General Trend:
- Asian equity markets trade mostly lower; US stocks ended down in shortened session ahead of July 4th holiday
- Chinese and Hong Kong property shares decline
- Japanese chip equipment companies trade generally lower amid declines in shares of Micron: Tokyo Electron -5.1%, Advantest -4.7%, SUMCO -4.9%
- Nikkei weighted Fast Retailing declines, reported drop in monthly SSS
- Chinese Telecom ZTE rises after being given temporary relief by US government
- Samsung expected to report prelim Q2 results on Friday July 6th, Op profit expected to decline q/q
- Aussie rises after better than expected retail sales, later pares gain
- Australian PMI Services surveys paint mixed picture in June: AIG index hits record high, CBA index declined
- China Caixin PMI Services Index unexpectedly rose amid higher input costs
- Yuan (CNY) trades higher despite being fixed weaker by PBoC
- China PBoC Advisers comment on risks related to deleveraging measures
- BoJ’s Harada warns against early rate hike
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.5%
- TOPIX Electric Appliances index -2.3%, Securities -0.8%, Marine Transportation -0.6%; Information & Communication +0.7%, Retail Trade +0.5%, Real Estate +0.5%
- (JP) Japan government said to see FY19 real GDP growth of 1.5% (vs 1-2% that was speculated) – Japanese Press
- (JP) JAPAN JUN PMI SERVICES: 51.4 V 51.0 PRIOR; COMPOSITE: 52.1 V 51.7 PRIOR
- (JP) 10 regional power companies in Japan are planning to sell approx. ¥1.7T in bonds during the current fiscal year (FY19), +17% y/y (the highest amount in 10-years) – Japanese Press
- (JP) Bank of Japan (BOJ) Harada: BOJ bold easing policy is having intended effects; need to continue current easing to reach 2% inflation
Korea
- Kospi opened -0.1%
- 005380.KR Hyundai/Kia expected to record Q2 net lower due to slowing sales in US and China – Korean press
- (KR) Bank of Korea (BoK) sells 2-year monetary stabilization bonds; yield 2.06% v 2.10% prior
- (KR) South Korea Jun Foreign Reserves: $400.3B (record high) v $398.9B prior
China/Hong Kong
- Hang Seng opened 0.0%, Shanghai Composite -0.4%
- Hang Seng Energy index -2.7%, Consumer Goods -2.3%, Property/Construction -2.2%, Industrial Goods -2.1%, Materials -2%, Info Tech -2%, Financials -0.9%
- 763.HK US Commerce Dept gives ZTE temporary authorization to resume some business activities until Aug 1st – press
- (CN) PBoC Financial Research Institute Head Sun Guofeng: Reiterates prudent, neutral monetary policy; reiterates 2018 monetary policy not overall loosening; RRR cut doesnt mean monetary policy easing
- (CN) Former PBoC Adviser said to issue warning about risks related to deleveraging – China Financial News
- (CN) China said to be pressuring the EU to issue a ‘strong’ joint statement against US President Trump’s trade policies at the upcoming Sino-European summit (July 16-17); some EU officials said to have concerns about the Chinese proposal – financial press
- (CN) China PBOC Gov Yi Gang: closely watching moves in fx market, reiterates to keep yuan basically stable and at reasonable level; reiterates ‘prudent, neutral’ monetary policy (after the close yesterday)
- (CN) China State Council financial stability and development committee: China is completely equipped with the favorable conditions to win the battle against major financial risks and counter external risks – Xinhua
- (CN) China PBoC set yuan reference rate at 6.6595 v 6.6497 prior (weakest setting since Aug 23, 2017)
- (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v skips prior; Net: CNY80B drain v CNY150B drain prior
- (CN) China PBOC has told mobile-payment providers that they need to deposit all customer funds with the central bank rather than elsewhere; proportion of funds to be placed with the central bank will rise incrementally from roughly 50% now to 100% by next year
- (CN) CHINA JUN CAIXIN PMI SERVICES: 53.9 V 52.7E; COMPOSITE: 53.0 V 52.3 PRIOR
- (CN) China plans to raise fuel standards for diesel vehicles from July 2019 – US financial press
Australia/New Zealand
- ASX 200 opened +0.1%
- ASX 200 Financials index -0.9%, Consumer Discretionary -0.7%; Telecom +1.1%
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: -5.0% v -1.2% prior
- (AU) Australia Jun AiG Performance of Service Index: 63.0 v 59.0 prior (record high)
- (AU) Australia Jun CBA PMI Services: 52.7 v 55.9 prior; Composite: 52.9 v 55.6 prior
- (AU) AFR notes uptick in Australia shadow banking in the residential developers market as big banks shy away
- (NZ) New Zealand Jun ANZ Commodity Price m/m: -1.0% v 1.5% prior (1st decline since Dec 2017)
- (AU) Australia sells A$800M v A$800M indicated in Nov 2029 bonds, avg yield 2.6094% v 2.7059% prior, bid to cover 3.50x v 3.62x prior
- (AU) AUSTRALIA MAY TRADE BALANCE (A$): 0.83B V 1.20BE; Exports m/m: +4% v -2% prior; Imports m/m: +3% v 0% prior
- (AU) AUSTRALIA MAY RETAIL SALES M/M: 0.4% V 0.3%E
Other Asia
- (MY) Officials in Malaysia have arrested former PM Najib – financial press
North America
- US equity markets ended lower in holiday shortened session: Dow -0.5%, Nasdaq -1.2%, S&P 500 -0.5%
- S&P500 Technology -1.2%, Telecom -1.2%
- Micron [MU]: Spokesperson: Micron has not yet been served with injunction in China; will not comment until receiving formal court notice
- T-Mobile [TMUS]: Officials from the US House said to call for ‘full and robust’ probe of transaction between Sprint and T-Mobile USA; cites Softbank’s ties to China’s Huawei – Japanese Press
- (US) Weekly API Oil Inventories: Crude: -4.5M v -9.2M prior
- (US) On Tuesday, the US Treasury 2 and 10 yield spread hit the flattest level since Aug 2007, the spread declined below 30bps – FT
Europe
- (DE) Bundesbank rejects monetary policy motivated by ECB investment – German press
Levels as of 01:30ET
- Hang Seng -0.9%; Shanghai Composite -0.4%; Kospi flat; Nikkei225 -0.2%; ASX 200 -0.5%
- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.1%
- EUR 1.1654-1.1679; JPY 110.27-110.63; AUD 0.7376-0.7426; NZD 0.6744-0.6779
- Aug Gold +0.4% at $1,258,/oz; Aug Crude Oil +0.6% at $74.60/brl; Sept Copper +0.3% at 2.934$/lb