Asian Equity Markets Mixed As Traders Digest US Fed, BoJ Left Policy Unchanged

Sep 19 19, 07:18 GMT

General Trend:

Japanese equities rise on gains in financials, markets pare gain after BoJ left policy unchanged
Hang Seng underperforms amid broad-based selling and focus on US Fed rate outlook: HK officials see negative trend for Q3 growth after the Q2 contraction
Shanghai Property index declines after recent outperformance
PBoC utilized 14-day reverse repos for the first time since late June, left rate unchanged
There remains speculation that the PBOC may cut the benchmark loan prime rate (LPR) by 5bps on Friday [The LPR will be set monthly on the 20th of each month]
Most big Aussie banks now calling for easing by RBA at Oct meeting, comes amid disappointing unemployment rate data
RBA Gov Lowe is due to deliver his ‘An Economic Update’ speech on Sept 24th (Tues)
New Zealand Q2 GDP above ests, but annual growth rate hit multi-year low; RBNZ due to hold official cash rate decision (OCR) on Sept 25th
Yen extended gain after BoJ decision; Commodity currencies underperform amid central bank decisions, data from Australia and New Zealand
US/China due to hold working-level trade talks in Washington D.C from Sept 19-20 (Thursday-Friday)
China Commerce Ministry (MOFCOM) sometimes holds its weekly news conferences on Thursday’s (generally seen during the European morning)
Indonesia and Taiwan Central Banks due to hold rate decisions later today
NY Fed to conduct third day of repo operations on Thursday, FOMC cut the Interest Rate on Excess Reserves (IOER) to 1.80% from 2.10% prior (below 1.85% estimate)

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened +0.1%
(AU) AUSTRALIA AUG EMPLOYMENT CHANGE: +34.7K V +15.0KE; UNEMPLOYMENT RATE: +5.3% V 5.2%E
(AU) Commonwealth Bank: Now expects Reserve Bank of Australia (RBA) to cut cash rate by 25 bps at Oct 2019 meeting [follows Australia’s weaker than expected unemployment data in Aug]
(NZ) NEW ZEALAND Q2 GDP Q/Q: 0.5% V 0.4%E; Y/Y: 2.1% V 2.0%E
(AU) Australia 2019/19 underling cash deficit A$0.7B; Budget balance deficit A$690M v deficit A$4.2B forecasted
BKW.AU Reports FY19 (A$) Net 154.6M v 175.4M y/y; Underlying EBIT 310M v 304Me; Cont Ops Rev 918.7M v 785.2M y/y

Japan

Nikkei 225 opened +0.5%
(JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
(JP) Japan Foreign Min Motegi: Want to reconfirm with the US that there will be no additional tariffs placed on Japan automobiles before trade deal is signed – Nikkei
(JP) Japan has negotiated with the US to set up 242Kt quota of US beef with lower tariffs – Japan press
4901.JP Guides FY19 health care segment rev ¥510B, op profit ¥44B; targeting by mid-2020s to have Rev of ¥1.0T – Nikkei
(JP) Japan Foreign Min Kono: Not aware of any Iranian involvement in Saudi attack
(JP) Japan Economy Min Nishimura: Prepared to support small business and farms if needed in light of US trade talks, working to avoid major impact from sales tax hike

Korea

Kospi opened flat
(KR) Bank of Korea (BOK) Gov Lee: Fed decision to cut rates eases pressure on BOK ahead of rate decision; swine fever not issues to consider yet in monetary policy
(KR) South Korea President Moon approval rating falls to 42.8% (record low)

China/Hong Kong

Hang Seng opened +0.3%; Shanghai Composite opened +0.2%
(CN) China PBoC Open Market Operation (OMO): Injects CNY170B combined in 7-day and 14-day reverse repos v injects CNY30B in 7-day prior; Net drain CNY170B v CNY0B prior
(HK) Hong Kong Monetary Authority Chief Chan: Sees downward pressure in Q3 growth citing political unrest and trade war; interest rate level not high in general; USFed cut may not have direct impact on rates in Hong Kong
(CN) China has shortened its unified (includes both foreign and domestic investors) negative list for market access – press
(HK) Hong Kong Fin Sec Chan: Sees negative trend in Q3 growth – Global Times
(CN) China Aug Swift Global Payments CNY: 2.22% v 1.81% prior
(CN) China PBOC sets Yuan Reference Rate: 7.0732 v 7.0728 prior
(CN) China Ministry of Finance (MOF): Reiterates China tax and fee cut expected to exceed CNY2.0T in 2019
293.HK Cathay Pacific: Nearly 100 employees have been fired due to their participation in Hong Kong protests or their social media connections to Hong Kong protesters – Hong Kong Press
1199.HK Cosco Shipping Ports: Announces disposals of interest in various port assets for ~CNY1.06B to Shanghai International Port Group
178.HK SA SA International: Profit warning, expects turnover to decline by 15%
5.HK Maintains best lending rate at 5.125%; cuts USD savings rate from 0.25% to 0.10% in Hong Kong (following HK cutting base rate)

Other

(SA) Saudi Defense Ministry displays remnants of drones used in Aramco attack says it is evidence of Iranian weapons being involved in the attack and Iranian aggression (overnight)
(SA) Saudi Arabia Crown prince: Attacks were aimed at destabilizing the region’s security, damaging the global energy supply and the global economy – local press
(US) US Energy Dept: Saudi Arabia must forgo uranium enrichment to secure nuclear reactor deal; US is committed to Westinghouse efforts to sell reactors
(PH) Philippines Central Bank Chief Diokno: Committed to ‘normalizing rates;’ Negative rates would be tough on pensioners and investment; very comfortable with reserves level

North America

(US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.75-2.00% (AS EXPECTED); SUSTAINED EXPANSION LIKELY, UNCERTAINTIES ABOUT ECONOMIC OUTLOOK REMAIN
(US) Fed Chair Powell: Fed cut rates in order to provide insurance against risks and to keep US economy strong – post rate decision press conference
(US) Fed Chair Powell: if the economy were to turn down, we could potentially see more extensive rate cuts; will continue to monitor developments in markets and outlook – post rate decision Q&A
X Guides Q3 -$0.35 v -$0.11e, adj EBITDA $115M (previously declined to guide); expects 2.5K headcount reduction at U.S. Steel Europe
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 50BPS TO 5.5%; AS EXPECTED
(US) New York Fed to conduct a third day of repo operations tomorrow morning
(US) Speaker Pelosi to announces briefing related to announcement on drug cost bill for tomorrow

Europe

(UK) DUP leader met with Ireland PM Varadkar in Dublin tonight to talk about backstop options
(UK) House of Commons Leader Rees-Mogg rejected the idea of suspending Parliament a second time – UK press
(UK) Brexit said to have cost 1.0K London finance jobs to date according to analysts, much lower than expected – financial press

Levels as of 1:20 ET

Nikkei 225, +0.6%, ASX 200 +0.6%, Hang Seng -1.2%; Shanghai Composite flat; Kospi +0.3%
Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%, Dax -0.2%; FTSE100 -0.8%
EUR 1.1041-1.1022 ; JPY 108.47-107.78; AUD 0.6833-0.6781 ;NZD 0.6334-0.6298
Gold -0.9% at $1,502/oz; Crude Oil +0.3% at $58.22/brl; Copper flat at $2.612/lb