Yen Rises After Monday’s Declines

General Trend:

• FT: Asian stocks rise as China/US trade fears ease
• On Monday, US President Trump said China called US trade negotiators and wants to come back to the negotiating table, not aware of Chinese officials disputing trade calls; Treasury Sec Mnuchin has had ‘many’ calls over last 48 hours with China
• China Foreign Ministry official said he was not aware of weekend phone calls between US and China
• Shanghai Composite outperforms; IT and Telecom services firms gain amid reports of ‘trade hopes’, ZTE rises ahead of possible earnings
• Consumer Discretionary index in Shanghai supported by automakers
• Hang Seng underperforms as protest concerns linger; HK Leader Lam noted the ‘escalation’ of violence during the weekend protests
• Smartphone maker Xiaomi declines after recent stock sale by President
• Trade-sensitive Marine/Transportation index rises in Japan
• Offshore yuan (CNH) rises on stronger than expected CNY fix, later pares gain
• AUD/JPY declines after Monday’s gains; Australian writer Yang Hengjun charged with espionage by China (Aussie press)
• RBA Deputy Gov Debelle: Floor for interest rates in Australia likely around 0-0.5% [current RBA cash rate is 1.00%], Aussie may decline further
• There is speculation India could seek to reduce gov’t borrowing after surplus transfer from RBI; Indian bond yields decline over 5bps

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU) Reserve Bank of Australia (RBA) Asst Gov Debelle: Threats to global trade are a risk not only to Australia but also the world; A$ playing an important role as shock absorber – “A Balance of Payments”
• WES.AU Reports FY18 (A$) Net 5.5B v 1.2B y/y; EBIT 2.9B v 2.3B y/y, Rev 27.9B v 26.8B y/y
• CTX.AU Reports H1 (A$) RCOP Net 135M v 296M y/y; Rev 10.3B v 10.2B y/y; Targeting to cut costs by A$100M/year, to sell 50 retail sites; cuts FY capex guidance
• (AU) Australia working to court India as a consistent buyer of Aussie coal, as tensions from China and other nations decreasing their coal buying weigh on the industry – press
• (AU) Australian writer Yang Hengjun charged with espionage by China – Aussie press

Japan

• Nikkei 225 opened +1.0%
• (JP) Japan Fin Min Aso: Will not comment on current FX level; currency stability is important and closely watching market moves with a sense of urgency; no change to sales tax hike plans
• (JP) Japan’s top 3 banks will form collaboration agreements this week with several African financial services providers which will open up Africa to greater Japanese investment – Nikkei
• (JP) Japan PM Abe to reshuffle cabinet and LDP executives in September – Japan Press
• (JP) Japan July PPI Services Y/Y: 0.5% v 0.6%e
• 7238.JP Appoints Nidec’s Yasuhiro Miyaji CEO (after the close yesterday)
• (JP) Japan Econ Min Motegi: Want to deal with auto tariff issue in trade deal with US; not true that US overpowered Japan in recent talks

Korea

• Kospi opened +0.7%
• (KR) South Korea Aug Consumer Confidence: 92.5 v 95.9 prior (2-year low)
• (KR) South Korea Financial Services Commission (FSC) chairman: Govt will expand financial support for companies impacted by Japan’s export restrictions if needed (removal from Japan’s
• white list to take effect this week) – Yonhap
• (KR) South Korea sells 30-year Govt bonds; avg yield 1.26% v 1.375% prior

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened +0.6%
• (CN) CHINA JULY INDUSTRIAL PROFITS Y/Y: +2.6% V -3.1% PRIOR; YTD Y/Y: -1.7% V -2.4% PRIOR
• (CN) China PBoC Open Market Operation (OMO): Injects CNY80B in 7-day reverse repos v skips prior; Net inject CNY30B v skips prior
• (CN) CHINA PBOC SETS YUAN REFERENCE RATE: 7.0810 V 7.0570 PRIOR (weakest level since March 18, 2008)
• (CN) China People’s Daily Op Ed: US should not misjudge China’s will to retaliate, firmly opposes ant provocation
• (CN) China Foreign Ministry spokesperson Geng Shuang: not aware of US-China weekend phone calls, clearly haven’t heard of such a thing (overnight)\
• (HK) Hong Kong Chief Exec Lam: Still working on a platform for dialogue with protesters; confident can handle situation alone, but if violence continues only thing to do is stamp it out with law enforcement

Other Asia

• (IN) Reserve Bank of India (RBI) approved INR1.76T funding to Govt – financial press
• (PH) Philippines Central Bank Chief Diokono: Optimistic about growth prospects, expects 2019 GDP growth to hit lower end of 6-7% target; global policy easing might be both longer and deeper

North America

• JNJ OKLAHOMA JUDGE RULES J&J LIABLE IN OPIOID LAWSUIT FOR $572M (LOWER THAN EXPECTED IN $17B LAWSUIT); Confirms plans to appeal Oklahoma opioid lawsuit decision
• (US) President Trump: believes China is sincere, want a deal badly; Treasury Sec Mnuchin has had many calls over last 48 hours with China; Very close to making trade deal with the EU; believes will be able to make deal without going down tariff auto route – press interview at G7
• BA Russia aircraft leasing company, Avia, files lawsuit to cancel order for 35 of its grounded 737 Max planes – FT

Europe

• G7 summit statement: G7 is committed to open and just global trade; Seeks WTO reform to guard intellectual property
• (IT) Italy coalition talks remain stuck around 2020 budget – Italian press
• (UK) PM Europe Adviser Frost to visit Brussels on Weds to discuss alternatives to Brexit plan – UK press

Levels as of 1:20 ET

• Nikkei 225, +1%, ASX 200 +0.5%, Hang Seng -0.2%; Shanghai Composite +1.5%; Kospi +0.3%
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax flat; FTSE100 -0.4%
• EUR 1.1108-1.1098 ; JPY 106/17-105.66 ; AUD 0.6780-0.6754 ;NZD 0.6400-0.6369
• Gold +0.1% at $1,538/oz; Crude Oil +0.6% at 53.96$/brl; Copper +0.1% at $2.546/lb