Asia Mid-session Market Update: Dollar fluctuates against regional currencies; equities remain mixed as HK/Shenzhen link fails to wow the markets
***Economic Data***
- (NZ) NEW ZEALAND Q2 PPI INPUT Q/Q: +0.9% V -1.0% PRIOR; PPI OUTPUT Q/Q: +0.2% V -0.2% PRIOR
- (NZ) NEW ZEALAND Q2 UNEMPLOYMENT RATE: 5.1% V 5.3%E; EMPLOYMENT CHANGE Q/Q: 2.4% V 0.6%E; Y/Y: 4.5% V 2.3%E
- (AU) AUSTRALIA JUL WESTPAC LEADING INDEX: 0.05% V -0.22% PRIOR
- (SG) SINGAPORE JUL ELECTRONIC EXPORTS Y/Y: -12.9% V -4.3% PRIOR; NON-OIL DOMESTIC EXPORTS M/M: -1.8% V -0.3%E; Y/Y: -10.6% V -2.5%E
- (SG) SINGAPORE JUL BALANCE OF TRADE: $6.5B V $5.2B PRIOR
- (AU) AUSTRALIA Q2 WAGE PRICE INDEX Q/Q: 0.5% V 0.5%E; Y/Y: 2.1% V 2.0%E
***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX -0.1%, Kospi -0.6%, Shanghai Composite -0.2%, Hang Seng +0.2%, Sep S&P500 +0.1% at 2,179
***Commodities/Fixed Income***
- Dec gold -0.6% at $1,349/oz, Sep crude oil -0.2% at $46.34/brl, Sep copper -0.1% at $2.16/lb; Sept Silver -0.2% at $1.839/oz
- (KR) South Korea Finance Ministry: Planning to issue KRW1.0T in 50-yr treasury bonds as soon as possible, this may reduce issuance of 30-yr bonds
- (AU) Australia MoF sells A$800M in 2.75% 2024 bonds; avg yield 1.8098%; bid-to-cover 2.34x
- (KR) Bank of Korea (BOK) Sells 2-yr monetary stabilization bonds, yield 1.25%
- (CN) PBOC to inject CNY100B in 7-day reverse repos
- (CN) PBOC SETS YUAN MID POINT AT 6.6056 V 6.6305 PRIOR (strongest fixing since June 24th)
- (CN) China MoF sells 7-yr bonds at 2.6469% v 2.63%e
***Market Focal Points/FX***
- Asian markets traded mixed for another day. Oil traded higher on the hopes the production caps would be implemented; this gave some strength to Japanese names Inpex and automakers like Toyota. USD/JPY traded slightly higher after Japan MoF Official Asakawa warned that Japan would respond to fx market if there are excessive moves. Overnight saw the pair test ¥99.55, level not seen since June during the Brexit vote. USD/KRW fell to 1% to 1,103.6 (lowest level since July 6th). Singapore Straits Times Index traded to the downside after exports were weaker than expected in July.
- China Premier Li formally approved the Hong Kong, Shenzhen connect after the close of trade in yesterday's session. He also removed certain restrictions on how much foreign investors can invest into the stock market. Daily inflows to remain capped at CNY13B/day. The less than enthusiastic response in the markets is being attributed to the year plus long wait and the speculation in the last weeks that the deal was imminent. It is being taken as a signal that China is still taking reforms to the financial sector seriously.
- In Australia, Moody's affirmed AAA sovereign rating, sending AUD/USD to 0.77032. PM Turnbull said to be seeking A$4.6B in budget savings through the "omnibus bill". China MOFCOM warned that investment enthusiasm from China may be limited, following blocked Ausgrid deal. NZD/USD tested 0.730 after second quarter unemployment data was better than expected. However the pair quickly returned to pre-announcement levels before trading to 0.7260 heading into the close of NZ equities trading.
***Equities***
US equities / ADRs:
- URBN: Reports Q2 $0.66 v $0.56e, R$890.6M v $889Me; +11.9% afterhours
-CREE; Reports Q4 $0.19 v $0.20e, R$388.4M v $381Me; -7.8% afterhours
- CSCO: Said to consider cutting at least 9-14K jobs (12.5-19.5% of total employees) - financial press; +0.2% afterhours
- OSIS: Reports Q4 $0.55 v $0.49e, R$221.5M v $233Me; +4.7% afterhours
- INCR: Announces 4.5M share secondary offering (8% of shares outstanding) and repurchase of 1.5M shares (3% of shares outstanding); -4.3% afterhours
- MEET: Reiterates Q3 and FY16 Rev and adjusted EBITDA guidance, +4.4% afterhours
- LL: Announces a final resolution in Proposition 65 lawsuit; +6.9% afterhours
Notable movers by sector:
- Consumer discretionary: Intime Department Store Group1833.HK -1.6% (H1 result); Stockland SGP.AU -2.1% (FY16 result); Hankook Tire Co161390.KR +6.2% (Q2 result); LG Corp 003550.KR +1.6% (Q2 result); Toray Industries 3402.JP -0.1% (in supply agreement with SpaceX)
- Financials: Bank of Jinzhou 416.HK +4.1% (H1 result); Dexus Property Group DXS.AU +0.2% (FY16 result); QBE Insurance Group QBE.AU -7.7% (H1 result)
- Industrials: Sumitomo Heavy Industries 6302.JP +8.2% (Nomura raises to Buy); JFE Holdings 5411.JP +4.6% (Jefferies raises to Hold); Fletcher Building FBU.NZ +4.6% (FY16 results)
- Materials: China Minmetals Resources 1208.HK -2.9% (H1 result); Evolution Mining EVN.AU -5.1% (FY16 result); Kumho Petrochemical Co 011780.KR +13.6% (Q2 result)
- Energy: GCL-Poly Energy Holdings 3800.HK +6.3% (H1 guidance); China Resources Gas Group 1193.HK +9.9% (H1 result)
- Healthcare: CSL Limited CSL.AU -4.8% (FY16 result); Sonic Healthcare SHL.AU +6.3% (FY16 result)
- Telecom: Citic Telecom International Holdings 1883.HK -3.3% (H1 result)