HomeContributorsFundamental AnalysisPBOC Weakened The Yuan, Australia Deficit Below Market Ests

PBOC Weakened The Yuan, Australia Deficit Below Market Ests

General Trend:

  • Shanghai Composite dropped by over 2% during morning session; IT firms dropped by over 2%, financials also traded lower
  • Shanghai Property index declines by over 2% amid report that Nanjing will tighten certain property-related measures
  • Hang Seng traded generally flat during morning session; Financials were flat, while tech firms moved generally higher
  • AAC Technologies (Apple supplier) rises over 11% in HK on strategic investment agreement
  • Gainers in Australia include Consumer Discretionary and Energy cos.; Consumer Staples, Resource and Financial firms decline
  • Hynix reverses opening gain amid guidance, sees DRAM price ‘adjustment’
  • China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thursday
  • Companies due to report during the NY morning include American Airlines, AutoNation, The Blackstone Group, Citrix Systems, Dow Chemical, Freeport McMoran, W.W Grainger, Hershey, Kimberly-Clark, Southwest Airlines, Nucor, PulteGroup, AT&T, Travelers, Twitter, Union Pacific

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened -0.1%
  • (AU) AUSTRALIA TREASURER FRYDENBERG: FORECASTS FY19/20 BUDGET DEFICIT OF A$85.8B; FY20/21 BUDGET DEFICIT OF A$184.5B [below expectations for above A$200B deficit] – PRE BUDGET STATEMENT
  • (AU) Australia Fin Min Cormann: Cautions against using taxpayer funded economic support for too long
  • (AU) S&P Says Australia AAA sovereign rating can absorb growing deficit, reiterates sovereign rating remains tilted toward downside
  • (AU) Moody’s: Australia AAA sovereign rating will remain resilient, fiscal repair to start in 2021
  • (AU) Australia Q2 NAB Business Confidence: -15 v -12 prior
  • (AU) Victoria state reports 403 additional coronavirus cases v 484 prior
  • (AU) New South Wales (NSW) State reports 19 additional coronavirus cases v 16 prior
  • (NZ) New Zealand Debt Management Office (DMO) sells NZ$950M v NZ$950M indicated in 2023, 2029 and 2033 bonds

China/Hong Kong

  • Hang Seng opened +0.7%, Shanghai Composite -0.8%
  • CanSino [6185.HK] To issue 24.8M A-shares on the China STAR board in Shanghai: to make further announcement once the final offering size and issue price are determined
  • (CN) China PBoC said to pause further monetary policy easing – press (July 22nd)
  • (US) China moving to close US consulate in Chengdu – Press
  • (CN) China govt said to consider closing of the US consulate in Wuhan as a retaliatory response – financial press (from July 22nd)
  • (CN) China PBOC sets Yuan reference rate: 6.9921 v 6.9718 prior, (largest percentage weakening of CNY since June 29th)
  • (CN) Nanjing City, China says it will tighten its land market control and improve restrictions on home purchases – Press
  • (CN) China Industry Ministry (MIIT) Vice Min Xin : Coronavirus impact on China Economy is controllable; Activity in industrial economy has recovered to ‘normal track’
  • (CN) China PBoC Open Market Operation (OMO): Injects CNY50B in reverse repos v Skips prior; Net Drain CNY0B v Net drain CNY0B prior
  • (CN) China Finance Ministry (MOF): Sells 1-month deposits: avg yield 2.7%
  • (CN) China Finance Ministry (MOF) Sells CNY5B in 2-year and 5-year bonds in Hong Kong

Japan

  • Nikkei 225 closed for holiday
  • (JP) Tokyo reported to find >300 coronavirus cases – Press
  • (JP) Japan Cabinet Office (Govt) Monthly Economic Report for July: Raises Overall economic assessment: Sees economy showing signs of picking up but remains in a severe situation (2nd straight upgrade, as expected) [July 22nd]

Korea

  • Kospi opened flat
  • (KR) SOUTH KOREA Q2 PRELIMINARY GDP Q/Q: -3.3% V -2.4%E (LARGEST CONTRACTION SINCE 1997 Debt Crisis); Y/Y: -2.9% V -2.0%E (Enters technical recession for the first time since 2003)
  • Hynix [000660.KR]: Reports Q2 (KRW) Net 1.26T v 535.5B y/y; Op 1.95T v 637.6B y/y (1.67Te); Rev 8.61T v 6.45T y/y (8.17Te); guides Q3 DRAM shipments flat q/q, NAND shipments up in high single digit range q/q
  • Hyundai Motor: [005380.KR] Reports Q2 (KRW) Net 227B v 999B y/y; Op 590B v 1.24T y/y; Rev 21.9T v 27.0T y/y

Other Asia

  • (SG) Singapore Jun CPI M/M: 0.0% v 0.0%e; Y/Y: -0.5% v -0.5%e
  • (TH) Thailand Central Bank Assist Gov said baht (THB) intervention ‘not for trade benefit’ – press
  • (TW) Taiwan Govt will approve a NT$210B special budget

North America

  • (US) Pres Trump: Possible to close more diplomatic sites
  • (US) Sen Shelby (R-AL): Senate has tentative deal on Stimulus; Will finish appropriations part of Bill on Thurs (Jul 23rd)
  • (US) US Treasury Sec Mnuchin says in ‘good shape’ on the Republican stimulus talks
  • Airbnb: Said to have been approached about merger with blank check co., such a merger would enable the co. to conduct an IPO – financial press

Europe

  • (CN) China State TV blacks out football games amid clash with UK – press

Levels as of 1:20 ET

  • Nikkei 225, closed, ASX 200 +0.3% , Hang Seng +0.5%; Shanghai Composite -0.9% ; Kospi -0.5%
  • Equity S&P500 Futures: +0.1%; Nasdaq100 +0.3%, Dax flat; FTSE100 +0.1%
  • EUR 1.1583-1.1564 ; JPY 107.19-107.10 ; AUD 0.7154-0.7132 ;NZD 0.6680-0.6650
  • Gold +0.2% at $1,868/oz; Crude Oil +0.1% at $42.03/brl; Copper -0.4% at $2.9135/lb
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