach its nominal GDP target of ¥600T in FY24 if economic growth maintains its current pace.
- With the most recent UK PMI data beginning to showcase the headwinds of Brexit vote on business confidence, BOE's Weale commentary in FT indicated he is dropping his opposition to further monetary stimulus. Weale said the PMIs were very material for next week's decision as he also expressed concern over soft wage growth even before the Brexit referendum. GBP/USD plunged about 60pips on the comments, falling toward $1.3080.
- New Zealand trade data were the centerpiece of another light in economic data session. Terms of trade hit a surplus for the 6th straight month but slightly below expectations. Imports were right in line with consensus, while exports were slightly softer. Shipments to Australia saw the most notable decline of -8.5% y/y, as exports to China rose an impressive 17.9% and to US by 4.7%.
***Equities***
US equities / ADRs:
- TXN: Reports Q2 $0.76 v $0.73e, R$3.27B v $3.20Be; Guides Q3 $0.81-0.91 v $0.81e, R$3.34-3.62B v $3.39Be; +6.2% afterhours
- LVS: Reports Q2 $0.52 v $0.56e, R$2.65B v $2.75Be; +4.5% afterhours
- CNI: Reports Q2 C$1.11 v C$1.11 y/y, Rev C$2.84B v C$3.13B y/y; +0.8% afterhours
- ESRX: Reports Q2 $1.57 (adj) v $1.57e, R$25.2B v $25.5Be; Narrows higher FY16 $6.33-6.43 v $6.35e; +0.5% afterhours
- GILD: Reports Q2 $3.08 v $3.01e, R$7.78B v $7.85Be; Cuts FY16 Product sales R$29.5-30.5B; -3.9% afterhours
- SANM: Reports Q3 $0.63 v $0.63e, R$1.67B v $1.65Be; -9.9% afterhours
- NDLS: Reports prelim Q2 R$121M v $125Me; Chair/CEO steps down for personal reasons, effective immediately; -11.4% afterhours
Notable movers by sector:
- Consumer discretionary: Sands China LTD 1928.HK +7.2% (Q2 result); JSR Corp 4185.JP -7.8% (Q1 result)
- Financials: SmartGroup Corp SIQ.AU +13.7% (placement priced)
- Industrials: Geely Automobile Holdings 175.HK +3.9% (to sell stake in JVs); Hosiden Corp 6804.JP +13.8% (Mitsubishi UFJ Financial Group Raised to Overweight); Mitsui Home Co. 1868.JP -4.4% (delays Q1 result)
- Technology: Hynix Semiconductor 000660.KR -2.6% (Q2 result); Shin-Etsu Polymer Co 7970.JP +4.9% (Q1 result)
- Materials: Northern Star Resources NST.AU -1.1% (FY16 result); Alacer Gold Corp AQG.AU -1.5% (Q2 result); Perseus Mining PRU.AU -1.4% (Q4 result)