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BOJ Adjusts To Allow More Flexible Policy

General Trend:

  • Asian equity markets trade mixed as traders digest the BoJ decision
  • Samsung Electronics expects H2 results to be driven by memory and flexible OLEDs
  • BoJ announced forward guidance, left yield curve control target unchanged; to raise purchases of ETFS which track the TOPIX (as speculated)
  • Japan JGB yields move lower in the aftermath of the BoJ rate decision: 40-year yield down over 8bps, near 0.88%
  • Japan jobless rate rises for the first time since Feb, job-to-applicant ratio hits highest level since 1974
  • Japan prelim June industrial production misses ests
  • China July official PMIs decline amid ‘trade war’
  • China central bank skipped open market operation for the 8th straight session
  • PBOC fixed the yuan slightly weaker
  • New Zealand July ANZ business confidence hits the lowest level since 2008
  • Rio Tinto expected to report H1 results on Wed
  • Apple is due to report Q3 results on Tuesday after the US close
  • Japanese companies which may report earnings include Honda, Sony, Nintendo, Panasonic, Renesas, Resona, Yamato Holdings, ANA Holdings, Japan Airlines, Kyocera, Takeda, JFE Holdings and Start Today

Headlines/Economic Data

Japan

  • Nikkei 225 opened -0.3%
  • (JP) BOJ TWEAKS POLICY TO ENHANCE FLEXIBILITY; adjusts ETF allocation (as speculated); Cuts amount to which negative rate applies, starts forward guidance
  • (JP) JAPAN JUN JOBLESS RATE: 2.4% V 2.3%E; Job-To-Applicant Ratio: 1.62 v 1.60e (highest level since January 1974)
  • (JP) JAPAN JUN PRELIM INDUSTRIAL PRODUCTION M/M: -2.1% V -0.3%E; Y/Y: -1.2% V 0.6%E
  • (JP) Japan 10-year JGB yield trades above 0.105% before BOJ
  • (JP) JAPAN JUN ANNUALIZED HOUSING STARTS: 915K V 960KE; Y/Y: -7.1% V -2.5%

Korea

  • Kospi opened -0.1%
  • (KR) Analysts note that downturn in South Korea economic indicators point to GDP being weaker in H2, which may make it hard to meet 2018 target of 2.9% – Korean press
  • (KR) South Korea Aug Business Survey: Manufacturing: 74 v 81 prior (17-month low); Non-manufacturing: 76 v 81 prior
  • (KR) South Korea Jun Industrial Production m/m: -0.6% v -0.9%e; y/y: -0.4% v 0.7%e
  • (KR) North Korea said to have built new missiles after summit with Trump – press
  • (KR) South Korea Jun Construction Output y/y: -7.7% v 0.0% prior
  • Samsung Electronics, 005930.KR Reports final Q2 (KRW) Net 11.0T v 11.1Te, Op 14.9T v 14.8T prelim, Rev 58.5T v 58.0T prelim
  • 005930.KR Exec: Chip unit still focused on mid and long term profitability; FY19 will see memory chi[ market to remain stable, with strong server demand – conf call comments

China/Hong Kong

  • Hang Seng opened -0.2%, Shanghai Composite -0.1%
  • (CN) Yuan may fluctuate at low level in short term – China Securities Journal
  • (CN) CHINA JUL OFFICIAL GOVT MANUFACTURING PMI: 51.2 V 51.3E; NON-MANUFACTURING PMI: 54.0 V 54.9E (weakest reading since Aug 2017); COMPOSITE PMI 53.6 V 54.4 PRIOR
  • (CN) China PBoC Open Market Operation (OMO): Skips OMO for the 8th consecutive session; Net drains CNY30B v drains CNY130B prior
  • (CN) China PBoC sets yuan reference rate at 6.8165 v 6.8131 prior
  • (BR) Brazil Pres Temer: talked with China Pres Xi about barriers to sugar and poultry trade
  • (CN) China to raise penalties on illegal online finance – Chinese Press
  • (CN) China authorities are said to be slowing down rollout of China Depository Receipts (CDR) plan as companies are being slow to apply – financial press
  • (CN) Moody’s: Trade restrictions will contribute to slowdown in China growth, cutting real GDP growth by around 0.3-0.5 pct points in 2019; US/China trade dispute likely to escalate further in 2018 and impact global growth

Australia/New Zealand

  • ASX 200 opened +0.1%
  • FCG.NZ Reports Jul collections: New Zealand 13.3M v 11.8M y/y; Australia 9.9M v 8.7M y/y
  • (AU) AUSTRALIA JUN BUILDING APPROVALS M/M: 6.4% V 1.0%E; Y/Y: +1.6% V -6.0%E
  • (AU) Australia Foreign Min Bishop: Australia, Japan and US form partnership for infrastructure investment
  • (NZ) New Zealand Jun Building Permits m/m: -7.6% v +7.1% prior
  • (NZ) New Zealand Jul ANZ Activity Outlook: 3.8 v 9.4 prior; Business Confidence: -44.9 v -39.0 prior
  • (AU) Australia Jun HIA New Homes Sales m/m: +2.2% v -4.4% prior

Other Asia

  • (PH) Philippines Economic Chief Pernia: Risks to GDP include interest rates and disruptive capital flows

North America

  • US equity markets ended lower: Dow -0.6%, S&P500 -0.6%, Nasdaq -1.4%, Russell 2000 -0.6%
  • S&P500 Technology -1.6%
  • TSLA Panasonic confirms to raise production capacity at gigafactory – Japanese Press
  • LOGI Reports Q1 $0.34 v $0.24 y/y, Rev $608M v $530M y/y; To acquire California based Blue Microphones for ~$117M in cash
  • (US) Trump Attorney Giuliani: Trump interview with Special Investigator Mueller is ‘highly unlikely’, been driven further from taking questions from Mueller
  • (CA) Canada said to be rejected by US from the NAFA talks – National Post; C$ falls 0.25% against USD

Europe

  • (UK) Jul GfK Consumer Confidence: -10 v -9e
  • (IE) Ireland Central Bank: Trims 2018 GDP growth forecast from 4.8% to 4.7%; affirms 2019 GDP growth forecast at 4.2%
  • IGY.DE E.ON said to consider merger with the company – German Press

Levels as of 01:30ET

  • Hang Seng -0.6%; Shanghai Composite -0.2%; Kospi -0.1%; Nikkei225 -0.0%; ASX 200 +0.1%
  • Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.0%
  • EUR 1.1700-1.1719; JPY 110.77-111.43; AUD 0.7404-0.7434;NZD 0.6813-0.6833
  • Aug Gold -0.1% at $1,220/oz; Sept Crude Oil -0.5% at $69.81/brl; Sept Copper +0.4% at $2.80/lb
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