Asian Mid-session Market Update: Fed threads the needle of acknowledging improved employment and tempering market outlook for higher rates; BOJ decision in focus
***Economic Data***
- (AU) AUSTRALIA Q2 IMPORT PRICE INDEX Q/Q: -1.0% V +1.5%E; EXPORT PRICE INDEX Q/Q: 1.4% V 3.0%E
- (KR) SOUTH KOREA JUN DEPARTMENT STORE SALES Y/Y: +11.8% V -2.7% PRIOR; DISCOUNT STORE SALES Y/Y: +0.9% V -6.3% PRIOR
- (SG) SINGAPORE Q2 PRELIMINARY UNEMPLOYMENT RATE: 2.1% V 2.0%E
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 -0.7%, S&P/ASX +0.4%, Kospi -0.4%, Shanghai Composite -0.6%, Hang Seng -0.5%, Sep S&P500 +0.2% at 2,164
***Commodities/Fixed Income***
- Dec gold +0.8% at $1,345/oz, Sep crude oil +0.4% at $42.09/brl, Sep copper +0.9% at $2.20/lb
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6597 V 6.6671 PRIOR; 3rd straight firmer Yuan fix; strongest Yuan fix since July 5th
- (CN) PBOC to inject CNY80B in 7-day reverse repos
- (JP) Japan investors bought net ¥679B in foreign bonds v bought ¥1.71T in prior week; Foreign investors sold net ¥271.5B in Japan stocks v bought ¥443.7B in Japan stocks in prior week
- JGB: Japan's MoF sells ¥2.15T in 0.1% (0.1% prior) 2-yr JGBs; avg yield -0.361% v -0.295% prior; bid-to-cover 3.95x v 4.96x prior
***Market Focal Points/FX***
- Asian equity markets are mixed, tracking a similarly divided session on Wall St confounded by the balanced FOMC policy statement. On the one hand, the Fed acknowledged the strengthening labor market and deemed the near-term risks to the economic outlook as diminished, but on the other, it maintained that inflation measures remain low and expectations for pickup are little changed. Fed funds futures actually tilted in favor of lower rates, and even December contract moved by 5pts and is now below 50% probability of a 25bp hike. USD was also on the defensive, falling about 40pips below 104.70 vs JPY. AUD/USD and NZD/USD rallied by about 60pips respectively to $0.7520 and $0.7120.
- The focus now falls on the BOJ and its high-profile plicy decision in tomorrow's session. Expectations are high that Gov Kuroda will deliver with more easing, either with expanded asset purchases, deeper cut in interest rates, or both. However, given the recent BOJ penchant for disappointment, the degree of uncertainty is high. Today, former BOJ chief economist Hayakawa endorsed more easing and a more flexible CPI target. Concurrently, investors are trying to parse the latest announcement by PM Abe of a ¥28T fiscal stimulus that was suspiciously short on detail. A report today indicated that ¥7T of the package would be devoted to new spending, which is only about half of yesterday's floated forecast.
- In China, PBOC has continued to fix the Yuan midpoint firmer for the 3rd day. China's bloated credit was also in the spotlight, as CBRC called for banks to maintain sufficient liquidity against rising NPLs and Fitch warned again that the leverage growth has contributed to financial imbalances.
- Samsung Electronics also delivered a final Q2 results that was fairly in line with expectations. Company mapped out CAPEX for FY16 to be higher y/y and forecast Q3 shipments of smartphones to rise.
***Equities***
US equities / ADRs:
- GRPN: Reports Q2 -$0.01 v -$0.03e, R$756M v $712Me; +23.8% afterhours
- FB: Reports Q2 $0.97 (adj) v $0.81e, R$6.44B v $6.01Be; +4.5% afterhours
- CAKE: Reports Q2 $0.78 v $0.71e, R$558.9M v $563Me; Raises dividend 20% to $0.24 (implied yield 1.9%; Increases share repurchase by 7.5M shares (16.1% of outstanding); +1.5% afterhours
- LRCX: Reports Q4 $1.80 adj v $1.64e, R$1.55B v $1.53Be; +1.1% afterhours
- XL: Reports Q2 $0.37 v $0.23e, R$2.53B v $2.54Be; +0.9% afterhours
- ABX: Reports Q2 $0.14 v $0.14e, R$2.01B v $2.04Be; -0.7% afterhours
- NE: Reports Q2 $0.01 adj v $0.07e, R$895M v $515Me; -0.7% afterhours
- AMGN: Reports Q2 $2.84 v $2.74e, R$5.69B v $5.60Be; -0.8% afterhours
- ORLY: Reports Q2 $2.65 v $2.67e, R$2.18B v $2.20Be; -1.1% afterhours
- MAR: Reports Q2 $1.03 v $0.98e, R$3.90B v $3.86Be; -1.5% afterhours
- CA: Reports Q1 $0.64 v $0.61e, R$999M v $982Me; CFO retires; -1.6% afterhours
- MCK: Reports Q1 $3.53 v $3.35e, R$49.7B v $50.2Be; -4.0% afterhours
- WFM: Reports Q3 $0.37 v $0.37e, R$3.70B v $3.69Be; Guides Q4 $0.23-0.24 v $0.37e; -5.2% afterhours
Notable movers by sector:
- Consumer discretionary: Belle International Holdings 1880.HK +6.9% (Q2 SSS improved); Alps Electric Co 6770.JP +9.7% (Q1 result); Stanley Electric Co 6923.JP +8.3% (Q1 result)
- Financials: Macquarie Group MQG.AU +1.4% (Q1 update); Sumitomo Mitsui Financial Group 8316.JP -3.0% (Q1 result); Japan Airlines Corp.9201.JP -4.6% (Q1 result speculation)
- Industrials: Hyundai Engineering and Construction 000720.KR +3.6% (Q2 result); Hyundai Heavy 009540.KR +8.3% (Q2 result); GUD Holdings GUD.AU -3.5% (FY16 result); Virgin Australia VAH.AU +2.3% (Q4 result); Nissan Motor Co 7201.JP -0.5% (Q1 result)
- Technology: Advantest Corp 6857.JP +11.3% (raises guidance); Hitachi High-Technologies Corp 8036.JP +10.3% (Q1 result); Samsung Electronics 005930.KR -1.3% (Q2 final result)
- Materials: CITIC Dameng Holdings 1091.HK +8.9% (H1 result); RUSAL PLC 486.HK -0.7% (Q2 result); Beadell Resources BDR.AU +4.6% (Q2 result); Sandfire Resources SFR.AU +1.1% (Q4 result); Northern Star Resources NST.AU +7.5%, Evolution Mining EVN.AU +4.1% (gold rises)
- Energy: Syrah Resources SYR.AU -3.8%, Origin Energy ORG.AU -3.1% (oil declines); Beach Energy BPT.AU -3.3% (Q4 result)