Asia Summary
Asian equity markets are currently trading mixed, apparently largely ignoring the most recent North Korean missile launch, which was reported on early Saturday. In M&A news, US listed CBS announced that it would acquire Australia’s Ten Networks, which has already been placed into administration, for an undisclosed amount.
In the currency markets, the Euro had gained by over 0.25% versus the US dollar, but has since pared gains. On Friday at Jackson Hole, ECB”s Draghi did not directly address currencies. Economic data points expected this week include Germany Aug Prelim CPI, EU Prelim Aug CPI, China Manufacturing PMI, Australia Q2 Private new Capex, Japan Q2 Capex and US ISM Aug Manufacturing and non-farm payrolls
US NYMEX gasoline futures opened the session higher by over 6%, as companies including Exxon and Shell noted they would shut facilities located near Houston amid the impact of Harvey, which was downgraded to a tropical storm on Saturday. Shell said its Deer Park Texas refinery (up to 340K bpd) may be shut for up to 1 week.
According to the National Hurricane Center (NHC),‘unprecedented’ flooding is occurring over Southeastern Texas due to Harvey and it expects the center of the storm to move off the middle of Texas’ coast on Monday and wander just offshore through Monday night. The NHC also said the storm is expected to produce additional rainfall through Friday over parts of Texas.
Speakers and Press
(EU) France could be willing to begin Brexit trade talks by Oct – UK Press
(JP) BoJ Gov Kuroda: Reiterated policy to stay very accommodative; Does not think Q2 GDP growth rate of 4% can be sustained (update from Aug 25th)
(JP) Japan PM Abe cabinet approval rating rises by 4 pct points to 46% – Nikkei
(KR) Bank of Korea: Domestic markets stabilizing after turbulence in early Aug over North Korea tensions
(NZ) New Zealand Wine Exports in June year +5.9% to NZ$1.66B (record high)
(US) On Sunday, President Trump reiterated "we are in the NAFTA renegotiation process with Mexico, and Canada. Both being very difficult, may have to terminate?"
Asian Equity Indices/Futures (00:30ET)
Nikkei flat, Hang Seng +0.5%, Shanghai Composite +0.9%, ASX200 -0.7%, Kospi -0.4%
Equity Futures: S&P500 -0.1% ; Nasdaq -0.2% , Dax -0.2% , FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1921-1.1960; JPY 109.09-109.40; AUD 0.7927-0.7950; NZD 0.7236-0.7256
Aug Gold +0.1% at 1,299/oz; Aug Crude Oil -0.4% at $47.68/brl; Sept Copper +0.5% at $3.07/lb
GLD SPDR Gold Trust ETF daily holdings rise 5.91 tons to 805.2 tons
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6353 V 6.6579 PRIOR (strongest yuan fix since Aug 19, 2016)
(CN) China PBOC OMO injects CNY100B v skipped 7 and 14-day reverse repo prior; Net drain CNY100B v CNY130B drain prior
(AU) Australia sells A$400M in 2.75% 2035 bonds, avg yield 3.1008%, bid to cover 4.16x
(KR) Bank of Korea sells KRW900B in 1-year monetary stabilization bonds at 1.53 v 1.52% prior
US markets on close (from Friday)
Best Sector in S&P500: Real Estate +0.5%
Worst Sector in S&P500: Technology flat
At the close: VIX 11.28 (-0.95 pts); Treasuries: 2-yr 1.338% (flat), 10-yr 2.169% (-3bps), 30-yr 2.749% (-2bps)
US Market Summaryv (From Friday, Aug 25th)
US stock markets commenced the week testing more than one month lows in most cases. The S&P found support just above the 100-day moving average on Tuesday. As Washington looked to put the controversy surrounding the President and his reaction to Charlottesville in the rear view mirror, rekindled hopes for genuine tax reform along with thin summer trading conditions were widely cited as fostering the turnaround. A host of late season retail earnings reports surpassed expectations which provided a boost to investor sentiment. The Russel 2000 led the way higher as investors placed bets small cap US centric businesses would get the most benefit from tax relief. For the week, the DJIA gained 0.7%, the S&P500 added 0.7%, and the Nasdaq rose 0.8%.
The greenback retreated further led by strength in the Euro. The economic data, Europe’s in particular, continued to signal building economic momentum. By Friday when neither Fed Chair Yellen nor ECB President Draghi directly addressed monetary policy at the Jackson Hole symposium, the Euro hit fresh one and half year highs above 1.1920. Gasoline prices moved up late in the week as it became clear Hurricane Harvey would make landfall in southern Texas and bring with it up to 30 inches of rain.
