Japan May Need Extra Budget After Disaster Recovery

Jul 10 18, 07:12 GMT

General Trend:

Asian equity markets mostly track US gains
Chinese equities move between gains and losses
Chinese cement products firm Anhui Conch rises over 3%, guided H1 net up by as much as 100% on higher selling prices
Xiaomi gains over 8% in second day of trading
Yahoo Japan rises over 12% on buyback
Japanese energy companies Showa Shell and Idemitsu rise on merger plans
China June PPI rises at the fastest rate since Dec 2017, CPI in line
Japan confirms extra budget is under consideration amid impact from recent rains

Headlines/Economic Data

Japan

Nikkei 225 opened +0.7%
TOPIX Iron & Steel index +1.9%, Marine Transportation +1.7%, Electric Appliances +1.4%, Securities +1.3%
Megabanks outperform, track gains in the US financial sector
Nissan, 7201.JP Exhaust measurements briefing: Found exhaust inspection records were altered
(JP) Japan to consider supplemental budget for FY18 is current disaster recovery funding and financial reserves prove insufficient to deal with recent flooding and mud slides – Nikkei
Yahoo Japan, 4689.JP Altaba to sell 613.9M shares to Softbank at ¥360/shr cash
(JP) Japan Cabinet Office estimates Japan will need an extra ¥2.4T in Rev to meet FY25 fiscal target – Japan press
(JP) Japan Fin Min Aso: Still confirming the damage from recent heavy rains; confirms will consider extra budget if reserve funds do not meet needs
Show Shell, 5002.JP To merge with Idemitsu by next April in a share swap agreement – Japan press
(JP) Japan MoF sells ¥2.0T v ¥2.0T indicated in 0.10% (prior 0.10%) 5-yr bonds; avg yield -0.107% v -0.113% prior; bid to cover 4.87x v 3.88x prior

Korea

Kospi opened +0.6%
(KR) Korean press notes the continued disconnect among President Moon’s policies, those suggested by his advisers and reality; making it hard to see an actual direction in South Korea policy
Posco, 005490.KR Will take legal actions against a former employee who has led a group accusing CEO nominee Choi Jeong-woo of alleged embezzlement and dereliction of duty – Korean press
(KR) South Korea said to consider increasing 2019 budget by 10% y/y to KRW470T – Local Press

China/Hong Kong

Hang Seng opened +0.7%, Shanghai Composite +0.2%
Hang Seng Energy index +1.7%, Financials +1%, Materials +1%, Services +0.7%; Info Tech -1.9%, Consumer Goods -0.6%, Industrial Goods -0.4%
(CN) China Premier Li: China seeking common interests with Germany – Xinhua
(CN) China Ministry of Commerce (MOFCOM) announces measures to reduce impact of China-US trade frictions on companies. New tax income from the countermeasures taken against the US will be mainly used to relieve the impacts on companies and their employees. Companies will be encouraged to increase imports of agricultural products such as soybeans and soybean meal, aquatic products, and automobiles from other countries – Xinhua
(CN) PBoC Adviser sees room for additional liquidity injection – Chinese Press
(CN) Yuan weakness has not slowed down foreigners buying of yuan bonds; June buying of bonds was close to a 2-yr high despite the yuan having the biggest monthly drop against the dollar in ~24 years
(CN) China PBoC Open Market Operation (OMO): Skips OMO for the 4th consecutive day: Net: CNY30B drain v CNY0B drain prior
(CN) China PBoC set yuan reference rate at 6.6259 v 6.6393 prior
(CN) CHINA JUN CPI M/M: -0.1% V -0.1%E; Y/Y: +1.9% V +1.9%E
(CN) CHINA JUN PPI Y/Y: 4.7% V 4.5%E (highest level since Dec 2017)
(CN) China President Xi: Will help to build ports and railroads in Arabic nations, to offer $20B loan quota to these nations

Australia/New Zealand

ASX 200 opened +0.2%
ASX 200 Utilities index -1.6%, Financials -1%, Telecom -0.5%; Resources +0.8%, Energy +0.5%
AMP.AU Puts more than 300 advisers on notice that it may revoke their licences to gives financial advice under moves to reduce risk after royal commission – AFR
VRL.AU Confirms A$51M entitlement offering; sees non-cash asset impairment of ~A$166M; Guides FY18F Net loss A$6.0-10.0M (guided break even to loss of A$10M prior), EBITDA of A$88-92M, adj EBITDA of A$98-102M
(NZ) New Zealand Jun Card Spending Retail m/m: 0.8% v 0.5%e; Total m/m: 0.4% v 0.5% prior
(AU) Australia sells A$150M v A$150M indicated in 1.25% Aug 2040 indexed bonds, avg yield 0.9086%, bid to cover 3.45x
(AU) Australia Jun NAB Business Conditions: 15 v 14 prior; Confidence: 6 v 7 prior

North America

US equity markets ended higher: Dow +1.3%, S&P500 +0.9%, Nasdaq +0.9%, Russell 2000 +0.6%
S&P500 Financials +2.3%, Industrials +1.9%
UAE Energy Min (OPEC president) Mazrouei: does not foresee need for extraordinary meeting before Dec
(US) Pres Trump picks Brett Kavanaugh as nominee for US Supreme Court to replace Kennedy – US press

Europe

(NO) Oil drillers in Norway said to strike after wage mediation talks did not succeed – US financial press
Sky [SKY.UK]: Fox reportedly readying new offer for Sky to outbid Comcast, valuing Sky at ~£25B – FT

Levels as of 01:30ET

Hang Seng +0.4%; Shanghai Composite +0.1%; Kospi +0.6%; Nikkei225 +1.1%; ASX 200 -0.2%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.4%, Dax +0.2%; FTSE100 +0.9%
EUR 1.1738-1.1763; JPY 110.79.-111.20; AUD 0.7460-0.7484;NZD 0.6833-0.6857
Aug Gold -0.1% at $1,259/oz; Aug Crude Oil +0.6% at $74.33/brl; Sept Copper -0.2% at $2.87/lb