PBOC Easing Speculation Supports Financials In China

Sep 05 19, 07:29 GMT

General Trend:

FT reports US and China have agreed to resume face-to-face trade talks
Nikkei 225 outperforms on gains in in the trade sensitive transports sector , yen weakened on the China trade news
Japanese healthcare company M3 rises over 11%, the company to be added to the Nikkei 225 index (as speculated)
Nissan said to delay Yen-denominated bond sale as corporate governance concerns widen
Shanghai rises above the 3,000 level in early trade; ZTE and Chinese telecom services firms gain on plan for US/China trade talks
Financials also rise in Shanghai on easing speculation
China listed Jinzi Ham raised all of its product prices by 10-30% amid the impact of the African swine fever on domestic pork prices.
Hang Seng lags on today’s session; The index rose over 3.5% on Wednesday as Hong Kong’s Chief Lam announced the HK government would formally withdraw the extradition bill.
Some are still waiting to see how the protesters in HK will respond to the move by Lam. Thus far, we have not seen any notable protest-related headlines on Thursday
Philippines CPI moves below the central bank’s target (2-4%) for the first time since Feb

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat
(NZ) NEW ZEALAND Q2 VOLUME OF ALL BUILDINGS Q/Q: -1.5% V +1.3%E
(AU) Australia July Trade Balance (A$): 7.3B v 7.0Be
BHP.AU CEO: Remain more cautious amid trade tensions; would consider offers for thermal coal assets – investor webcast
SIGMA.AU Reports H1 (A$) Net 2.5M v 13.4M y/y; Rev 1.88B v 1.96B y/y
(AU) ANZ Economists now see Reserve Bank of Australia (RBA) cutting cash target rate by 75bps by May 2020 (prior 25bps)

Japan

Nikkei 225 opened +0.7%
(JP) Japan Aug Beer exports to South Korea $223K, -97% y/y; amid trade tensions – Japan press
7201.JP CEO admits misconduct regarding stock-related compensation; will return portion that was received wrongfully; auditors found the mistake and do not blame Saikawa – Japan Press
7201.JP To delay issuance of 4 straight bonds worth ¥250B, first of which was scheduled for today
9064.JP To raise prices, cites expected sales tax increase in Japan in Oct
2413.JP To replace Tokyo Dome in Nikkei225, effective Oct 1
(JP) Japan Investors Net Buying of Foreign Bonds: +¥1.5T v -¥910.3B prior week; Foreign Net Buying of Japan Stocks: -¥89.5B v +¥3.9B prior week
JGB (JP) Japan MoF sells ¥680B v ¥700B indicated in 0.4% (prior 0.50%) coupon 30-year JGBs, avg yield: 0.1400% v 0.2920% prior, bid to cover 3.45x v 3.5x prior

Korea

Kospi opened +0.3%
(KR) South Korea considering dropping developing nation status at the WTO amid pressure from the US- Korea Press
005930.KR Samsung reportedly has begun using domestically produced hydrogen fluoride in chip production on a trial basis – Nikkei

China/Hong Kong

Hang Seng opened flat; Shanghai Composite opened +0.5%
(CN) CHINA COMMERCE MINISTRY: WILL HOLD TRADE TALKS WITH US IN EARLY OCT. IN WASHINGTON, DC; Mid-Sept talks to prepare for substantive talks in Oct
(HK) HONG KONG CHIEF EXECUTIVE LAM CONFIRMS: TO FORMALLY WITHDRAW THE EXTRADITION BILL; hopes Govt measures could break the deadlock (as expected) – video release
(CN) China Cabinet: Will implement broad and targeted cuts to RRR for banks in a “timely manner”; reiterates stance to continue prudent monetary policy and would fine-tune if needed at the appropriate time – Xinhua (overnight)
(CN) There is continued speculation that PBOC may ease policy in Sept; China News reports analysts see ‘high’ probability of China RRR cut in Sept [follows recent statement from China’s Cabinet]
(CN) China PBoC Open Market Operation (OMO):Skips for 6th consecutive session; Net CNY0B drain v drain CNY60B prior
(CN) China PBOC sets Yuan Reference Rate: 7.0852 v 7.0878 prior
002515.CN Announces raises all product prices by 10-30%, effective Sept 4th due to recent increase in pork prices and raw material costs
293.HK Appoints Patrick Healy as Chairman, effective November 6
(CN) China Standing Committee to announce measures to accelerate issuance of special bonds for local governments to help maintain stable investment and expansion of domestic demand
(CN) Provincial auditors in China said to have raised concerns about the local government debt maturities that are approaching – FT

Other Asia

(PH) Philippines Aug CPI Y/Y: 1.7% v 1.8%e (1st reading below target since Feb, lowest level since July 2016)

North America

(US) White House official confirms trade talks between China Liu and Mnuchin
(US) Weekly API Oil Inventories: Crude: +0.4M v -11.1M prior
(US) Pres Trump: not worried about the risk that China dumps US debt
PANW Reports Q4 $1.47 v $1.42e, Rev $806M v $803Me; Guides initial FY20 $5.00-5.10 v $6.26, Rev $3.44-3.48B v $3.44Be

Europe

(UK) Parliament rejects PM Johnson call for early elections; 298 voted in favor, 56 voted against (needed 434 lawmakers to vote in favor for early elections to move forward)
(UK) House of Commons passes the Brexit delay law; vote 327-299; The law would extend the Brexit date to Jan 31, 2020 if no approved Brexit deal is in place by the current Oct 31 date
(UK) All legislation required to halt no-deal Brexit will be completed by Friday 17:00 – UK Press
(UK) Bank of England (BOE) Fixed Income Standards Chief Harvey resigns after investigation – FT

Levels as of 1:20 ET

Nikkei 225, +2.4%, ASX 200 +1%, Hang Seng +0.4%; Shanghai Composite +1.7%; Kospi +1.2%
Equity Futures: S&P500 +1%; Nasdaq100 +1.3%, Dax +0.9%; FTSE100 +0.6%
EUR 1.1040-1.1026 ; JPY 106.75-106.32 ; AUD 0.6825-0.6793 ;NZD 0.6378-0.6354
Gold -0.4% at $1,554/oz; Crude Oil +0.3% at $56.41/brl; Copper +0.5% at $2.608/lb