Asia Summary
Asian equity markets opened moderately weaker, as markets and currencies shore up ahead of Fed meeting. Internationally US President Trump’s comments to UN vowing to destroy North Korea if necessary; large earthquake in Mexico and hurricane Maria made landfall in Puerto Rico (Jose decelerates to a tropical storm) dominated the headlines. Currencies overall were muted with the USD weaker. Markets strongly anticipate that the Fed will get more specific about balance sheet unwinding. PBOC OMO had a significantly smaller injection after two consecutive large injections. The onshore yuan climbed the most in nearly two weeks as the USD gave up an early advance and the euro extended a rally to the fifth day in a row. Onshore yuan rose 0.25%, the most since Sept. 7th , halting a 2- day decline.
Japan August trade balance had some notable components; exports to the US +21.8% y/y was the fastest rate since Dec 2014. Headline exports had their fastest rise since Nov 2013 and the 9th consecutive rise. Japan MoF said exports were supported by semiconductors and autos. Australia and New Zealand banks were under pressure after RBNZ announced new regulations in order to ensure that a bank can continue to operate in a situation where a key service provider fails.
Key economic data
(NZ) NEW ZEALAND Q2 CURRENT ACCOUNT BALANCE (NZ$): -0.62B V -0.9BE
(JP) JAPAN AUG TRADE BALANCE: ¥113.6B V ¥108.7BE; ADJ ¥367.3B V ¥404.5BE
(AU) AUSTRALIA AUG SKILLED VACANCIES M/M: 0.3% V 0.7% PRIOR
Speakers and Press
China/Hong Kong
USD/CNY (CN) China Securities Journal: Yuan’s one way depreciation trend has ended
(CN) PBoC supports a move by some banks to increase lending rates on mortgage loans in the Beijing market – CCTV
(CN) China corn farmers expected to hoard their crops, waiting for prices to rise – Chinese press
(CN) China considering a plan to allow foreign electric-car business in free-trade zones – press
(CN) According to John McAfee: China has banned bitcoin exchange heads from travelling overseas – speaking in HK
Korea
(KR) US President Trump: If US is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea – UN speech
(KR) South Korea President Moon: Trump’s comments to "totally destroy North Korea" were in line with previous remarks for pressure and sanctions
Japan
(JP) Japan PM Abe said to delay FY20 primary balance target – Nikkei
(JP) Japan Chief Cabinet Sec Suga: Trump speech was important due to its mention of abduction; nothing decided on primary balance surplus target year
Australia
(AU) RBA Assistant Gov Ellis: Household debt an exacerbating factor is shock occurred
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.0%, Hang Seng +0.2%; Shanghai Composite +0.2%, ASX200 -0.1%, Kospi -0.0%
Equity Futures: S&P500 -0.0%; Nasdaq100 -0.0%, Dax +0.0%, FTSE100 +0.0%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.2019-1.1987; JPY 111.65-111.45; AUD 0.8022-0.7999;NZD 0.7342-0.7311
Dec Gold +0.4% at $1,315/oz; Nov Crude Oil +0.7% at $50.25/brl; Dec Copper +0.1% at $2.98/lb
GLD SPDR Gold Trust ETF daily holdings +2.07 tonnes at 846.0 metric tonnes
(AU) Australia sells A$600M in 2% 2021 bonds; avg yield 2.3225%; bid-to-cover 7.48x (went to 1 bidder)
(CN) PBoC OMO: injects CNY30B in 7 and 28-day reverse repos v injected combined CNY150B in 7 and 28 day reverse repos prior
USD/CNY (CN) China PBOC sets yuan reference rate at 6.5670 v 6.5530 prior (weakest setting since Sept 12th)
(KR) Bank of Korea (BOK) Sells KRW2.1T v KRW2.1T indicated in 2-yr bonds; avg yield 1.73% v 1.69% prior
Equities notable movers
Australia/New Zealand
SVW.AU Acquires remaining 53.3% stake in Cotes Hire for A$517M; +7.5%
WLD.AU Reports 1st shipment of beef cattle to China; +10.3% (reported yesterday)
STO.AU Australia ACCC: moves to boost local gas supply not enough to help market; -1%
Japan
6502.JP Said to have chosen to sell chip unit to Innovation INCJ group (Japan/South Korea alliance); +2%
Korea
023530.KR , Lotte Shopping, (KR) South Korea govt considering law that would raise required closed days of hypermarkets to four per month from two; -3%
Hong Kong/China
175.HK Expects to reach sales target of 2.0M units by 2019 – HK press; +3.5%
1211.HK BYD, China considering a plan to allow foreign electric-car business in free-trade zones – press; +10%
