Asia Mid-Session Market Update: RBNZ Gov Wheeler discourages expectations of more aggressive easing; Oil falls on cautious Goldman Sachs report; Japan manufacturing PMI remains in contraction
***Economic Data***
- (JP) JAPAN AUG PRELIMINARY PMI MANUFACTURING: 49.6 V 49.3 PRIOR; indicates 6th straight month of contraction
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 121.8 v 117.6 prior; highest since Nov 2013
- NPD: July Video Games Sales -14% y/y at $480.1M
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.2%, S&P/ASX +0.9%, Kospi +0.2%, Shanghai Composite +0.2%, Hang Seng -0.3%, Sep S&P500 +0.1% at 2,182
***Commodities/Fixed Income***
- Dec gold -0.2% at $1,341/oz, Oct crude oil -1.3% at $46.80/brl, Sep copper +0.1% at $2.14/lb
- GLD: SPDR Gold Trust ETF daily holdings rise to 958.4 tonnes from 956.0
- SLV: iShares Silver Trust ETF daily holdings rise to 11,159 tonnes from 10,941 tonnes prior; multi-year high
- BNO: Goldman Sachs maintains its $45-50/brl target for Brent Crude through next summer - financial press
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6586 V 6.6652 PRIOR
- (CN) PBOC to inject CNY100B in 7-day reverse repos
- JGB: (JP) Japan's MoF sells ¥1.0T in 0.2% (0.2% prior) 20-year JGBs; Avg yield: 0.286% v 0.147% prior; bid-to-cover: 3.87x (highest in 23-months) v 3.46x prior
- (AU) Australia MoF sells A$150M in 1.25% 2022 bonds; avg yield 0.1842%; bid-to-cover 2.6x
***Market Focal Points/FX***
- Asian equity markets are modestly higher with volatility at a minimum on few macro catalysts, as investors seem reluctant to place large directional bets ahead of the Jackson Hole address by Fed chair Yellen late this week. Oil prices continued to roll over, falling for the 3rd straight session in electronic trade following a cautious note on Brent out of Goldman Sachs. In FX, NZD was most volatile, spiking up over 50pips on RBNZ Gov Wheeler comments. In other USD majors, USD/JPY traded in about a 40pip range above ¥100 and AUD/USD in a 25pip range above 0.7620.
- In notable economic data, Japan Aug prelim Manufacturing PMI rose to 49.6 from 49.3 but stayed in contraction for the 6th straight month. Output component trend switched to the positive, but Employment switched to Negative. New export orders and input prices deteriorated further, but at a slower rate. Markit economist said the data "registered a slight drop in employment for the first time since last September, and weak client demand alongside a strong yen prompted firms to cut their selling prices at the sharpest rate since October 2012 as part of efforts to attract new business." Developments are not a welcome sign for BOJ as it continues to fight deflation amid rising expectations of more easing at the September meeting. Former BOJ member Shirai however remarked that she's not sure just how much further stimulus will help, given that households already have an inflationary mindset but expet to spend less because of stagnant wages, recommending a more achievable 1% inflation objective for the short term.
- RBNZ Gov Wheeler said there is no need for a rapid easing or a policy change while also reiterated the exchange rate is too high. Wheeler said the current rate track balances risks with inflation objective, and too rapid of an easing would produce an unsustainable growth. NZD spiked up on the comments as markets interpreted Wheeler preferring a one-and-done approach on further policy easing against some expectations of at least two more rate cuts by the RBNZ into the first half of next year.
***Equities***
US equities / ADRs:
- NDSN: Reports Q3 $1.47 adj v $1.34e, R$490M v $481Me; +2.7% afterhours
- ZOES: Reports Q2 $0.06 v $0.06e, R$66.3M v $67.0Me; -15.6% afterhours
Notable movers by sector:
- Consumer discretionary: Nissin Foods 2897.JP +5.3% (JPMorgan raised to Overweight)
- Consumer staples: China Modern Dairy 1117.HK -5.5% (H1 result)
- Financials: Wuzhou International Holdings 1369.HK +1.3% (H1 result)
- Industrials: CRRC Corp 1766.HK -4.3% (H1 result); CIMC Enric Holdings 3899.HK -2.7% (H1 result); Monadelphous Group MND.AU -17.0% (FY16 result)
- Technology: Renesas Electronics Corp 6723.JP -4.9% (speculation for acquisition of Intersil)
- Materials: Anhui Conch Cement 914.HK +3.1% (H1 result)
- Energy: Oil Search OSH.AU -0.8% (H1 result); Caltex Australia CTX.AU -0.8% (H1 result)
- Healthcare: Ono Pharmaceutical Co 4528.JP +6.4% (to start selling Opdivo drug); Healthscope HSO.AU +2.8% (FY16 result)