General Trend:
- Asian equity markets trade mostly lower after US President Trump threatened additional tariffs on $200B worth of Chinese goods; China threatens more countermeasures
- MSCI Asia-Pacific (ex-Japan) index trades at 4-month low
- Shanghai Composite declines over 2% after Monday’s holiday, index breaches 3,000 for the first time since 2016
- Shares of Chinese telecom ZTE remain under pressure, company’s A-shares trade limit down (-10%)
- Australian equities outperform on gains in the energy and financial sectors
- Japan IPO, Mercari opens strong, 67% above IPO pricing in its first day of trade, rising 76% from pricing
- AUD/JPY declines over 0.5%, trade concerns overshadow RBA minutes; USD/JPY breaches ¥110
- China PBoC conducts second medium-term lending facility (MLF) this month at unchanged rate; Press speculation continues to mount regarding RRR cut
- US 10-yr Treasury yields decline by over 3bps amid the equity weakness
- N. Korea’s Kim arrives in China for a 2 day visit
Headlines/Economic Data
Japan
- Nikkei 225 opened -0.5%
- TOPIX Retail trade index -1.6%, Marine Transportation -1.6%, Real Estate -1.6%, Securities -1.5%
- (JP) Yesterday’s earthquake in western Japan hit aging infrastructure hard, exposing weaknesses – Nikkei
- XRX Fujifilm files $1B breach of contract suit against Xerox over terminated merger (as expected)
- Kubota Pharma, [+22%], 4589.JP EMIXUSTAT trial showed better results v placebo
- (JP) Japan MoF sells ¥698.9B v ¥700B indicated in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.707% v 0.746% prior; Bid to cover: 4.22x v 4.41x prior
Korea
- Kospi opened -0.1%
- (KR) South Korea mobile carriers have secured frequency spectrums for the upcoming fifth-generation network in an auction at a total of KRW3.6T – Korean press
- Woori Bank, 000030.KR Seeking approval for holding company structure – Korean press
- (KR) South Korea Deputy Fin Min Kim: Govt to continue its efforts to realign budget spending in a way to tackle the country’s chronic low birth rate, boost job creation and facilitate innovative growth
- (KR) US and South Korea agree to suspend joint military drill scheduled for August – press citing SK military
- (KR) North Korea Kim planning a visit to China as soon as today – Nikkei
China/Hong Kong
- Hang Seng opened -1.0%, Shanghai Composite -1.3%
- Hang Seng Industrial Goods index -3.7%, Materials -3.6%, Services -3%, Energy -3%, Info Tech -2.8%, Consumer Goods -2.7%, Financials -2.4%, Property/Construction -2.3%
- 763.HK , [-13%],(US) US Senate has enough votes to pass defense bill which includes penalties for China telecom firm ZTE
- (US) US President Trump: Has asked USTR to identify $200B in China goods for additional tariffs at a rate of 10% – financial press
- (CN) China PBoC expected to increase ‘targeted’ monetary support – Chinese Press
- (CN) China Commerce Ministry (MOFCOM): US threats on $200B tariffs list disobeys negotiation and consensus reached previously between the two countries: to take qualitative and quantitative measures if US publishes additional tariffs list
- XIAOMI.IPO China Securities Regulator (CSRC): Xiaomi applied to have review of CDR IPO postponed; co. is seeking to issue H-shares first and then CDRs
- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7, 14 and 28-day reverse repos v CNY100B injected in 7, 14 and 28-day reverse repos prior: Net: CNY50B injection v CNY90B injected prior
- (CN) CHINA PBOC CONDUCTS CNY200B IN 1-YEAR MEDIUM-TERM LENDING FACILITY (MLF) V CNY463B PRIOR AT 3.30% V 3.30% PRIOR
- (CN) China PBoC sets yuan reference rate at 6.4235 v 6.4306 prior
- (CN) There is renewed speculation that the PBoC could ‘soon’ cut the reserve ratio requirement (RRR) – financial press
- (CN) China State Planner (NDRC) Chief: Need to closely monitor new problems in the economy; would like to see targeted policy for boosting investment
Australia/New Zealand
- ASX 200 opened +0.1%
- ASX 200 Energy index +1.2%, Financials +0.6%, Telecom +0.5%
- AGO.AU Board assessed offer from Hancock and determined that it could be expected to lead to a superior proposal vs Mineral Resources offer
- IAG.AU [+3%],Confirms to sell operations in Thailand, Indonesia and Vietnam to Tokio Marine for A$525M
- (AU) Reserve Bank of Australia (RBA) June Meeting Minutes: Pricing in money markets implied that the cash rate was expected to remain unchanged for a considerable period, with a 25 basis point increase not expected before the second half of 2019
- (AU) AUSTRALIA Q1 HOUSE PRICE INDEX Q/Q: -0.7% V -1.0%E; Y/Y: 2.0% V 1.7%E
Other Asia
- (ID) Indonesia Central Bank Gov Warjiyo: Ready to be preemptive regarding Fed and ECB policy
North America
- US equity markets ended mixed: Dow -0.4%, S&P500 -0.2%, Nasdaq flat, Russell 2000 +0.5%
- S&P500 Energy +1%; Consumer Staples -1.4%
- JD Reports 618 mid-year shopping festival sales CNY127.5B v CNY119.9B y/y – Chinese press
- AAPL Trump said to have told CEO Cook that iPhones will be excluded from China tariffs – NYT
Europe
- (UK) Chancellor Hammond has reportedly warned cabinet about any new spending after being forced to find £25B for the NHS – UK press
- (UK) PM May defeated in House of Lords over plans to give lawmakers meaningful vote over final Brexit agreement – press (as expected)
- Ministerial meeting of the 33 member Global Forum on Excess Steel Capacity scheduled for Wednesday in Paris has been cancelled due to trade tensions – Nikkei
- (ES) Spain PM Sanchez: plan to call elections in 2020 – TV interview
- (EU) ECB’s Draghi: Economies have undergone profound structural changes
Levels as of 01:30ET
- Hang Seng -2.5%; Shanghai Composite -3.0%; Kospi -0.9%; Nikkei225 -1.4%; ASX 200 +0.2%
- Equity Futures: S&P500 -0.9%; Nasdaq100 -1.0%, Dax -1.1%; FTSE100 -0.8%
- EUR 1.1619-1.1644; JPY 109.66-110.57; AUD 0.7388-0.7427;NZD 0.6924-0.6944
- Aug Gold +0.3% at $1,285/oz; Aug Crude Oil -0.6% at $65.28/brl; Jul Copper -0.7% at $3.10/lb
