Asia Summary
With the US payrolls report due later today, Asian equity markets have generally seen little volatility. The S&P ASX 200 conducted its quarterly rebalancing (Charter Hall Long Wale Reit, NIB Holdings, Washington H Soul Pattinson added; Isentia, Sky Network TV and Virtus Health removed).
On data front, Japan’s Q2 CAPEX missed expectations and this has led to speculation that Q2 GDP could be revised lower from the preliminary annualized reading of 4.0%. South Korea’s Aug CPI rose at the fastest pace in over 5-years and the government attributed the increase to temporary factors. China’s Aug Caixin Manufacturing PMI, which hit the highest level since Feb, had little noticeable impact on markets, as it followed Thursday’s release of the official PMI figures.
(CN) PBoC reiterates ‘prudent and neutral’ monetary policy; Property market has become major source of financial risk; Cannot expect use of ‘pure’ monetary policies to address problems in the property market; China should keep tight property curbs in main cities; mulling measures related to home mortgage loan growth to reduce volatility related to property market prices; Reiterates property market tax reform should be included in broader tax reform considerations – Publication
Key economic data
(AU) Australia AiG Perf of Mfg Index: 59.8 v 56.0 prior
(AU) Australia Aug CBA Australia PMI Mfg: 53.5 v 54.4 prior
(CN) CHINA AUG CAIXIN PMI MFG: 51.6 V 51.0E (Highest since Feb)
(KR) SOUTH KOREA AUG TRADE BALANCE: $7.01B V $6.24BE; Exports Y/Y: 17.4% v 15.8%e (10th straight rise)
(JP) JAPAN Q2 CAPITAL SPENDING Y/Y: 1.5% (3RD CONSECUTIVE RISE) V 7.9%E; EX-SOFTWARE Y/Y: 0.6% V 8.2%E
(KR) SOUTH KOREA AUG CPI M/M: 0.6% V 0.2%E; Y/Y: 2.6% V 2.2%E (fastest rate in over 5-years)
(KR) SOUTH KOREA Q2 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.7% V 2.7%E
(NZ) NEW ZEALAND Q2 TERMS OF TRADE INDEX Q/Q: 1.5% V 3.0%E
Speakers and Press
China
(CN) China Communist Party expected to convene National Congress on Oct 18th – Xinhua
Other
(JP) Japan Fin Min Aso: Will not travel to the US on Sept 4 due to North Korea risk; Says his comments on Hitler were unrelated to cancellation of US trip.
(US) US President Trump to propose initial $5.9B in Harvey aid; said to consider linking debt limit increase to Harvey aid – US financial press
(US) US Transportation Sec: Signed executive order allowing expedited fuel deliveries to Texas from 25 other states
(US) Pemex: Due to port closures in Houston, importing fuel shipments from Bermuda, US East Coast and Alabama
(US) Houston Port: Heavy current into Houston Ship Channel making it unsafe to bring in vessels
(US) Explorer Pipeline planning to start lines on Saturday and Sunday – US financial press
(US) EIA: In June, US gasoline consumption 9.77M bpd, +1.1% y/y (record)
Asian Equity Indices/Futures (00:30ET)
Nikkei flat, Hang Seng +0.4%, Shanghai Composite +0.6%, ASX200 +0.2%, Kospi flat
Equity Futures: S&P500 flat ; Nasdaq +0.1% , Dax +0.1% , FTSE100 flat
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1186-1.1923; JPY 109.93-110.15; AUD 0.7937-0.7957; NZD 0.7169-0.7189
Aug Gold +0.2% at1,324 /oz; Aug Crude Oil -0.6% at $46.95/brl; Sept Copper flat at $3.10/lb, Gasoline Futures -0.1%
GLD SPDR Gold Trust ETF daily holdings flat at 816.4 metric tons
(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5909 V 6.6010 PRIOR (yuan set stronger for 5 straight sessions, today’s fix strongest since June 24, 2016)
(CN) PBoC skips OMO v skipped 7 and 14-day prior; Drains net CNY50B v CNY40B prior
(JP) Bank of Japan (BoJ) announces amounts to buy in QE operation: Cuts 3-5 yr JGB purchases to ¥300B from ¥330B prior
(AU) Australia sells A$500M in 2.00% Dec 2021 Bonds, avg yield 2.1575%, bid to cover 7.82x; Says one buyer purchased all of the 2021 notes at the auction.
Equities notable movers
Australia
Virtus Health, VRT.AU Removed from S&P ASX 200 Index; -2.4%
Sky Network TV, SKT.AU Removed from S&P ASX 200 Index; -3.5%
Hong Kong/China
Sunac China, 1918.HK Reversed opening gains seen after earnings, commented on its exposure to Wanda;-2.5%
GD Power Development Co, 600795.CN Higher on M&A; +10%
US markets on close: Dow +0.3%, S&P500 +0.6%, Nasdaq +1.0%, Russell +1.0%
Best Sector in S&P500: Health Care +1.7%
Worst Sector in S&P500: Financials flat
At the close: VIX 10.59 ( -0.63 pts); Treasuries: 2-yr 1.33% (flat), 10-yr 2.119% (-2.5bps), 30-yr 2.725% (-2bps)
US Market Summary
Stocks rose again today, helped by strong jobless data and low CPE data. Mnuchin’s comments on tax reform and the aim to pass a bill by year end gave investors hope. Crude turned the recent sell-off around, rising 2.5%, with CLV7 trading above $47 at close. Treasury yields declined after weak inflation data seemed to confirm inaction from Fed for the rest of year; the 10-year yield was down 2 bps from yesterday at 2.12%, 10s30s curve spread unchanged from yesterday at 60 bps. Weak inflation data also saw gold continue its bullish trend, as the Fed seems even less likely to raise rates before year end.
US Afterhours Movers
LULU Reports Q2 $0.39 v $0.35e, Rev $581.1M v $568Me; Guides Q3 $0.50-0.52 v $0.52e, Rev $605-615M v $601Me; SSS mid single digits increase; +7.1% afterhours
PANW Reports Q4 $0.92 v $0.79e, Rev $509.1M v $487Me; Guides Q1 $0.67-0.69 v $0.69e, Rev $482-492M v $487Me; +6.8% afterhours
TECD Reports Q2 $1.74 v $2.06e, Rev $8.88B v $8.71Be; Guides Q3 $1.84-2.04 v $2.20e, Rev $9.0-9.35B v $8.6Be; -19.4% afterhours
