Asian Equities Trade Mixed

General Trend:

• Early decliners in Shanghai included IT and financial-related firms; Consumer stocks rise after losses during prior session, Kweichow Moutai rose over 2%
• Japanese Real Estate and Iron/Steel companies are among the decliners
• Weakness in JP airlines has been attributed to report that Japan will exclude Tokyo from its travel campaign
• TOPIX Bank index drops, Brokerage index rises; Japan said to consider removing the ‘firewall’ between banking and brokerage activities
• Bluescope Steel declines in Australia following guidance
• Netflix declines by over 9% after results and guidance
• Companies expected to report results during the NY morning include BlackRock, State Street

Headlines/Economic Data

Australia/New Zealand

• ASX200 opened +0.1%
• Rio Tinto [RIO.AU]: Reports Q2 Pilbara iron ore shipments 86.7Mt v 85.4Mt y/y (87.3Mte); Affirms FY20 Pilbara shipments guidance
• (AU) Victoria State reports 428 additional coronavirus cases v 317 prior (New daily record)
• (AU) Australia sells A$1.0B v A$1.0B indicated in 1.50% June 2031 bonds, avg yield 0.9407%, bid to cover 4.5x
• (AU) Australia will sell new 2051 bond via syndication during week of Jul 27th
• (NZ) New Zealand May Manufacturing PMI: 56.3 v 39.8 prior
• (NZ) New Zealand Jun Treasury Activity Index M/M: -0.9 v -6.3 prior
• (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$230M v NZ$390M prior in government bonds as part of QE v NZ$230M sought
• (NZ) Reserve Bank of New Zealand (RBNZ): Will seek to purchase NZ$940M v NZ$940M prior in government bonds next week

China/Hong Kong

• Hang Seng opened +0.7%, Shanghai +0.1%
• Cathay Pacific [293.HK]: Issues profit warning: H1 Prelim (HK$) Net -9.9B v +1.3B y/y [previously guided a ‘substantial loss’]; June Passenger Traffic -99.1% y/y
• (CN) Shanghai Exchange Margin Balance -0.2% v 0.4% prior (first decline since early June); China stock leverage declines for first time in 14 sessions
• (CN) China says the sharp fall in A-share prices yesterday was a ‘normal market adjustment’ – Chinese press
• (CN) China State Planner (NDRC): Some domestic industries have not returned to normal, Employment pressure is ‘Huge’; Will closely watch changes in domestic and international environment and step up policy reserves
• (CN) China Banking and Insurance Regulatory Commission (CBIRC) reported to have urged banks to strengthen their emergency management, said to have told these financial firms to create or update their contingency plans – Financial Press
• (CN) China tighter rules related to banks’ online lending said to take effect – US financial press
• (US) White House Press Sec McEnany: Trump has not ruled out any options on China
• (CN) China PBoC Open Market Operation (OMO): Injects CNY200B via 7-day reverse repos v Injects CNY50B via 7-day reverse repos prior; Net injection CNY200B v Net injection CNY50B prior
• (CN) China PBoC Open Market Operation (OMO) Net injection total CNY330B for the week v Net drain of CNY290B prior
• (CN) China PBOC sets Yuan reference rate: 7.0043 v 6.9913 prior
• (CN) China Jun FX Net Settlement (CNY): -21.7B v 142.9B prior
• (CN) China State Administration of Foreign Exchange (SAFE): Sees current account surplus in Q2; small fluctuations in current account are ‘normal’, no need to ‘panic’; [In June] Chinese banks’ net US dollar (USD) purchase declined due to dividend payouts.
• (CN) China Finance Ministry (MOF): H1 Rev -10.8% y/y; H1 fiscal spending -5.8% y/y; Will sell total of CNY15B in bonds overseas in 2020
• (CN) PBoC Gov Yi Gang: Allocation of IMF’s SDR would boost all members FX reserves as a quick and cost-effective response to the global pandemic – OP ED piece
• (CN) CSI News Front Page Comment: Reinforcing the foundation of China economic recovery requires policy efforts
• (CN) Follow Up: US White House is weighing its options on blacklisting Tiktok, the co. could be added to the US Entity List – FT
• (CN) China National Health Commission Coronavirus Update for July 16th: additional cases 10 v 1 prior; Additional deaths: 0 v 0 prior

Japan

• Nikkei 225 opened -0.2%
• (JP) Japan reported to be considering eliminating the firewall between Banking and Brokerage businesses – Nikkei
• (JP) Follow Up: Japan reported to be offering up to ¥70B in subsidies in order to diversify supply chain out of China – Press
• (JP) Japan said to exclude Tokyo from travel campaign
• (JP) Tokyo coronavirus cases reported to be >290 v 286 prior – Press
• (JP) Japan suspends the bidding process for program to support Japanese restaurants – Japan Press
• (JP) Kazushige Kamiyama (head of BOJ research and stats dept) noted the importance of high-frequency and other unconventional data in providing real-time info – financial press

Korea

• Kospi opened +0.2%
• (KR) Bank of Korea (BOK) To provide up to KRW8T in loans through its special purpose vehicle (SPV) program; To begin purchases of Corp paper and Bonds starting Jul 24th (Friday)
• (KR) South Korea Fin Min: Uncertainties to growth path ‘high’, weak global demand hurts exports recovery
• (KR) South Korea President Moon: Tax revisions should not hurt the equity market

Other Asia

• *(SG) SINGAPORE JUN NON-OIL DOMESTIC EXPORTS M/M: +0.5% V -4.6%E; Y/Y: 16.1% V 8.0%E

North America

• Microsoft [MSFT]: Reportedly cut <1K jobs this week; the cuts were said to target areas including MSN.com and Azure cloud unit – Financial Press
• Twitter [TWTR]: Says ~130 accounts were targeted by hackers
• Tesla [TSLA]: June China vehicle registrations said to rise to record – US financial press
• (US) Senate Republicans reported to produce relief opening bid next week (as speculated); Plan expected to have employee retention tax credit – Press
• (US) Pres Trump tells associates he will not sign next COVID relief bill without a payroll tax cut – Politico

Europe

• Daimler [DAI.DE]: Reports prelim Q2 above market expectations; reports prelim Q2 group EBIT -€1.7B v -€2.1Be, industrial FCF €685M v €2.11Be; better than expected market recovery and a strong June performance

Levels as of 1:20 ET

• Nikkei 225, -0.4%, ASX 200 -0.1% , Hang Seng +0.5%; Shanghai Composite -0.4% ; Kospi +0.6%
• Equity S&P500 Futures: +0.2%; Nasdaq100 +0.7%, Dax +0.2%; FTSE100 +0.1%
• EUR 1.1393-1.1377 ; JPY 107.36-107.19 ; AUD 0.6991-0.6966 ;NZD 0.6549-0.6530
• Gold -0.1% at $1,798/oz; Crude Oil flat at $40.74/brl; Copper -0.2% at $2.8893/lb