Asia Summary
Asian equity markets opened mostly to the downside with North Korea conducting its sixth-ever nuclear test on Sunday, which according to Japanese officials resulted in seismic readings that were 10 times more powerful than the country’s previous test a year ago. North Korean state media claimed the country has developed a hydrogen bomb that could attach to an intercontinental ballistic missile. The test was met with widespread condemnation across the globe. US Defense Secretary Mattis said the US has many military options to deal with the latest provocations, but that it was not seeking total annihilation of the country. President Trump scheduled a meeting with military leaders to discuss the situation, while also tweeting the US is ‘considering, in addition to other options, stopping all trade with any country doing business with North Korea.’ Analysts in general think that the market impact this time around will linger longer than previous as provocations have become more frequent and more successful. Though lacking a major event should return to normal in the near term.
On the whole markets traded off N. Korea with earnings season mostly over and no major economic data. In China metals continue to rally and gasoline prices in the US continue to climb on supply concerns after Hurricane Harvey. US markets will be closed Monday for a holiday, on Friday US nonfarm payrolls increased 156K in August after a downwardly revised 189K gain (was 209K) in July, below the 180K consensus.
Key economic data
(JP) JAPAN AUG MONETARY BASE Y/Y: 16.3% V 15.6%E; MONETARY BASE END OF PERIOD: ¥469.2T V ¥468.3T PRIOR
(AU) AUSTRALIA Q2 BUSINESS INVENTORIES Q/Q: -0.4% V 0.3%E; CORPORATE OP PROFIT Q/Q: -4.5% V -4.0%E
(AU) AUSTRALIA AUG ANZ JOB ADVERTISEMENTS M/M: 2.0% V 1.6% PRIOR
Speakers and Press
China/Hong Kong
(CN) China Securities Regulatory Commission (CSRC) announces draft rules designed to give stock exchanges more power in regulating the market – Shanghai Securities News and Securities Time
(CN) Former PBoC Adviser Yu Yongding urges achieving free float of yuan currency rate as soon as possible – Chinese Press
(CN) China shadow banking sector grew by an annualized 36% between 2010 and the end of 2016, to reach a total CNY122.8T – Nomura
Korea
(KR) Follow Up: USGS: Magnitude 5.1 ‘mining explosion’ detected East-Northeast of Sungjibaegam, North Korea – US financial press
(KR) South Korea Fin Min Kim: facing increased geopolitical risks; market impact from North Korea wont be short term
(KR) South Korea Environment Ministry conditionally approves THAAD environment report
(KR) South Korea President Moon: To seek maximum sanctions and pressure on North Korea; agree with Japan PM Abe to a stronger response against North Korea
Japan
(JP) Japan Chief Cabinet Sec Suga: On the call Abe and Putin agreed North Korea situation is grave; Japan and China to increase North Korea pressure on various levels
Asian Equity Indices/Futures (00:00ET)
Nikkei -1.0%, Hang Seng -0.5%; Shanghai Composite +0.1%, ASX200 -0.5%, Kospi -0.8%
Equity Futures: S&P500 -0.4%; Nasdaq100 -0.5%, Dax -0.4%, FTSE100 -0.2%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1890-1.1857; JPY 109.93-109.26; AUD 0.7973-0.7930; NZD 0.7145-0.7144
Dec Gold +0.6% at $1,338/oz; Oct Crude Oil +0.3% at $47.42/brl; Sept Copper +0.6% at $3.14/lb
(US) According to AAA, on Sunday average retail gasoline price rise 1% to $2.621/gallon from $2.59 on Saturday; +10.9% w/w
(CN) PBoC skips OMO v skipped 7 and 14-day prior; Drains net CNY140B v CNY50B prior (3rd consecutive skip)
USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5668 V 6.5909 PRIOR (6th consecutive stronger setting)
(KR) Bank of Korea (BOK) sells KRW430B in 6-month bonds at 1.34%
(KR) South Korea sells KRW1.56T vs. KRW1.55T target in 5-year Govt bonds; Yield: 2.005% v 1.970% prior
(TH) Thailand sells combined THB20.7B in 3-month and 1-yr bills
Equities notable movers
Australia/New Zealand
RAP.AU Reaffirms commitment for a follow-up SMARTCOUGH-C Study; +23.9%
ADO.AU Signed agreement to sell 100% stake in Diasource unit for €15.9M; CEO Jef Vangenechten to resign; +22.2%
88E.AU Flow testing on ICEWine number 2 resumed on Aug 31st; -20.9%
