Asia Summary
Asian equity markets have generally traded with a slightly positive tone, in line with what was seen with US bourses. Trading has, however, been cautious ahead of upcoming US data (including CPI and retail sales) and bank corporate earnings (JPMorgan, Citigroup and Wells Fargo). In Japan, the Nikkei has underperformed the Topix index, as Fast Retailing has declined by over 4% amid its 9-month results and accompanying broker downgrades. Taiwan Semi has traded slightly lower amid weaker than expected Q2 results and some disappointment in the market regarding its outlook. Infosys has gained over 2% on better than expected quarterly results.
On the macroeconomic front, Singapore reported weaker than expected preliminary GDP figures for Q2. Overall, the country is the first major economy in Asia to report Q2 growth figures and China is expected to release its Q2 GDP data around Monday, July 17th.
Key economic data
(SG) SINGAPORE Q2 ADVANCED GDP Q/Q: 0.4% V 1.1%E; Y/Y: 2.5% V 2.7%E
(CN) CHINA JUNE FISCAL REVENUES CNY1.71T, +8.9% Y/Y; June Fiscal Expenditures CNY2.70T, +19.1% y/y
(JP) Bank of Japan (BoJ) announced planned bond purchases: To buy 3-5 year JGBs worth ¥330B v ¥330B prior
(NZ) NEW ZEALAND JUNE BUSINESS NZ MANUFACTURING PMI: 56.2 V 58.5 PRIOR
Speakers and Press
China
(CN) China Insurance Regulatory Commission (CIRC) vice chairman Chen Wenhui: insurance industry is facing a number of risks, ranging from liquidity pressure to reputational, insurers need to take precautions – Xinhua
(CN) Fitch: Liquidity and asset risk for life insurance companies in China are rising
Japan
(JP) Japan Finance Min Aso: Wants forward-looking extra budget to improve production and logistics in the agricultural sector; Will help domestic companies competing under the EU trade deal; Has not made decision on supplemental budget
(JP) Japan PM Abe: Will do ‘utmost’ to relieve concerns about the EU Economic Partnership Agreement (EPA)
Mexico
(MX) Mexico Central Bank Chief Carstens: Risks for the Peso include oil prices, relationship with US and ‘surprises’ from US monetary policy; reiterates first 6-9 months of 2018 Too Early for ‘Cut Talks’
Philippines
(PH) S&P cuts Philippines 2017 GDP growth forecast to 6.4% from 6.6% – financial press
Asian Equity Indices/Futures (00:30ET)
Nikkei +0.1%, Hang Seng +0.1%, Shanghai Composite -0.2%, ASX200 +0.3%, Kospi +0.2%
Equity Futures: S&P500 flat; Nasdaq flat, Dax flat, FTSE100 flat
FX ranges/Commodities/Fixed Income (00:30ET)
EUR 1.1391-1.1411; JPY 113.27-113.57; AUD 0.7727-0.7746; NZD 0.7313-7329
Aug Gold flat at $1,216/oz, Aug Crude -0.22% at $45.98/bbl; Sept Copper +0.2% at $2.68/lb
(CN) PBOC SETS YUAN REFERENCE RATE AT 6.7774 V 6.7802 PRIOR
(CN) PBoC OMO: injects CNY100B in 7-day reverse repos at unchanged yields v skipped prior, did not announce a 14-day or 28-day reverse repo; During the prior session, the PBoC skipped its OMO and instead announced a CNY360B 1-year medium term lending facility (MLF) at 3.2%
(CN) FITCH AFFIRMS CHINA SOVEREIGN RATING AT A+; OUTLOOK STABLE; Ratings are underpinned by the strength of China’s external finances and macroeconomic track record; Near-term growth prospects remain favorable.
(CN) China Finance Ministry (MOF) sells 3 and 6-month bills
The Aussie traded marginally higher, after gaining over 0.7% during the prior session amid the release of Chinese trade and iron ore imports data. USD/JPY saw little volatility, amid the BoJ’s uneventful bond purchase operation and ahead of the upcoming US data.
In fixed income, some Asian sovereign yields are slightly higher, following yesterday’s rebound in Treasury yields. Australia’s 3-year yield has risen by 2bps. Japan JGB yields are little changed, amid the BoJ’s bond purchase operation.
In China, the H1 local government debt avg yield rose by 82bps y/y to 3.85%, according to the Chinese press.
Various Japanese corporates issued bonds: Toyota’s Finance unit priced ¥40B in 4, 7 and 10-year bonds. Mizuho priced ¥460B in subordinated bonds in two tranches. Other issuers included Komatsu (¥50B in 3-year bonds).
Asia equities notable movers
Australia
Redflow Ltd, RFX.AU Announced strategic review and capital raise; -9.5%
Programmed Maintenance Services, PRG.AU A$791M takeover offer; +65%
Hong Kong
Angang Steel, 347.HK H1 guidance; +4%
China Candy Holdings, 8182.HK Takeover offer lapses; -52%
India
Infosys, INFO.IN Q1 results above estimates; +2.3% (pre-market)
Japan
Fast Retailing, 9983.JP Reported 9-month results; -4.5%
Taiwan
Taiwan Semi, 2330.TW Issued Q2 results and guidance; -0.2%
US Session Highlights
US markets on close: Dow +0.1%, S&P +0.2%, NASDAQ +0.2%; Russell +0.1%***
Upcoming US data in focus includes June Retail Sales, CPI and Industrial Production. July Prelim Michigan Consumer Sentiment to also be released.
