General Trend:
- Asian equity markets trade generally lower amid weakness in China
- US earnings in focus: Facebook drops over 20% post earnings, Ford cut FY EPS forecast
- Declines in Facebook weigh on Nasdaq Futures
- Japan Nikkei index underperforms the TOPIX amid speculation related to the BOJ’s ETF buying program
- Large Nikkei component Fast Retailing declines
- Japanese automation company Fanuc declines following earnings
- Eisai weighed down by disappointing Alzheimer’s data
- South Korean chipmaker Hynix rises after its earnings and guidance
- Australian mining updates in focus: Iron ore producer Fortescue declines, while gold miner Newcrest rises following production updates
- Australian media companies Fairfax and Nine Entertainment to merge
- Macquarie Group declines over 2%, issued Q1 guidance and announced CEO succession plan
- South Korea Q2 GDP data meets ests
- Australia Q2 import prices rise at the quickest pace since 2014
- Japan June PPI Services data rises at the fastest pace since 2015
- PBoC skipped its daily open market operation (OMO) for the 5th straight session, cites the need to ensure ‘reasonably ample’ liquidity
- China’s Tianjin Realty noted high bond redemption pressure
- JGB yields remain elevated ahead of next week’s BoJ policy meeting (July 30-31st)
- The EU and US reached a ‘breakthrough’ on trade, according to Germany’s Econ Min
- The later today ECB meeting in focus
- Japanese companies which may report earnings later today include Tokyo Electron, Omron, Nomura, Nissan Motor, Canon Inc, KAO Corp, Fujitsu and Fuji Electric.
Headlines/Economic Data
Japan
- Nikkei 225 opened +0.4%
- TOPIX Securities index -0.2%; Iron Steel +0.9%, Real Estate +0.8%, Retail trade +0.7%, Marine Transportation +0.7%
- (JP) Japan and the US to hold new trade talks by as soon as Aug – Japanese Press
- (JP) Japan Jun PPI Services y/y: 1.2% v 1.0%e
- (JP) Japan Investors Net Buying of Foreign Bonds: -¥209.2B v -¥8.2B prior; Foreign Buying of Japan Stocks: +¥173.5B v +¥601.9B prior
- (JP) Bank of Japan (BOJ) expected to discuss reducing investment in exchange traded funds that track the Nikkei Stock Average in favor of those that follow broader indexes such as the Topix at next meeting – Nikkei
- (JP) Japan planning to raise FY18 minimum wage benchmark by ~3% (3rd consecutive raise) amid a severe labor shortage – Nikkei
- (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% (prior 0.10%) 2-yr JGBs; avg yield -0.117% v -0.128% prior; bid to cover 4.38x v 4.88x prior
- Nintendo: 7974.JP 2018 shipments of the Switch device seen at 19.8M units; 2019 shipments seen rising to 29.7M units – IHS
Korea
- Kospi opened +0.5%
- (KR) SOUTH KOREA PRELIM Q2 GDP Q/Q: 0.7% V 0.7%E; Y/Y: 2.9% V 2.9%E
- Hynix,[+1%], 000660.KR Reports Q2 (KRW) Net 4.33T v 3.4Te; Op 5.57T v 5.3Te; Rev 10.37T v 10.2Te
- (KR) South Korea Party and government said to reach agreement on increase in the coal tax; also agreed to cut the LNG tax – South Korean Press
China/Hong Kong
- Hang Seng opened +0.6%, Shanghai Composite +0.1%
- Hang Seng Info Tech index -1.8%, Materials -1%, Financials -1%, Consumer Goods -0.9%, Industrial Goods -0.7%, Industrials Goods -0.7%, Property/Construction -0.2%
- (CN) China PBOC said to have eased capital requirements form some banks in order to support lending in an effort to mitigate increasing risks to the economy from the trade war – press
- (CN) China Jun Swift Global Payments (CNY): 1.81% v 1.88% prior
- (CN) China PBoC Open Market Operation (OMO): Skips OMO for the 5th consecutive session; Net drains CNY70B v drains CNY60B prior
- (CN) China PBOC sets yuan reference rate at 6.7662 v 6.8040 prior
- (CN) China State Planner (NDRC) researcher Guo Liyan: Inflation to moderate in H2, expected to avg 1.8% in 2018; trade frictions will have a relatively small impact – Xinhua
Australia/New Zealand
- ASX 200 opened flat
- ASX 200 Financials index -0.3%; Energy +0.7%, Resources +0.4%
- Fairfax, [+16.6%], FXJ.AU To be acquired by Nine Entertainment in cash and stock transaction, shareholders to receive 0.3627 Nine shares and A$0.025/share in cash
- FMG.AU Reports Q4 total ore shipped 46.5Mt v 44.7Mt y/y; Ore mined 49.8Mt v 53.5 /yy; C1 costs $12.17/WMT v $13.14 q/q
- NCM.AU Reports Q4 gold production 653K oz, +10% q/q; AISC $795/oz v $826 q/q
- (AU) AUSTRALIA Q2 EXPORTS PRICE INDEX Q/Q: +1.9% V -1.3%E; IMPORTS PRICE INDEX Q/Q: 3.2% V 1.9%E
- (AU) According to NAB, there are some bets in the market for the Reserve Bank of Australia (RBA) to not raise rates until early 2020 – US financial press
- (NZ) New Zealand sells NZ$150M v NZ$150M indicated in April 2025 bonds, avg yield 2.4386%, bid to cover 3.42x
- (NZ) New Zealand Fin Min Robertson: Expects growth to pick up in H2, expect investment to hold up despite confidence slump; sees CPI rising to 2% over time
Other Asia
- (PH) Philippines Central Bank (BSP) Chief Espenilla: ‘Done’ with bank reserve ratio requirement (RRR) cuts, could be resumed in 2019; can deploy arsenal of tools for price stability
- (IN) US said to consider waiver for India regarding 25% steel tariff – Local Press
[Singapore IP ]
North America
- US equity markets ended higher: Dow +0.7%, S&P500 +0.9%, Nasdaq +1.2%, Russell 2000 +0.3%
- S&P500 Industrials +1.5%, Health Care +1.3%, Tech +1.3%
- (VE) Venezuela President Maduro: FX redenomination has been delayed until Aug 20th; the new currency overhaul plan to remove ‘5 zeros’ from the Bolivar currency rather than 3
- (US) President Trump: European Union representatives told me that they would start buying soybeans from our great farmers immediately. Also, they will be buying vast amounts of LNG! – tweet
- (US) DOE CRUDE: -6.2M V -1ME
- FB Reports Q2 $1.74 v $1.75e, Rev $13.2B v $13.4Be; Total revenue growth rate expected to continue to decelerate in H2 2018, down in high single digits during Q3 and Q4 – earnings call comments (-20% after hours)
Europe
- (US) Pres Trump: US and EU will be winners, have agreed to work together toward zero tariffs on non-auto industrial goods – press conf with EU’s Juncker
- (UK) Reportedly UK govt is considering a contentious Brexit plan over the Irish border issue – press
Levels as of 01:30ET
- Hang Seng -0.7%; Shanghai Composite -0.7%; Kospi +0.7%; Nikkei225 -0.1%; ASX 200 +0.0%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.9%, Dax -0.4%; FTSE100 -0.4%
- EUR 1.1665-1.1744; JPY 110.70-111.05; AUD 0.7433-0.7463;NZD 0.6830-0.6851
- Aug Gold -0.1% at $1,230/oz; Sept Crude Oil +0.0% at $69.33/brl; Sept Copper -0.8% at $2.84/lb
