Fundamental Analysis

Market Update - Asian Session: US Temporary Debt Deal Provides Some Relief To The Markets

Typography

Asia Summary

Asian equity markets opened mostly higher with short term stability seen in US government on funding deal, gains overall remained muted as South Korea prepares for any action from the North. China was weaker, being dragged down by real estate names after S&P commented on the sector’s leverage.

US Senate reached a deal to keep the government funded to early December, after the US close a Republican congressional aide says in debt ceiling talks today there was no discussion of blocking the Treasury from using extraordinary measures.

Currencies were quiet for another session yen a little stronger, Aussie weaker after weaker than expected retail sales and trade surplus. PBOC again set the yuan mid-point rate stronger for the 9th consecutive setting and the longest run since 2011. It did skip OMO operations electing to use CNY298B in 1-yr medium-term lending facility, rate of 3.2% was left unchanged from prior. Mid-session financial press reported that there was a h.

Overnight Russia reiterated that tougher sanctions would not help the North Korea situation however today Japan PM Abe and South Korea President Moon held meeting and said they agree to seek maximum sanctions on North Korea. South Korea Vice Foreign Min Lim noted that the UN discussing banning North Korea exports of textiles and workers. South Korea confirmed it has set up four additional Thaad missile shields in addition to its regular two.

Key economic data

(AU) Australia Aug AiG Performance of Construction Index: 55.3 v 60.5 prior

(JP) Foreign investors net bought ¥1.35T in Japan bonds v bought ¥500.2B prior (3rd largest buy on record)

(AU) AUSTRALIA JULY RETAIL SALES M/M: 0.0% V 0.2%E

(AU) AUSTRALIA JULY TRADE BALANCE (A$): 460M V 1.0BE

Speakers and Press

China

(CN) S&P: China property developer margins are up, leverage unchanged but will moderately improve

(CN) China increases financial regulation to address risks (reference to ban on Initial Coin Offerings) - Xinhua

Korea

(KR) Moody's: If there was a short contained military conflict, the credit implications would be limited; Damage to sovereign credit profile would depend on length and intensity of any conflict

(KR) South Korea PM Lee: North Korea may launch missile on Sept 9th (reiteration)

(KR) Full artillery of the Thaad missile shield in South Korea will be ready for operation as soon as an internal process ends, this is 4 additional launches on top of the 2 already

(KR) US White House Official: Confirms to set aside for now consideration of terminating free trade agreement with South Korea

Other

USD/PHP (PH) Philippines Central Bank Gov Espenilla: Philippines to ease FX rules further this year, to streamline FX requirements

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.1%, Hang Seng +0.1%; Shanghai Composite -0.1%, ASX200 +0.1%, Kospi +1.1%

Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax +0.1%, FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1935-1.1919; JPY 109.26-108.89; AUD 0.8018-0.7984; NZD 0.7218-0.7195

Dec Gold +0.1% at $1,340/oz; Oct Crude Oil -0.2% at $49.06/brl; Sept Copper -0.3% at $3.15/lb

(CN) China PBOC skips OMO v CNY180B in 7 and 14-day reverse reports prior: net drains CNY100B v drains CNY40B prior

GLD SPDR Gold Trust ETF daily holdings -0.4% to 837.1 metric tonnes

(US) Weekly API Oil Inventories: Crude: +2.8M v -5.8M prior

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5269 V 6.5311 PRIOR (9th consecutive stronger setting, longest run since 2011)

(CN) China PBoC skips OMO v injects CNY40B prior in 7-day and 28-day reverse repos

(CN) PBOC conducts CNY298B v CNY360B prior in 1-yr MLF 3.2% v 3.2% prior in medium term lending facility (MLF) operations

(JP) Japan MoF sells ¥3.622T in 3-month bills; avg yield -0.2040% v -0.1463% prior; bid-to-cover 3.19x

JGB (JP) Japan MoF sells ¥658.3B in 0.8% (0.8% prior) 30-yr bonds; Avg yield: 0.8320% v 0.8760% prior; Bid to cover: 3.67x v 3.90x prior

Equities notable movers

Australia/New Zealand

MBE.AU Launches AddGlu for Marketers a Predictive Customer Acquisition Platform for Digital Performance Marketing; +8.6%

Hong Kong/China

3383.HK Agile Property Holdings, +6.4%; 2007.HK Country Garden Holdings, +3.8% Both names move on broader real estate sector move

2313.HK Prices 52.1M shares at HK$58.60 v 58.50-60.50 expected range; -6.4%

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