Asian Indices Trade Generally Lower As Yuan Weakens

Aug 07 19, 06:13 GMT

General Trend:

Nikkei underperforms as yen strengthens, insurers and marine/transportation companies decline; Softbank Group to report earnings after Nikkei close
Chip-related firm SUMCO drops over 10% in Tokyo on guidance
Samsung Electronics denied it is aiming to replace all chip-related materials made by Japan
Japanese materials firms (Showa Denko, Mitsubishi Materials) to report earnings as investors try to assess impact of Japan’s export restrictions on South Korea
Japanese companies start to announce price increases ahead of expected Oct sales tax rise (Ajinomoto, Japan Tobacco)
Hong Kong companies note impact of protests in earnings reports
Australia ASX 200 rises after underperformance during prior session, REITs gain
Commonwealth Bank drops as earnings declined
RBNZ cuts rates by larger than expected 50bps, rate path suggests some probability of additional easing
Some analysts call for Nov rate cuts after RBNZ decision
Aussie tracks declines in Kiwi, some are now focusing on RBA policy after RBNZ move
Yuan declines after PBoC fix, currency continues to be fixed stronger than the key ‘7 level’
Australia July construction index hits lowest level since 2013, new orders and employment components decline
Gold Futures trade above $1,500/oz (highest since 2013) amid EUR gains and central bank easing
China July foreign exchange reserves expected to be released later today
China July trade balance may be released Aug 7-8th

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened flat
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE (OCR) BY 50BPS TO 1.0%; MORE THAN EXPECTED
(NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Today’s decision to cut does not rule out any future action; Lowering the interest rate is completely sustainable at this point in time; 50bps cut was a strategic decision, may have to consider using negative rates – post rate decision press conference
(AU) AUSTRALIA JUNE HOME LOANS M/M: 0.4% V 0.5%E; Owner Occupied Loan Value m/m: +2.4% v -1.0%e
CBA.AU Reports FY19 (A$) Cash Net profit 8.49B v 8.92B y/y; Rev 23.19B v 23.56B y/y
OPT.AU Meets Primary Endpoint in Phase 2B Study of OPT-302 in Wet AMD [+131%]
SUN.AU Reports FY19 (A$) Cash earnings 1.12B v 1.09B y/y; announces A$506M shareholder distribution on sale of Aussie Life Insurance business, proposes share consolidation 1,000 to 971
GXY.AU Guides H1 to record $150-185M impairment related to Mt Cattlin
(AU) AUSTRALIA JULY AIG PERFORMANCE OF CONSTRUCTION INDEX: 39.1 V 43.0 PRIOR (11th consecutive month of contraction)
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: -2.6% v +2.7% prior

Japan

Nikkei 225 opened -0.2%
(JP) Bank of Japan (BOJ) Summary of Opinions from July 29-30 meeting: Need to persistently continue with easing, momentum for reaching 2% inflation maintained
6753.JP CEO Tai Jeng-wu: Will pay performance based bonuses 3 times a year (prior 2) to help motivate staff – Nikkei

Korea

Kospi opened +0.3%
(KR) South Korea Fin Min Hong: Will take all efforts to stabilize markets, will take preemptive measures in case of herd behavior; US not likely to name Korea a currency manipulator
(KR) Bank of Korea (BOK) Gov Lee: Will make efforts to stabilize markets with Govt, will focus on stabilizing financial and FX markets; may consider responding to changes with monetary policy

China/Hong Kong

Hang Seng opened flat; Shanghai Composite opened +0.4%
(CN) CHINA PBOC SETS YUAN REFERENCE RATE: 6.9996 V 6.9683 PRIOR
(CN) China to revise the quota rules for farm product import tariffs, to remove soybean, rapeseed and palm oil import tariff quota management quotas – US Financial Press
(CN) China State Banks said to be buying up USD through swaps in yuan onshore forwards – financial press
(CN) China PBoC Open Market Operation (OMO): Skips for 12th consecutive session; Net CNY0B drained v CNY0B drained prior
(HK) Hong Kong Monetary Authority refutes speculation it lends $400B in foreign currency reserve to mainland China
(CN) JPMorgan: USD/CNY may trade at 7.35 by end of 2019; notes higher probability that US could raise tariff level on China to 25% – US financial press
293.HK Reports H1 (HK$) Net 1.35B v -263M y/y, Rev 53.6B v 53.1B y/y
(CN) China PBoC: China does not manipulate its currency; Reiterates stance to keep CNY rate basically stable at reasonable and balanced level (overnight)
(CN) China PBoC said to have told foreign companies that CNY currency (Yuan) will not keep falling – financial press (overnight)

North America

PDCE Said to be in talks to merge with SRC Energy – financial press
DIS Reports Q3 $1.35 v $1.76e, Rev $20.3B v $21.7Be; Exec: Fox acquisition diluted EPS by $0.60/shr; streaming bundle to launch Nov 12th – earnings call
(US) Fed’s Bullard (dove, voter): further rate action may be desirable but economy is still adjusting to Fed’s shift as of early this year from raising rates to lowering them
WYNN Reports Q2 $1.44 v $1.42e, Rev $1.66B v $1.59Be

Levels as of 1:20 ET

Nikkei 225, -0.5%, ASX 200 0.6%, Hang Seng -0.6%; Shanghai Composite -0.1%; Kospi -0.5%
Equity Futures: S&P500 -0.6%; Nasdaq100 -0.7%, Dax -0.4%; FTSE100 -0.2%
EUR1.1220-1.1198 ; JPY 106.47-105.93 ; AUD 0.6783-0.6676 ;NZD 0.6558-0.6377
Gold +0.9% at $1,496/oz; Crude Oil -0.7% at $53.60/brl; Copper -0.4% at $2.554/lb