Equity Markets Trade Higher Led By HK And Shanghai

General trend

• Nasdaq FUTs lag in Asia; Facebook declined following results.
• Hang Seng opened higher by almost 3% [TECH index has gained over 6%; Education cos. also rise].
• Shanghai Composite remained higher during the morning session [IT and Consumer Discretionary indices outperform; Financial and property shares lag].
• Nikkei has remained modestly higher [Automakers rise after results from Nissan]; Companies expected to report earnings include Panasonic, FANUC, Renesas, Murata Manufacturing, TEPCO, Daiwa Securities, Kyocera, FUJITSU, Oriental Land.
• S&P ASX 200 has also held gains [Resources index rises amid earnings from Rio Tinto].
• Samsung has traded generally flat after earnings/comments.
• US Fed announced the establishment of two standing repurchase agreement (repo) facilities [a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA repo facility)].
• Companies due to report during the NY morning include Albertson’s, Alliance Data, AGCO, American Tower, Baxter International, Peabody Energy, Carrier, Carlyle Group, Comcast, Citrix Systems, Flex Ltd, Hilton Worldwide, Hershey, IntercontinentalExchange, International Paper, KBR, Keurig DR Pepper, Laboratory Corp, MasterCard, Altria Group, Merck, Northrop Grumman, NetScout, Oshkosh, Overstock, PG&E, Radware, Sally Beauty, S&P Global, MolsonCoors, Tempur Sealy, LendingTree, Textron, Valero Energy, YUM! Brands.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened 0.0%.
• FMG.AU Reports Q4 Iron Ore Shipments 49.Mt v 47.3Mt y/y, Ore Mined 64.9Mt v 57.2Mt y/y; Guides initial FY22 shipments 180-185Mt.
• API.AU Rejects Wesfarmers A$1.38/shr offer.
• (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$344.1B v A$343.2B prior (Record high).
• (AU) Australia Q2 Import Price Index Q/Q: 1.9% v 0.2% prior; Export Price Index Q/Q: 13.2% v 11.2% prior.

Japan

• Nikkei 225 opened +0.5%.
• 9984.JP Said to be selling 45M shares (33% of its stake) of Uber to cover losses on Didi – press.
• (JP) Japan Investors Net Buying of Foreign Bonds: -¥1.09T v -¥1.22T prior; Foreign Net Buying of Japan Stocks: -¥58.5B v -¥10.5B prior.
• (JP) Japan Econ Min Nishimura: Coronavirus situation in Osaka is quite severe.
• (JP) Japan MOF sells ¥3.0T v ¥3.0T indicated in 0.00% 2-year JGBs: avg yield: -0.1260% v -0.116% prior; bid to cover 4.19x v 4.29x prior.
• 6503.JP Reports Q1 Net ¥61.8B v ¥17.9B y/y, Op ¥82.8B v ¥20.2B y/y, Rev ¥1.07T v ¥858.2B y/y.

Korea

• Kospi opened +0.4%.
• 005930.KR Reports final Q2 (KRW) Net 9.45T v 5.5T y/y; Op 12.6T v 12.5T prelim (8.15T y/y); Rev 63.7T v 63.0T prelim (52.97T y/y).

China/Hong Kong

• Hang Seng opened +2.9%; Shanghai Composite opened +1.3%.
• (CN) China said to permit China companies to continue to have US IPOs – US press.
• (CN) China Sec Daily: China may strengthen its housing loan policies during H2, mortgage rates are expected to continue to rise.
• (CN) China PBOC to conduct CNY5.0B in 3-month Central Bank Bill Swap (CBS) operation on today’s session v CNY5.0B prior.
• (CN) China PBOC sets Yuan reference rate: 6.4942 v 6.4929 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY30B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net CNY20B v Net CNY0B prior (1st injection since Jun 30th).
• 1876.HK Reports Q2 Normalized Net $284M v $228M y/y, Normalized EBITDA $627M v $523M y/y, Rev $1.85B v $1.62B y/y.
• (CN) China replaces ambassador to US Cui Tiankai with Qin Gang, who is known for speaking out against Western criticism of China.
• (CN) China: Shortage of empty shipping containers in major ports has eased.
• (CN) China authorities met recently with global financial companies, indicating they will consider impact on markets when making new policies – press.
• Other
• (SG) Singapore Central Bank (MAS) removes dividend curbs for banks and financial companies (yesterday after the close).

North America

• UBER Hearing block of 45M shares being shopped via Goldman for Softbank (-5% after hours).
• YUMC Reports Q2 $0.42 v $0.35 y/y, Rev $2.45B v $1.90B y/y.
• FB Reports Q2 $3.61 v $3.03e, Rev $29.1B v $27.9Be; Expects Rev growth rate v 2019 levels to decelerate modestly in H2 2021.
• F Reports Q2 +$0.13 v -$0.11e, Rev $26.8B adj v $21.5Be, raises FY guidance.
• (US) Senator Sanders (I-VT): Senate has all 50 Democrat votes needed to pass budget resolution next week.
• (US) Senate said to have votes to pass the $550B infrastructure bill, said to have votes for the $1.0T bill; Follow Up: vote 67-32 to move forward with debate.
• (US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); Made progress towards goals since setting out bar for tapering.
• (US) Fed Chair Powell: Fed will continue to support the economy until recovery is complete; Timing of tapering will depend on incoming data; Delta variant will have health consequences but recent waves have shown less economic implications; Still a ways away from considering raising interest rates; Not on our radar screen right now; There is no consensus on explanations for moves in the bond markets; Acknowledges there is a discussion to be had on pace of tapering in MBS relative to US Treasuries but likely both will begin tapering at same time; Do not have a problem with what the RRP is doing, expect RRP usage to be high for some time – post rate decision press conference.
• (US) Fed announced the establishment of two standing repurchase agreement (repo) facilities—a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA repo facility).

Europe

• (UK) Jun Car Manufacturing 69.1K unit, +22.1% y/y; YTD Manufacturing 498.9K units, +30.8% y/y – SMMT.
• (UK) Press notes that the UK saw COVID cases decline for 7 consecutive days, before a small increase Wednesday, but health officials are unsure why.

Levels as of 01:15ET

• Hang Seng +3.2%; Shanghai Composite +1.3%; Kospi +0.0%; Nikkei225 +0.7%; ASX 200 +0.6%.
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.1%.
• EUR 1.1859-1.1841; JPY 109.96-109.69 ;AUD 0.7382-0.7359; NZD 0.6972-0.6949.
• Commodity Futures: Gold +0.9% at $1,815/oz; Crude Oil +0.4% at $72.64/brl; Copper +0.5% at $4.49/lb.