Asia Summary
Asian markets opened weaker as dollar weakness, flipped into some strength as risk off sentiment took hold of the markets with increasing tensions in the Korea peninsula. RBA’s Kent reiterated the RBA’s prior statement that A$ strength is more a symptom of USD weakness. AUD/USD fell 0.5% to 0.7867 after Westpac consumer confidence for August fell 1.2% m/m to 95.5.Several large earthquakes reported in China over the course of the last 12 hours, so far 9 have been reported dead. PBOC strengthened yuan fixing to highest in a week, sending onshore yuan higher for a ninth straight day against trade-weighted basket, longest streak since index was started late last year.
USD/KRW rose 0.6% to 1,135.20 after US intelligence officials find that North Korea has successfully produced a miniaturized nuclear warhead, President Trump issued a warning that if North Korea escalates the nuclear threat, “they will be met with fire and fury like the world has never seen.” North Korean state-run media issued statement saying, US war hysteria will bring a miserable end; North Korea could strike before any preemptive attack by the US, could strike Guam with mid-to-long range missiles. South Korea government places focus on defense readiness.
Key economic data
(CN) CHINA JULY CPI Y/Y: 1.4% V 1.5%E; PPI Y/Y: 5.5% V 5.6%E; Food prices -1.1% y/y; Non-food prices +2.0% y/y
(KR) SOUTH KOREA JULY UNEMPLOYMENT RATE: 3.6% V 3.8%E
(AU) Australia Aug Westpac Consumer Confidence Index: 95.5 v 96.6 prior; m/m: -1.2% v 0.4% prior
(AU) AUSTRALIA JUN HOME LOANS M/M: 0.5% V 1.5%E
Speakers and Press
China
(CN) US President Trump appears to be giving China banks dealing with North Korea temporary pass from threatened US sanctions after China supported UN deal against North Korea – press
Australia
(AU) Australia RBA Assistant Gov Kent: No initial comments on monetary policy; Reiterates further rise in A$ would result in slightly lower domestic growth, that’s a statement of fact
Korea
(KR) North Korea state media: US war hysteria will bring a miserable end; North Korea could strike before any preemptive attack by the US, could strike Guam with mid-to-long range missiles
(KR) South Korea Fin Min Kim: Sees limited risk impact on markets from North Korea
Japan
(JP) Former BoJ Official Kiuchi: Yield target may change to 3-5 years; Japan govt not insisting on achieving 2% CPI – press
(JP) Japan Econ Min Motegi: Must looks at several indicators not just CPI to determine if Japan is out of deflation
Asian Equity Indices/Futures (00:00ET)
Nikkei -1.5%, Hang Seng -0.8%, Shanghai Composite -0.2%, ASX200 +0.5%, Kospi -0.9%
Equity Futures: S&P500 -0.3%; Nasdaq100 -0.4%, Dax -0.2%, FTSE100 -0.1%
FX ranges/Commodities/Fixed Income (00:00ET)
EUR 1.1764-1.1718; JPY 110.32-109.74; AUD 0.7915-0.7855; NZD 0.7335-0.7309
Dec Gold +0.7% at 1,270/oz; Sept Crude Oil -0.3% at $49.02/brl; Sept Copper -0.1% at $2.94/lb
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.7075 V 6.7184 PRIOR
(CN) China PBOC OMO injects CNY140B in 7 and 14-day reverse repos v CNY140B prior; Drains net CNY0B v CNY0B prior
(CN) China MoF sells 2-yr bonds at 3.423%, bid-to-cover 2.36x; Sells 5-yr bonds at 3.6005%, bid-to-cover 3.16x
Equities notable movers
Hong Kong/China
Esprit, 330.HK Guides FY16/17 Net HK$50-80M v HK$21M y/y; +7.3%
Japan
Toshiba, 6502.JP Confirms to disclose Q1 earnings and FY16 securities report tomorrow; Has not received audit review from auditor PwC; +4.3%
Rohto Pharmaceutical,4527.JP Reports Q1 Net ¥2.3B v ¥1.4B y/y, Op ¥3.4B v ¥2.2B Rev ¥35.8B v ¥32.9B y/y; +12.7%\
Sumco, 3436.JP Reports H1 Net ¥9.6B v ¥2.3B y/y, Op ¥17.3B v ¥6.2B Rev ¥123.9B v ¥103.2B y/y; -10.8%
Australia
Bellamy’s, BAL.AU Camperdown’s CNCA registration suspension lifted; +6.9%
CBA.AU Reports FY17 Cash profit A$9.88B v A$9.79Be; Net interest income A$17.6B v A$16.9B y/y; +0.7%
