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Market Update – Asian Session: Asian Markets Quiet Ahead Of Yellen And Draghi

Asia Summary

Asian equities have been fairly quiet as traders await the Jackson Hole comments from the Fed’s Yellen and ECB’s Draghi. Earnings reports were seen from Qantas and Rusal. Shares of Samsung Electronics are little changed ahead of the expected court ruling in the corruption case involving Lee Jae-yong, who is viewed as the head of the Samsung conglomerate.

Key economic data

(JP) JAPAN JULY NATIONAL CPI Y/Y: 0.4% V 0.4%E; CPI EX FRESH FOOD (CORE) Y/Y: 0.5% V 0.5%E

(JP) Japan Aug Tokyo CPI Y/Y: 0.5% v 0.3%e; CPI Ex-Fresh Food (core) Y/Y: 0.4% v 0.3%e

(JP) JAPAN JUL PPI SERVICES Y/Y: 0.6% V 0.8%E

(KR) South Korea Aug Consumer Confidence: 109.9 v 111.2 prior

Speakers and Press

China

(CN) China NDRC: Urges steel sector to continue cutting overcapacity; to promote steel companies M&A in some regions; To increase effective steel supply to avoid market volatility.

Japan

(JP) Japan Government Official: Will consider reflecting discount smart-phone carrier charges in CPI data starting Jan next year at the earliest

(JP) Japan Chief Cabinet Sec Suga: Economy not in situation now that requires extra budget; To impose additional sanctions against North Korea

Other

(US) Fed’s Kaplan (moderate, voter): Has not lost faith inflation will get back to 2%; Does not favor raising 2% inflation target

(PH) Philippines Central Bank Gov Espenilla: Allowed peso to adjust moderately and gradually, but BSP in firm control of peso (PHP) exchange rate; Reiterates confident peso won’t go on ‘free fall’, definitely not in ‘fx crisis’

(VE) Venezuela President Maduro names Del Pino as Oil Minister and Nelson Martinez as President of PDVSA

(VE) Under possible US sanctions, Venezuela’s bonds could be removed from the JPMorgan Emerging Market Bond Index – US financial press

Asian Equity Indices/Futures (00:30ET)

Nikkei +0.6%, Hang Seng +0.7%, Shanghai Composite +1.2%, ASX200 +0.3%, Kospi +0.1%

Equity Futures: S&P500 flat; Nasdaq +0.1 , Dax flat , FTSE100 flat

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1788-1.1804; JPY 109.50-109.77; AUD 0.7885-0.7907; NZD 0.7198-0.7218

Aug Gold flat at 1,291/oz; Aug Crude Oil +0.6% at $47.72/brl; Sept Copper -0.1% at $3.03/lb

GLD SPDR Gold Trust ETF daily holdings unchanged at 799.3 metric tons

(CN) China PBoC skips OMO v skipped 7 and 14-day reverse repo prior (2nd straight); Net drain CNY130B, drains net of CNY330B for week

(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6579 V 6.6525 PRIOR

(JP) BoJ announces amounts to buy in QE operation; Cuts planned purchases of 5-10 yr JGBs to ¥410B from ¥440B prior

(AU) Australia sells A$600M in 1.75% 2020 Bonds, avg yield 1.9962%, bid to cover 5.75x

Equities notable movers

Australia

Qantas, QAN.AU, FY17 profits in line and announced dividend and buyback; +2.5%

Sims Metal, SGM.AU FY17 EBITDA above ests and declared a special dividend; +5%

Super Retail Group, SUL.AU FY17 profits rose; +8%

Hong Kong/China

Li & Fung, 494.HK H1 profits rose by 40% and above ests; +14.5%

PetroChina, 857.HK H1 profits above estimates; +3.5%

Rusal, 486.HK Q2 results above ests; -0.9%

US markets on close: Dow -0.1%, S&P500 -0.2%, Nasdaq -0.1%, Russell +0.3%

Best Sector in S&P500: Health Care +0.3%

Worst Sector in S&P500: Consumer Staples -1.4% (Amazon closed acquisition of Whole Foods and announced expected price cuts)

At the close: VIX 12.23 (-0.02 pts); Treasuries: 2-yr 1.338% (+3bps), 10-yr 2.196% (+3bps), 30-yr 2.769% (+2bps)

US Market Summary

Investors continued to remain on the sidelines in anticipation of the Jackson Hole Symposium. Major indices all posted moderate losses again in light trading, with a counter trend for small caps, as the Russell gained 4 points. Crude oil turned south again with a lack of new factors to prop-up price, while gasoline prices rose in advance of Hurricane Harvey. The WTI/gasoline crack spread surged as the predicted path of Harvey aims the storm at refiners, avoiding oil production platforms. Gold continued to hold its ground with low volatility and closing just short of $1,290. Treasuries took some selling pressure today with 10-year yield gaining 2.5 bps, back up at 2.19%, 10s30s curve spread steady at 58 bps.

US Afterhours Movers

ADMS FDA approves GOCOVRI as first and only medication for the treatment of Dyskinesia in Parkinson’s Disease patients; +35.4% afterhours

SPLK Reports Q2 $0.08 v $0.06e, Rev $280M v $268Me; Guides Q3 R$307-309M v $306Me, Non-GAAP op margin 8%; +8% afterhours

AVGO Reports Q3 $4.10 v $4.03e, Rev $4.46B v $4.46Be; Guides Q4 Rev $4.80B +/- $75M v $4.75Be, non-GAAP gross margin 63.0% +/- 1%; -4.2% afterhours

GME Reports Q2 $0.15 v $0.16e, Rev $1.69B v $1.62Be; SSS +1.9% (-1.4% in US, +3.4% internationally); -7.9% afterhours

VEEV Reports Q2 $0.25 v $0.20e, Rev $166.6M v $164Me (1 est.); Guides Q3 $0.21-0.22 v $0.21e, Rev $171-172M v $171Me; -8.4% afterhours

UEPS Reports Q4 $0.20 v $0.44e, Rev $155M v $173Me; Guides initial FY18 EPS at least $1.61 v $1.85e; -11.5% afterhours

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