Asian Mid-session Update: BOJ maintains assessment, raises view on housing; RBA quarterly statement cuts GDP but raises CPI outlook
***Economic Data***
- (AU) AUSTRALIA JUNE HOME LOANS M/M: 4.4% V 5.2%E; 2-year high
- (AU) AUSTRALIA JULY AIG PERFORMANCE OF CONSTRUCTION INDEX: 47.1 V 46.4 PRIOR (4th month of contraction)
- (JP) JAPAN JULY OFFICIAL RESERVE ASSETS: $1.24T V $1.24T PRIOR
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -0.3%, S&P/ASX -1.6%, Kospi -0.1%, Shanghai Composite +2.0%, Hang Seng +1.0%, Sept S&P500 +0.1% at 2,081
***Commodities/Fixed Income***
- Dec gold -0.2% at $1,088/oz, Sept crude oil +0.3% at $44.80/brl, Sept copper flat at $2.34/lb
***Market Focal Points/FX***
- Asian markets are mixed, with China indices outperforming and Australia lagging. After a 10% shellacking for the prior week, Shanghai Composite is on track to finish up by nearly 2%. Investors await the release on trade and inflation data expected over the weekend, but also remain optimistic that policymakers will continue to find ways to boost liquidity. A local press report saw some banks and brokerages planning to lower stock-pledge loan amount allowed to be used as collateral. Meanwhile, in a move eerily reminiscent of the US financial meltdown, some of the Chinese brokers are attempting to securitize margin debt into ABS.
- Bank of Japan policy statement hardly generated any market reaction, with USD/JPY overall slightly bid up 15pips to 124.80 on the day. The BOJ maintained its annual pace of ¥80T monetary base expansion, reiterating economy continued to recover moderately, and also slightly raised its view on Housing investment to "picking up" from "started to pick up". On inflation, the BOJ still sees CPI around 0% but rising from a longer term perspective.
- Reserve Bank of Australia released its quarterly policy statement with updated forecasts for GDP and inflation. Most notable change on GDP outlook was a 25bp reduction for overall 2016 GDP from 2.75-3.75% to 2.5-3.5%. However, AUD/USD rose some 30pips toward $0.7380 on the release as RBA also raised its 2016 Core CPI target from 1.75-2.75% to 2-3% and also reiterated a more upbeat outlook for employment as it did earlier this week in its monetary decision. The prospects of central bank standing pat down under in the face of falling commodities has contributed to the headwinds for S&P/ASX index this week, sending it down by about 3.5%.
- Fonterra lowered its FY15/16 Milk payout forecast to NZ$3.85/Kg from NZ$5.25/Kg, citing ongoing imbalance of supply and weak demand. Volume forecast was also cut by 2% for FY15/16 to about 1.6M KgMS, while forecast CAPEX was lowered by some NZ$500-600M. Fonterra management noted they remain optimistic that prices will recover and market will improve, but added it was hard to call when and how quickly. NZD/USD initially fell 15pips on the announcement below $0.6530 before bouncing toward $0.6570.
***Equities***
US equities / ADRs:
- NVDA: Reports Q2 $0.34 v $0.11e, R$1.15B v $1.02Be; +10.6% afterhours
- NUS: Reports Q2 $0.75 v $0.72e, R$560.2M v $544Me; +10.3% afterhours
- LNG: Icahn takes new 8.2% stake; seeks talks with board and may ask for board representation - 13D filing; +6.2% afterhours
- MHK: Reports Q2 $2.69 v $2.61e, R$2.04B v $2.14Be; +6.3% afterhours
- MNST: Reports Q2 $0.79 v $0.90e, R$789.9M v $753Me: +4.2% afterhours
- LGF: Reports Q1 $0.33 v $0.10e, R$408.9Mv $431Me; -3.1% afterhours
Notable movers by sector:
- Consumer discretionary: Ricoh Co LTD 7752.JP -5.9% (Q1 result); Suntory Beverage & Food Ltd 2587.JP +0.2% (H1 result); Melco International Development 200.HK +4.1% (controlling shareholder Q2 result); Guangdong Qtong Education Co Ltd 300359.CN +9.0% (H1 result)
- Financials: ANZ Bank ANZ.AU -7.0% (capital raise); Mitsui & Co Ltd 8031.JP -0.3% (Q1 result); Sunac China Holdings 1918.HK +1.6% (July result); CITIC Securities 600030.CN +3.0% (July result); Shenzhen Investment 604.HK +5.7% (July result); Guotai Junan International Holdings 601211.CN +1.7% (July result); China Merchants Securities 600999.CN +2.0% (July result)
- Industrials: Daikin Industries 6367.JP +3.1% (Q1 result); Orica Ltd ORI.AU -17.2% (impairment); China Railway Signal & Communication Corporation 3969.HK +0.3% (IPO debut); SAIC Motor Corp 600104.CN +1.7% (July result); Great Wall Motor 2333.HK -2.4% (July result); Hunan China Sun Pharmaceutical Machinery Co Ltd 300216.CN +10.0% (H1 result)
- Technology: HTC Corp 2498.TW +2.3% (Q3 guidance); AU Optronics Corp 2409.TW +1.3% (July result); MediaTek Inc 2454.TW +3.0% (July result)
- Materials: Rio Tinto RIO.AU +0.4% (H1 result); Shenzhen Capchem Technology Co Ltd 300037.CN +7.9% (H1 result); Nationz Technologies Inc 300077.CN +3.1% (H1 result)
- Energy: Showa Shell 5002.JP +1.2% (H1 result); Kunlun Energy Co 135.HK +0.7% (H1 result)
- Telecom: Softbank Corp 9984.JP +4.5% (Q1 result); PCCW Ltd 8.HK -0.4% (H1 result)
- Utilities: Huadian Power International Corp 1071.HK +2.4% (H1 guidance); Guangzhou Zhiguang Electric Co 002169.CN +5.4% (H1 result)