China Reiterates Will Take Action

Jul 11 18, 06:19 GMT

General Trend:

Asian equity markets and US futures decline; Trump follows through with prior threat to publish tariffs list covering $200B in additional Chinese goods
Traders remain on alert for any comments out of China regarding specific possible countermeasures, so far China has just said it will announce countermeasures
Shanghai Composite declines over 2%, property sub-index drops over 3%
Australian utilities underperform, Competition regulator issued report on retail electricity pricing
Commodities trade generally lower: Shanghai Zinc drops by daily limit, US soybean futures decline over 1%
AUD/JPY underperforms amid the trade concerns, Offshore Chinese yuan (CNH) weakens by over 0.4%
Bank of Korea (BoK) expected to leave rates unchanged at Thursday’s policy decision

Headlines/Economic Data

Japan

Nikkei 225 opened -0.9%
TOPIX Marine Transportation index -2.2%, Securities -1.7%, Iron & Steel -1.5%, Electric Appliances -1.2%, Real Estate -1%
(JP) Japan to launch a public-private initiative to develop next-generation nuclear reactors that are safer and less expensive – Nikkei
(JP) Japan Center for Economic Research sees May real GDP at 2.1%; Exports fell 3.8% which reduced overall GDP by 1.8% – Nikkei
(JP) JAPAN MAY CORE MACHINE ORDERS M/M: -3.7% V 10.1% PRIOR; Y/Y: 16.5% V 9.6% PRIOR
(JP) JAPAN JUNE PPI (CGPI) M/M: 0.2% V 0.6% PRIOR; Y/Y: 2.8% V 2.7% PRIOR

Korea

Kospi opened -0.7%
LG display, 034220.KR China govt approves plans to build a new joint venture and OLED production plant in Guangzhou – Korean press
(KR) South Korea President Moon and India PM Modi agree to double trade by 2030 to $50B – Nikkei
(KR) South Korea June Unemployment Rate: 3.7% v 4.0% prior
(KR) Bank of Korea (BOK) likely to keep rates on hold Thursday; many analysts see possible first hike in August – Korean press
(KR) South Korea Financial Ministry: Govt to maintain expansionary fiscal policies in 2019 to focus on jobs and economy

China/Hong Kong

Hang Seng opened -2.3%, Shanghai Composite -1.7%
Hang Seng Materials index -2.5%, Property/Construction -1.8%, Info Tech -1.6%, Financials -1.5%
(CN) US reportedly preparing list of $200B in additional tariff’s on Chinese goods – press
(CN) US Senior Administration Official: Confirms 10% tariff on additional $200B in China goods; will try to avoid impacting consumer goods, new list of China tariffs will include products that China identified in its 2025 report; US will not implement tariffs on new list for 2-months
(CN) China Commerce Ministry (MOFCOM): Latest US proposed tariffs on $200B in Chinese goods interferes in globalization of world economy, harms WTO trade order; reiterates China will take counter measures
Offshore China yuan (CNH) declines over 0.5% versus US dollar, Trump Administration unveiled new tariffs list targeting additional $200B in Chinese goods
(CN) China PBoC Open Market Operation (OMO): Skips OMO for the 5th consecutive day: Net: CNY40B drain v CNY30B drain prior
(CN) China PBoC set yuan reference rate at 6.6234 v 6.6259 prior
(CN) China Tangshan City has ordered steel, coke and utilities companies to cut production from July 20 – Aug 31st – financial press
(CN) China PBoC official Ma Jun reiterated considering measures to offset the negative impact from US tariffs – US financial press
(CN) China FX Regulator SAFE chief: China companies should hedge to protect themselves against yuan’s fluctuations

Australia/New Zealand

ASX 200 opened -0.1%
ASX 200 Utilities index -3.4%, Resources -1.1%, Energy -1.1%, Telecom -1%, Financials -0.6%, REIT -0.6%
(AU) Australia ACCC gives final Retail Electricity Pricing Inquiry report with recommendations to improve electricity affordability for consumers and businesses
(AU) Australia July Westpac Consumer Confidence Index: 106.1 v 102.1 prior; m/m: 3.9% v +0.3% prior (highest level since Nov 2013)
(AU) AUSTRALIA MAY HOME LOANS M/M: +1.1% V -1.9%E; INVESTMENT LENDING: -0.1% V -0.9% PRIOR
(AU) Australia Prudential Regulation Authority (APRA) Chairman Byres: The ‘heavy lifting’ on home lending standards has largely been done; banks have passed the severe but plausible stress-test scenario

North America

US equity markets ended mixed: Dow +0.6%, S&P500 +0.4%, Nasdaq flat, Russell 2000 -0.5%
S&P500 Consumer Staples +1.2%, Financials -0.3%
PFE President Trump: “Just talked with Pfizer CEO and @SecAzar on our drug pricing blueprint. Pfizer is rolling back price hikes, so American patients don’t pay more. We applaud Pfizer for this decision and hope other companies do the same. Great news for the American people!” – twitter
Follow Up: PFE: Confirms to delay prices increases, will defer the drug price increases that were effective on July 1st
(US) US exported $11.5B in agricultural products to EU in 2017, making it the 5th largest export market for agri goods – press citing Dept of Agriculture data

Levels as of 01:30ET

Hang Seng -1.6%; Shanghai Composite -1.9%; Kospi -0.5%; Nikkei225 -1.1%; ASX 200 -0.7%
Equity Futures: S&P500 -0.7%; Nasdaq100 -0.9%, Dax -0.3%; FTSE100 -0.3%
EUR 1.1723-1.1747; JPY 110.77-111.15; AUD 0.7405-0.7484;NZD 0.6806-0.6839
Aug Gold -0.3% at $1,251/oz; Aug Crude Oil -0.3% at $73.70/brl; Sept Copper -2.9% at $2.75/lb