China Reports Higher Trade Surplus, US Jobs Data Due Later Today

Aug 07 20, 06:16 GMT

General Trend:

Large-cap tech names trade lower in HK amid the recent moves by the Trump administration; Semiconductor Manufacturing (China’s largest chipmaker) drops over 8% after earnings report
CK Asset Holdings drops over 8% in HK post earnings
Shanghai Composite declines by over 1% during morning session; IT shares track the weakness in HK, brokerage firms also decline
Japanese steelmakers decline after results/outlook from Kobe Steel; Other decliners include brokers and Electric Appliances cos.
Nintendo rises over 3% post earnings, Toyota Motor gains over 1% after affirming FY outlook
Resource and Financial companies are among the decliners in Australia
Taiwan Semi may issue Jul sales data later today (US financial press)
Japan markets will be closed for holiday on Aug 10th (Monday)

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.3%
(AU) RESERVE BANK OF AUSTRALIA (RBA) STATEMENT ON MONETARY POLICY (SOMP): Measures taken to address coronavirus in Victoria will further delay Australia Recovery
(AU) RBA Assist Gov (Economic) Ellis: Baseline Scenario assumes infection rates subside in Australia, no more lockdowns; It will take many years for GDP to return to pre coronavirus levels; Inability of US to control virus is a worry, Virus to weigh on US growth for some time
(AU) Australia Treasurer Frydenberg: Will add A$15.6B to Jobkeeper program – local radio
(AU) Australia sells A$2.0B v A$2.0B indicated in 0.25% Nov 2024 bonds, avg yield 0.3383% v 0.3654% prior, bid to cover 5.62x v 4.5x prior
(NZ) Reserve Bank of New Zealand (RBNZ): Will seek to purchase NZ$940M v NZ$940M prior in government bonds next week
(NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$290M v NZ$280M prior in government bonds as part of QE v NZ$290M sought

China/Hong Kong

Hang Seng opened -0.1%, Shanghai Composite -0.5%
(US) President Trump signed executive order addressing threat posed by WeChat
(CN) China PBoC Q2 Monetary Report: Monetary policy to be more targeted; pledges to bring leverage ratio down to a reasonable level; To keep home and land prices stable
(CN) US SEC to demand that Chinese firms submit audit papers to the US; Trump administration threatens to delist US-listed China cos. by Jan 2022 if they do not meet US auditing requirements – press
*(CN) (CHINA JULY TRADE BALANCE: $62.3B V $42.6BE; Exports Y/Y: +7.2% v -0.7%e; Imports Y/Y: -1.4% v +0.9%e
US President Trump signed executive order related to the divestment of TikTok (as expected)
(CN) Hong Kong Monetary Authority (HKMA): China PBOC to sell CNY30B in 3-month and 1-year bills in Hong Kong on Aug 13th (Thursday)
(CN) China PBOC sets Yuan reference rate: 6.9408 v 6.9438 prior
(CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v Skips reverse repos prior; Net drain CNY10B v Net drain CNY50B prior

Japan

Nikkei 225 opened +0.1%
(JP) Japan Cabinet: Confirms to spend ¥1.13T in fighting coronavirus (as speculated)
(JP) China warns Japan that a TikTok ban would be problematic for the countries
(JP) Japan June Household Spending Y/Y: -1.2% v -7.8%e (9th straight decline)
(JP) Japan June Labor Cash Earnings Y/Y -1.7% v -3.0%e; Real Cash Earnings Y/Y: -1.9% v -2.0%e
(JP) JAPAN JUN PRELIMINARY LEADING INDEX CI: 85.0 V 84.9E; COINCIDENT INDEX: 76.4 V 77.2E
(JP) Japan July Official Reserve Assets: $1.40T v $1.38T prior
(JP) Panel in Japan expected to ask banks to stop using LIBOR as a reference by June 2021 – Japanese Press
(JP) Japan Fin Min Aso: Japan Needs to secure financial stability for the future; Reiterates not considering cutting sales tax

Korea

North America

(US) Treasury Sec Mnuchin: Negotiators will try to narrow remaining differences on Friday (August 7th)
(US) House Speaker Pelosi (D-CA): Negotiators had ‘consequential meeting’ that showed differences in each side’s values; Negotiators are ‘very far apart’ in stimulus talks
(US) State Department to lift advisory against all international travel – press
(US) Pres Trump: confirms re-imposing some tariffs on Canadian aluminum industry, says Canada producers have broken their commitments
(CA) Canada to respond to the implementation of Aluminum tariffs at 11:00EST (3:00GMT) on August 7th [Friday]

Europe

(SA) Saudi Arabia and Iraq reported to stress commitment to the OPEC+ deal – Iraqi Press
Rolls Royce [RR.UK]: ValueAct said to sell entire stake in Rolls-Royce – FT

Levels as of 1:20 ET

Nikkei 225, -0.8%, ASX 200 -0.8% , Hang Seng -2%; Shanghai Composite -1.9% ; Kospi flat
Equity S&P500 Futures: -0.5%; Nasdaq100 -0.6%, Dax -0.7%; FTSE100 -0.3%
EUR 1.1883-1.1819 ; JPY 105.64-105.49 ; AUD 0.7244-0.7194 ;NZD 0.6691-0.6660
Gold -0.3% at $2,053/oz; Crude Oil -0.4% at $41.72/brl; Copper -1.3% at $2.8763/lb