Asia Summary
Markets in the region opened mixed before strengthening on the back of strong China data . Broad dollar weakness as the overall theme with Anthony Scaramucci was removed as White House communications director just 10 days after being appointed by Trump, just adding fuel to the fire. Geopolitical risk remains a concern for global growth with no continent being immune from the risk. According to Oliver Wyman banks may need $30-50B in additional capital to support new European units after hard Brexit. RBA left cash target rate unchanged, as expected noting that the recent Aussie strength is more dollar weakness.
Regional PMI Manufacturing PMIs were generally weaker with only Malaysia and Taiwan rising m/m. China Caixin PMI manufacturing rose to its highest reading since March and had its second consecutive month of expansion. South Korea had a large trade surplus at $10.6B, exports rose to US, EU and China. China’s OMO were lower from the prior day, while the PBOC set the yuan mid-point rate at its strongest setting since Oct of last year.
Key economic data
(CN) CHINA JUL CAIXIN PMI MANUFACTURING: 51.1 V 50.4E (highest reading since March, 2nd consecutive month of expansion)
(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 1.50%; AS EXPECTED
(KR) SOUTH KOREA JULY CPI M/M: 0.2% V 0.1%E; Y/Y: 2.2% V 2.1%E; CPI CORE Y/Y: 1.8% V 1.6%E
(AU) AUSTRALIA JUL AIG PERFORMANCE OF MANUFACTURING INDEX: 56.0 V 55.0 PRIOR
(KR) SOUTH KOREA JULY TRADE BALANCE: $10.6B V $8.7BE
(JP) JAPAN JUL FINAL PMI MANUFACTURING: 52.1 V 52.2 PRELIM
(KR) SOUTH KOREA JUL PMI MANUFACTURING: 49.1 V 50.1 PRIOR
Speakers and Press
China
(CN) PBOC Assistant Gov: PBOC will ensure smooth, orderly deleveraging – Chinese press
(CN) PBOC has discovered operational violations among 40 Chinese banks and issued business correction orders with a compliance period of up to six months
Korea
(KR) US military detected highly unusual and unprecedented levels of North Korean submarine activity and evidence of an ejection test in the days following recent ICBM launch
Japan
(JP) Japan PM Abe said to be considering former ministers Motegi (trade) and Onodera (defense) for key positions during reshuffle – Japan press
(JP) Japan Chief Cabinet Sec Suga: Confirms Abe to reshuffle cabinet on Aug 3rd
(JP) Japan Fin Min Aso: Next US/Japan economic dialogue meeting is not set; will discuss tariffs on frozen beef imports in talks with US
Other
(PH) Philippine Central Bank Gov Espenilla: Economic expansion is durable and broad based; CPI forecast points to near the midpoint of the 2017-19 range
Asian Equity Indices/Futures (00:00ET)
Nikkei +0.2%, Hang Seng +0.8%, Shanghai Composite +0.4%, ASX200 +0.6%, Kospi +1.0%
Equity Futures: S&P500 +0.2%; Nasdaq +0.4%, Dax +0.2%, FTSE100 +0.3%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1837-1.1820; JPY 110.43-110.00; AUD 0.8043-0.7997; NZD 0.7525-0.7504
Aug Gold +0.2% at 1,268/oz; Sept Crude Oil +0.2% at $50.27/brl; Sept Copper +0.2% at $2.89/lb
(CN) China PBOC OMO injects CNY170B in 7-day and 14-day reverse repos v CNY240B prior in 7-day
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7148 (strongest setting since Oct 2016) V 6.7283 PRIOR
(CN) China MOF suspends 10-yr bond from trading due to abnormal fluctuations
JGB (JP) Japan MoF sells ¥1.86T v ¥2.3T indicated in 10-yr 0.1% (prior 0.1%) JGBs; Avg yield: 0.073% v 0.079% prior; bid to cover: 4.21x v 4.77x prior
(HK) Overnight Hong Kong dollar interbank rate -43bps to 0.28286%
Equities notable movers
Hong Kong/China
Eve Energy, 300014.CN Reports H1 net CNY232.5M, +161.4% y/y; +4.6%
Shanghai Electric, 2727.HK Gets regulatory approval to buy assets from group via share issue; +1.9%
Japan
Japan Airlines, 9201.JP Reports Q1 Net ¥19.6B v ¥14.7B y/y; Op ¥24.7B v ¥22.1B y/y; Rev ¥314.8B v ¥297.2B y/y; +2.2%
Australia
iSentia Group, ISD.AU Guides FY17 underying EBITDA A$41.5M v A$44Me (prior A$44M); Rev A$155M (prior A$162M); The board has decided to fully write down the value of the King Content business for A$37.08M; -18.9%
Doray Minerals, DRM.AU Announces assay results from drilling at Deflector Gold Copper Mine; +7.7%
Korea
Hyundai Heavy, 009540.KR Reports Q2 (KRW) Net 69.2B v 137.5B y/y; Op 151.7b v 142Be; Rev 4.63T v 4.6Te; +4.3%
