Asia Summary
Equities markets remained mixed in the session. USD/JPY fell 0.4% and EUR/USD rose to the highest level since May of 2016 above $1.1480, as markets shift focus to US Fed Yellen’s testimony later today and the expected move from Bank of Canada on interest rates. Yellen is not expected to give any fresh insight, but markets remain wary after Brainard’s comments saying Fed should move cautiously on further rate increases to help boost inflation back to 2% target. Crude rose higher after API data has a larger than expected drawdown.The Bank of Japan (BOJ) raised purchases of 3-5 yr bonds to ¥330B from ¥300B and left others unchanged. JGB 10-yr rate held around 0.09%.
Chinese and Hong Kong banks rose again for the second day after the PBOC injected funds through OMO for the second day after an extended stretch of no action. Offshore yuan rose 0.2% to 6.7880. Financial press explored that the USD/CNY has settled lower than its daily fix in the last 25 of 29 trading days and the PBOC suspected intervention to prop up the yuan, and its inclusion of a "counter-cyclical" adjustment factor to the daily fix, hasn’t appeared to shift expectations with the currency’s weaker settlement continuing into July. In other Chinese press the Hong Kong China bond connect is being called a success.
Key economic data
(JP) JAPAN JUN PPI M/M: 0.0% V 0.0%E; Y/Y: 2.1% V 2.0%E
(AU) AUSTRALIA JUL WESTPAC CONSUMER CONFIDENCE INDEX: 96.6 V 96.2 PRIOR, M/M: +0.4% V -1.8% V -1.1% PRIOR (1st increase in 3 months, 8th consecutive month below 100)
(KR) South Korea Jun Unemployment Rate: 3.8% v 3.7%e
Speakers and Press
China
(CN) China’s National Audit Office found improprieties in the 2015 financial statements of 18 out of 20 state enterprises investigated amid the government’s anti-graft campaign – Nikkei
Japan
(JP) Bank of Japan (BOJ) raises purchases of 3-5 yr bonds to ¥330B from ¥300B; leaves others unchanged
Australia/New Zealand
(AU) ANZ analysts comment that Australia Q2 CPI will likely show that rates will remain on hold
Korea
(KR) South Korea presidential official: South Korea’s new govt will seek both growth and fairer wealth distribution under the main theme of "good growth"
US
(US) Fed’s Mester (hawkish, non-voter): Reversing QE sooner rather than later is preferable
(US) Donald Trump Jr: Did not tell President Trump about his meeting with Russian lawyer last year – Fox interview
Asian Equity Indices/Futures (00:30ET)
Nikkei -0.6%, Hang Seng +0.9%, Shanghai Composite -0.2%, ASX200 0.8%, Kospi -0.1%
Equity Futures: S&P500 -0.1%; Nasdaq flat, Dax -0.1%, FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1487-1.1462; JPY 113.96-113.31; AUD 0.7664-0.7635; NZD 0.7240-0.7216
Aug Gold +0.4% at 1,219/oz; Aug Crude Oil +1.6% at $44.76/brl; Sept Copper +0.3% at $2.68/lb
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT 6.7868 V 6.7983 PRIOR
(CN) PBoC injects combined CNY70B v CNY40B prior in 7-day and 14-day reverse repos
(CN) China MoF sells 2-yr bonds at 3.4552% and 5-yr bonds at 3.47%
Asia equities notable movers
Australia
Royal Wolf Holdings , RWH.AU Affirms received offer from GFC for A$1.83/shr (40.8% premium) in cash less the amount of the special dividend of A$0.0265; +38.5%
Adairs Ltd,ADH.AU Guides FY17 results at the upper end of range EPS A$0.11-0.13; EBIT A$30.5-31.0M (prior A$27-32M); Rev A$264.9M (prior A$255-265M); +34.7%
Hong Kong/China
Singamas Container Holdings, 716.HK Announces continued pledge of shares by controlling shareholder; -4%
China Vanke,000002.CN Denies press report that it signed contract with Xiongan area; +5.4%
Korea
Kolon Life Science, 102940.KR Receives approval to sell INVOSSA in South Korea; -10.8%
US Session Highlights
Investors tried to assess two speeches from Fed officials and the impact of evidence that Donald Trump Jr. made contact with purported Russian govt officials who sought to influence the 2016 campaign.
(UK) BoE Deputy Governor Ben Broadbent in a speech today made no mention about his views on interest rates, giving way to the interpretation he sees no need to make any changes anytime soon. The Pound dropped against all major currencies, reaching an 8-month low against the Euro at 0.8933, and against the US dollar the Pound lost nearly 100 pips from its day high, trading as low as 1.2829 at one point.
HCSG Reports Q2 $0.30 v $0.29e, Rev $470.9M v $423Me; +7.0% afterhours
US markets on close: Dow flat, S&P500 -0.1%, Nasdaq +0.3%, Russell +0.3%
Best Sector in S&P500: Energy
Worst Sector in S&P500: Financial
Biggest gainers: MU +2.9%; MNK +2.8%; WDC +2.8%
Biggest losers: KORS -7.4%; CMG -2.8%; TROW -2.5%
At the close: VIX 10.89 (-0.22pts); Treasuries: 2-yr 1.38% (0.9%), 10-yr 2.36% (-0.4%), 30-yr 2.92% (0.0%)
