General Trend:
- Shanghai Composite rises during morning session after lower open, the index is on track for the 7th straight session of gains; IT and Brokerage firms rise, banks lag
- Tencent trades at new record high in HK, train operator MTR drops on guidance
- Decliners in Japan include Transports, financials track the earlier weakness in the US; Retail sector outperforms ahead of upcoming earnings
- Japanese companies expected to report earnings after the market close include Seven & I, FamilyMart, Aeon and Aeon Financial.
- Australian equities underperform, declining sectors include Consumer Discretionary and Financials
- Alumina drops over 5% in Australia on tax ruling
- Asian LCD makers move on report that Apple may use OLED displays in all new iPhone models; Japan Display declines, LG Display rises
- Another quiet Asian session for US Treasury FUTs
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened -0.1%
- (AU) Victoria state reports 134 additional coronvirus cases v 191 prior
- (AU) Australia Capital Territory (Located in NSW) reports 3 additional coronavirus cases, first cases in 1-month
- (AU) Australia PM Morrison: Victoria state outbreak a test for Australia; There is a need to slow international arrivals into Australia [may slow arrival of people returning to Australia by air]
- Apple said to close all stores in Victoria state effective July 9th (Thursday)
- (AU) Australia ABS (Stats Bureau): Free Childcare will subtract 1.1% from headline CPI in Q2; also expects re-negotiations of rents and rent reductions to result in CPI decline [Q2 CPI data due on Wed July 29th]
- (AU) Australia Prudential Regulation Authority (APRA): Announces extension of temporary capital treatment for bank loans with repayment deferrals; this regulatory approach will be extended to cover a maximum period of 10 months from the start of a repayment deferral, or until 31 March 2021 (whichever comes first)
- (AU) Australia Treasurer Frydenberg: Australia will announce more income support beyond Sept; Details to come on July 23rd (Thursday)
- (HK) Australia could seek to end its extradition treaty with Hong Kong amid the recent passage of the new national security law – Aussie press
- (AU) Australia sells A$2.0B v A$2.0B indicated in 2.50% May 2030 bonds, avg yield 0.8759% v 0.8919% prior, bid to cover 3.7 v 3.39x prior
- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$320M v NZ$370M prior in government bonds as part of QE v NZ$320M sought
- (NZ) New Zealand Debt Management Office (DMO): To offer NZ$950M in government bonds due 2023, 2029 and 2033 at auction on July 9th (Thursday)
- (NZ) New Zealand Treasury affirms 2041 Bond Syndication offering for next week
China/Hong Kong
- Hang Seng opened +0.4%, Shanghai Composite opened -0.2%
- (HK) US President Trump aides reported to propose ideas on undermining USD/HKD peg, the HKD peg idea was raised in talks held by advisers to US Sec of State Pompeo – US financial press
- (HK) HKMA said to sell HK$8.14B to defend peg as currency hits strong end of trading band; HKMA said to later sell an additional HK$2.2B to defend the currency peg
- (CN) US State Dept to ban China officials that restrict access to Tibet – NYT
- (CN) US President Trump admin warns Railroad retirement fund to avoid China- NYT [in line with prior developments]
- (CN) China PBOC sets Yuan reference rate: 7.0207 v 7.0310 prior (Strongest since Mar 17th)
- (CN) China PBoC Open Market Operation (OMO): Skips reverse repos v Skips prior; Net drain CNY0B v Net drain CNY110B prior (8th straight skip)
- (CN) CHINA JUN FOREIGN RESERVES: $3.112T V $3.120TE (3rd straight increase) [released on July 7th]
- (CN) China to require banks to prioritize employment
- (CN) China reported to be seeking additional private investment in Railroad and Airport construction
- (CN) China to auction 20Kt of Frozen Pork from State reserves on July 10th (Friday)
Japan
- Nikkei 225 opened -0.6%
- (JP) Japan May Current Account (BoP): ¥1.18T v -¥639Be; Adj Current Account: ¥821.1B v ¥252.4B prior; Trade Balance (BoP): -¥556.8B v ¥966.5B prior
- (JP) Japan Jun Bank Lending Ex-Trusts Y/Y: 6.2% v 5.1% prior; Incl Trusts Y/Y: 6.2% v 4.8% prior
- (JP) Japan Jun Bankruptcies Y/Y: +6.3% v -54.8% prior
- (JP) JAPAN JUN ECO WATCHERS CURRENT SURVEY: 38.8 V 24.3E; OUTLOOK SURVEY: 44.0 V 39.3E
- (JP) Japan METI Forecasts Q3 Crude Steel Output at -27.9% y/y
- (JP) Japan Chief Sec Suga: Japan will reduce coronavirus restrictions related to events on July 10th (Friday) as planned
Korea
- Kospi opened +0.1%
- (KR) South Korea President Moon: Urges High level officials to sell homes – Yonhap (as expected)
- (KR) On Tuesday (July 7th) South Korea Court ordered North Korea Leader Kim to compensate 2 prisoners of war who were in forced labor camps during the Korean War – Press
- (KR) US issues no antidumping duty on steel products from South Korea, said Hyundai Steel and POSCO did not sell cold-rolled steel in the US at prices below ‘normal’ – Yonhap
North America
- National General Holdings [NGHC]: Allstate agrees to acquire co. for $4.0B in cash or $34.50/shr (includes closing dividends of $2.50/share), ~69% premium to prior close; Allstate expects to maintain current share buyback program
- (US) Supreme Court Chief Justice Roberts was Hospitalized in June after a fall which led to a head injury – Press; Supreme Court Spokesperson said Roberts was later discharged from the hospital after 1 night
- (CA) Canada Govt forecasts C$300B federal Deficit for current FY20/21; The deficit is expected to be revealed by Finance Min Morneau on Wed (July 8th) – Canada Press
Europe
- Boohoo.com [BOO.UK]: Amazon Drops Boohoo products due to labor abuse concerns – Press
Levels as of 1:20 ET
- Nikkei 225, -0.6%, ASX 200 -1.3% , Hang Seng +0.3%; Shanghai Composite +0.5% ; Kospi -0.1%
- Equity S&P500 Futures: flat; Nasdaq100 flat, Dax +0.3%; FTSE100 -0.7%
- EUR 1.1282-1.1265 ; JPY 107.71-107.51 ; AUD 0.6955-0.6931 ;NZD 0.6563-0.6535
- Gold -0.2% at $1,805/oz; Crude Oil -0.4% at $40.45/brl; Copper +0.3% at $2.7938/lb
