Equities Open Lower After US Declines

Aug 21 19, 06:53 GMT

General Trend:

Asian financials trade generally lower after declines in the US on lower bond yields
Property shares outperform in China amid recent cut in the loan prime rate (LPR)
Wanhua Chemical reports ~46% decline in H1 profits [co. is the world’s largest producer of MDI]
Smartphone company Xiaomi declines in HK on weaker than expected results
Alibaba said to postpone HK IPO due to recent protests
Air China and China Construction Bank are expected to report earnings after the HK close
Australia’s Brambles [supply-chain logistics co.] declines over 9 % on outlook
Australia sells 2031 bonds at lower yield and bid to cover
Yen weakens after gains on Tuesday, Nikkei Futures pare losses; Bond yields and FOMC minutes in focus
Fed’s Quarles does not comment on monetary policy ahead of FOMC minutes release on Wed
Offshore yuan (CNH) rises amid stronger yuan fixing
Some Japanese companies have reported being granted permits to resume exports to South Korea

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.3%
(NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: monetary policy is still effective, latest rate cut gave inflation best chance to lift earlier, reducing probability unconventional tools needed
BXB.AU Reports FY19 Underlying net $803.7M v $826.1M y/y; Rev $4.6B v $4.5B y/y; Guides FY20 Rev growth at lower end of mid-single digit growth objective
(AU) Australia sells A$800M v A$800M indicated in 1.50% June 2031 bonds, avg yield 0.9753% v 1.056% prior, bid to cover 2.46x v 3.38x prior
(AU) Australia July Skilled Vacancies M/M: +0.4% v -0.6% prior

Japan

Nikkei 225 opened -0.9%
(JP) Convenience stores in Japan are expected to offset increase in sales tax with discounts – Japanese Press
(KR) Japan Defense White Paper alleges that North Korea has already made nuclear warheads – Japanese Press
7203.JP Planning to charge auto part companies more for steel in H2 – Japan press
(JP) Japan Foreign Min Kono: Agreed with China and South Korea to aim for a Regional Comprehensive Economic Partnership (RCEP) agremeent by end of the year

Korea

Kospi opened -0.3%
(KR) South Korea July PPI M/M 0.0% v -0.3% prior, Y/Y: -0.3% v +0.1% prior
(KR) South Korea Aug 1-20th Exports -13.3% y/y; Chip Exports -29.9% y/y; Imports -2.4% y/y
(KR) South Korea Q2 Short Term External Debt: $140.0B v $129.4B prior

China/Hong Kong

Hang Seng opened -0.3%; Shanghai Composite opened -0.2%
BABA Follow Up: Said to be postponing HK$15B IPO in Hong Kong to October due to protesting (was expected in late August) – press
(US) Pres Trump: Reiterates the US is not ready to make a deal with China
(CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v Injects CNY50B prior; Net drain CNY40B v drain CNY10B prior
(CN) China PBoC sets yuan reference rate: 7.0433 v 7.0454
2202.HK Reports H1 (CNY) Net 11.8B v 9.1B y/y , Rev 139.3B v 104.9B y/y
1810.HK Reports Q2 (CNY) adj Net 3.64B v 2.1B y/y, Op 2.34B v -7.59B y/y; Rev 52.0B v 45.2B y/y
(CN) China Foreign Exchange Trade System: On Aug 20th conducted CNY3.0B in LPR based interest rate swaps – WeChat
(HK) US Senate Majority Leader McConnell Op Ed: Senate to reconsider Hong Kong status is autonomy eroded; China’s actions in HK will shape US relationship

North America

(CN) Sec of State Pompeo: thinks a US-China deal could be reached by the 2020 election – CNBC
(US) Pres Trump: we are looking at possible tax cuts all the time; not talking about doing anything at this moment on tax cuts but it’s something I’m thinking about
(US) Fed’s Quarles (hawk, voter): No comments on monetary policy
(US) Fed’s Daly (dove, non-voter): sees solid domestic momentum that points to a continued economic expansion; don’t think we’re headed towards a recession right now
(VE) Venezuela President Maduro: Authorized ‘secret’ meetings with the Trump Administration, notes his gov’t had secret contacts with the Trump Admin
(US) Weekly API Oil Inventories: Crude: -3.5M v +3.7M prior

Europe

(IT) Italy PM Conte: confirms will meet with President to tender resignation later today; will stop govt experience here
(UK) UK budget reportedly could be delayed until 2020 if general election is called; could delay decision on BOE governor until after Brexit
(DK) US President Trump to postpone meeting with leader of Denmark over Greenland – US financial press

Levels as of 1:20 ET

Nikkei 225, -0.3%, ASX 200 -0.9%, Hang Seng flat; Shanghai Composite +0.1%; Kospi flat
Equity Futures: S&P500 +0.3%; Nasdaq100 +0.4%, Dax +0.5%; FTSE100 flat
EUR 1.1105-1.1090; JPY 106.55-106.22 ; AUD 0.6791-0.6772 ;NZD 0.6424-0.6406
Gold -0.2% at $1,512/oz; Crude Oil +0.4% at $56.34/brl; Copper +0.2% at $2.580/lb