General Trend:
- Japanese equities underperform amid continued uncertainty related to Korea/Japan relations; Earnings-related concerns weigh on Canon Inc and AGC
- Trade-sensitive TOPIX Marine Transportation index drops over 2%; US/China trade talks said to have stalled amid Huawei uncertainty (press)
- IT and Telecom Services sectors weigh on equities in China amid lingering trade concerns
- Netflix declines over 11% following earning/guidance
- Australian energy names Santos and Woodside decline following their respective production updates
- Lend Lease rises in Australia on development agreement with Google
- Bank of Korea cuts rates for first time since 2016; noted risks related to Japan’s export curbs, delayed recovery in exports
- Some analysts say Aussie jobs data supports RBA’s on hold position
- Japanese exports decline for 7th straight month in June, shipments to China worsen
- China expects current account surplus for Q2, ‘small’ current account surplus seen for 2019
- Taiwan Semi expected to report quarterly results later today
- US companies expected to report earnings during the NY morning include Blackstone Group, Honeywell, Morgan Stanley, Nucor, Philip Morris, SunTrust Bank, UnitedHealth and Union Pacific.
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.1%
- (AU) AUSTRALIA JUN EMPLOYMENT CHANGE: +0.5K V +9.0KE; UNEMPLOYMENT RATE: 5.2% V 5.2%E
- (AU) Australia Q2 NAB Business Confidence: 6 v -1 prior
- WPL.AU Reports Q2 Production 17.3MMBOE v 17MMBOEe; Rev A$738M v A$1.1B y/y
- STO.AU Reports Q2 Production 18.6 MMBOE v 18.4 MMBOE y/y; Sales Volume: 22.4 MMBOE v 22.8 MMBOE y/y; Rev A$959M v A$886M y/y
- S32.AU Reports Q4 Met Coal Production: 1.28Mt v 1.2Me; Aluminium Production: 245Kt v 246Kt y/y
- (AU) Australia sells A$500M v A$500M indicated in Oct 2019 notes, avg yield 1.1035%
Japan
- Nikkei 225 opened -0.6%
- (JP) JAPAN JUN TRADE BALANCE: ¥589.5B V +¥403.5BE; ADJUSTED TRADE BALANCE: -¥14.4B V -¥153.2BE; Exports to China -10.1% y/y; US +4.8% y/y; EU -6.7% y/y ; Asia -8.2% y/y
- (JP) Japan to send official to defend export curbs at WTO – Japanese Press
- (JP) Japan Fin Min Aso: trade friction is a large downside risk for the global economy; G7 officials did not debate Trump’s comments that China and Europe are intentionally devaluing FX – comments in France
- 5201.JP Confirms press report, H1 results will miss estimates due to larger than expected declines in automotive glass demand in US and Europe
- (JP) Japan to require extra tests on unapproved US GMO wheat imports (contrary to prior reports)
- (JP) US White House NSA Bolton said to be making arrangements to visit Japan next week, the visit may focus on a shipping coaliton – Japanese Press
- (JP) Japan to lead development of international cryptocurrency payment network – Financial Press
- 7238.JP Confirms to sell ¥20B stake to Japan Industrial Solutions via preferred shares; Will record ¥7.8B charge
Korea
- Kospi opened -0.2%
- (KR) BANK OF KOREA (BOK) CUTS 7-DAY REPO RATE BY 25BPS TO 1.50%; NOT EXPECTED; GOV LEE: NOT A LOT OF ROOM FOR POLICY ACTION, SOME ROOM TO A DEGREE; Rate decision was NOT unanimous, 1 member called for rates to remain on hold
- (KR) South Korea said to be considering various scenarios over Japan’s deadline for arbitration panel related to the issue of forced labor – Yonhap
China/Hong Kong
- Hang Seng opened -0.7%; Shanghai Composite opened -0.3%
- (CN) US-China trade talks reportedly have stalled while Trump administration figures out way forward on Huawei restrictions – press
- (CN) China to limit coal and steel output based on the company ratings – Local Press
- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 7-day reverse repos v injects CNY100B prior; Net CNY100B injected v CNY100B injected prior (3nd consecutive injection)
- (CN) China PBOC sets yuan reference rate: 6.8761 v 6.8827 prior
- (CN) China Jun FX Net Settlement Clients (CNY) -131.4B v +31.8B prior
- (CN) China FX Regulator SAFE spokesperson Wang Chunying: In H1 China’s forex market supply, demand was basically balanced; Impact of US/China trade dispute on cross border flows is controllable
- (HK) Hong Kong Monetary Authority (HKMA) will consider increasing China stock connect quota at ‘appropriate time’ – China financial press
Other
- (TH) Thailand Tourism Chief: Thai baht strength is affecting arrivals, will speak with central bank about strength in baht
North America
- (US) FEDERAL RESERVE BEIGE BOOK: ECONOMIC ACTIVITY EXPANDED AT MODEST PACE FROM MID-MAY TO EARLY JULY
- (US) Fed’s George (hawk, voter): Prepared to adjust view of appropriate monetary policy should downside risks materialize
- NFLX Reports Q2 $0.60 v $0.56e, Rev $4.92B v $4.93Be; paid domestic memberships decline q/q
- IBM Reports Q2 $3.17 v $3.06e, Rev $19.2B v $19.1Be
- EBAY Reports Q2 $0.68 v $0.63e, Rev $2.70B v $2.67Be; raises FY EPS and cuts Rev guidance
- URI Reports Q2 $4.74 v $4.48e, Rev $2.29B v $2.26Be
Europe
- (UK) PM candidate Johnson: whole Brexit withdrawal agreement is effectively defunct; Brexit backstop for Ireland won’t work
Levels as of 1:20 ET
- Nikkei 225, -1.9%, ASX 200 -0.5%, Hang Seng -0.5%; Shanghai Composite -0.8%; Kospi -0.3%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.5%, Dax -0.9%%; FTSE100 -0.4%
- EUR 1.1241-1.1223 ; JPY 108.00-107.63 ; AUD 0.7027-0.7005 ;NZD 0.6743-0.6724
- Gold +0.1% at $1,424/oz; Crude Oil +0.1% at $56.82/brl; Copper +0.1% at $2.705/lb
