US Considering Raising Tariffs On China

Aug 01 18, 07:12 GMT

General Trend:

Asian equity markets trade generally higher, in line with Tuesday’s US session
Equity markets in China lag
Nintendo, Sony and Honda rise following earnings reports
Apple and Baidu gain in the afterhours post earnings
China Tower’s IPO said to price at lower end of range
US said to now consider 25% tariff on $200B in goods from China as a negotiation tactic (initial plan was a 10% tariff), according to a US financial press report.
Meanwhile, the US and China are said to plan to meet regarding trade, said an earlier released press report
China Caixin Manufacturing PMI confirms the slowdown seen in the official PMIs
PBoC fixed the USD/CNY rate above 6.82, weakest Yuan fix since May 2017
Japan JGB yields rise on today’s session following decline on Tuesday; 10-yr yields move above 0.10%
Japan Securities Clearing Corp (JSCC) said an ‘emergency’ margin call was triggered for JGB Futures
Australia Manufacturing PMIs slow in July
Australian housing prices decline for the 10th straight month (CoreLogic)
New Zealand unemployment and participation rates unexpectedly rose in Q2
Rio Tinto expected to report earnings on today’s session
Japanese companies which may report earnings today include Japan Tobacco, KDDI, Oji Holdings, Kobe Steel, Konica Minolta, Mazda, Shinsei Bank, Eisai and Casio.
US Fed decision expected later on Wed

Headlines/Economic Data

Japan

Nikkei 225 opened +0.4%
TOPIX Iron & Steel index +4%, Marine Transportation +1.1%, Electric Appliances +1.1%; Real Estate -0.8%, Securities -0.3%
Steelmakers track gains in JFE Holdings
Japanese automakers gain following earnings from Honda
Megabanks trade broadly higher
(JP) BOJ Gov Kuroda: Introduced forward guidance to increase commitment on price target; stronger framework aimed at hitting the 2% price target asap – post rate decision press conference (yesterday after the close)
Sharp, [+5%], 6753.JP Reports Q1 Net ¥19.2B v ¥14.5B y/y; Op ¥24.8B v ¥17.1B y/y; Rev ¥533.9B v ¥506.4B y/y
(JP) JAPAN JUL FINAL PMI MANUFACTURING: 52.3 V 51.6 PRELIM (11-month low)

Korea

Kospi opened +0.3%
(KR) North and South Korea held military talks in Panmunjom – North Korea KCNA
(KR) SOUTH KOREA JUL CPI M/M: 0.2% V 0.4%E; Y/Y: 1.5% V 1.7%E; CORE Y/Y: 1.1% V 1.2%E
(KR) SOUTH KOREA JUL TRADE BALANCE: $7.0B V $6.8BE; Exports y/y: 6.2% v 7.4%e; Imports y/y: 16.2% v 17.0%e
(KR) South Korea Jul PMI Manufacturing: 48.3 v 49.8 prior (20-month low)
(KR) Bank of Korea (BOK) sells KRW2.3T in 2-yr Monetary Stabilization Bonds (MSBs) at 2.060% v 2.025% prior

China/Hong Kong

Hang Seng opened +0.6%, Shanghai Composite +0.2%
Hang Seng Property/Construction index -1.2%, Telecom -1%, Consumer Goods +1.6%, Info Tech +1.1%, Industrial Goods +1%, Services +0.9%, Financials +0.2%
(CN) China approved more IPOs in July – China Securities Journal
(CN) China Press Commentary piece: China faces large economic slowdown pressures
(CN) US considering 25% tariff on $200B worth of goods from China (initial plan was 10% on the $200B in goods); trying to encourage China to return to talks – US financial press
(CN) China investors have been seen buying domestic commercial property at a record pace; 2017 totaled $564.9B v $395.8B y/y
(CN) CHINA JUL CAIXIN PMI MANUFACTURING: 50.8 V 50.9E (matches Nov 2017 low)
(CN) China PBoC Open Market Operation (OMO): Skips OMO for the 9th consecutive session; Net drains CNY20B v drains CNY30B prior
(CN) China PBoC sets yuan reference rate at 6.8293 v 6.8165 prior (weakest fix since late May 2017)
(CN) China Politburo: Domestic economy stable in H1 but faces new challenges; to maintain proactive fiscal policy and prudent monetary policy (after the close yesterday)
(HK) Macau July Gaming Rev MOP25.3B v MOP22.5B prior, Y/Y: 10.3% v 11.5%e (3rd consecutive miss on estimates)

Australia/New Zealand

ASX 200 opened +0.1%
ASX 200 Resources index +0.7%, REIT +0.5%, Financials -0.7%, Utilities -0.2%, Energy -0.1%
SMM.AU Announces recommended off-market takeover by Paladin Energy worth ~A$0.202/share
(AU) Australia Jul AiG Performance of Manufacturing Index: 52.0 v 57.4 prior
(NZ) NEW ZEALAND Q2 UNEMPLOYMENT RATE: 4.5% V 4.4%E (1st rise since Q4 2016);EMPLOYMENT CHANGE Q/Q: 0.5% V 0.4%E; Y/Y: 3.7% V 3.6%E
(AU) Australia Jul CoreLogic House Prices m/m: -0.6% v -0.3% prior (10th consecutive decline)
(AU) Australia sells A$1.0B v A$1.0B indicated in Nov 2029 bonds, avg yield 2.7136% v 2.6094% prior, bid to cover 2.88x v 3.50x prior

Levels as of 01:30ET

Hang Seng +0.1%; Shanghai Composite -0.3%; Kospi +0.4%; Nikkei225 +0.9%; ASX 200 +0.1%
Equity Futures: S&P500 -0.0%; Nasdaq100 +0.3%, Dax -0.3%; FTSE100 -0.3%
EUR 1.1676-1.1746; JPY 111.70.-111.98; AUD 0.7409-0.7429;NZD 0.6793-0.6820
Aug Gold -0.3% at $1,220/oz; Sept Crude Oil -0.5% at $68.42/brl; Sept Copper -0.8% at $2.80/lb