Fundamental Analysis

Market Update - Asian Session: Equities And Currencies Muted, Awaiting Notable Data Tomorrow

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Asia Summary

Asian equity markets opened mixed, trading remained subdued with yields falling slightly and US dollar taking a break from its recent climb. Lithium miners in Australia, Syrah Resources, Galaxy Resources rose on the news yesterday that China could accelerate its move to non-fossil fuel burning cars. Iron ore futures on China's Dalian exchange were +2%. Crude saw little movement from the release of API data, showing a build of 6.2M.

PBOC weakened the yuan for the second consecutive day and returned to its use of 7, 14 and 28 day reverse repos. Markets look ahead to tomorrow's release of China's August industrial production and fixed asset investments and Australia's employment data. The offshore yuan overnight HIBOR was +95bps to 3.05 while the 1-week rose 66bps to 3.51%.

The kiwi fell 0.4% after a report that New Zealand National Intelligence Agency has started probe of China-born parliament member Jian Yang. Yang is in the ruling National Party; The report says the probe focuses on the time that Yang spent at military colleges in China. This could be trouble heading into elections for the ruling party.

Key economic data

(JP) JAPAN AUG PPI M/M: 0.0% V 0.1%E; Y/Y: 2.9% V 3.0%E

(JP) JAPAN Q3 BSI LARGE ALL INDUSTRY Q/Q: 5.1 V -2 PRIOR; BSI LARGE MANUFACTURING Q/Q: 9.4 V 5.0E

(AU) Australia Sept Westpac Consumer Confidence Index: 97.9 v 95.5 prior, Consumer Confidence M/M: +2.5% v -1.2% prior

Speakers and Press

China/Hong Kong

(CN) China FX Regulator SAFE: No changes to foreign currency cash withdrawal rule

(CN) President Trump has warned China to get tough on North Korea and reduce trade and financial transactions or it will target Chinese banks - FT

Korea

(KR) North Korea rejects UN adding new sanctions; to establish 'practical equilibrium' with the US; will redouble efforts to increase its strength – KCNA

(KR) Bank of Korea (BOK) Gov Lee: FX swap with China not on agenda for meeting

(KR) South Korea Nuclear Safety and Security Commission: traces of radioactive xenon gas were confirmed to be from a North Korean nuclear test earlier this month, but it was unable to conclude whether the test had been for a hydrogen bomb

Japan

(JP) Japan to start watching virtual currency exchange markets from Oct - Nikkei

Australia

(AU) RBA's Harper: Currency gains being driven by weaker USD; economic growth is too weak to justify a rate hike; AUD -0.2% on the comments before returning to +0.1%

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.5%, Hang Seng -0.3%; Shanghai Composite -0.1%, ASX200 +0.2%, Kospi +0.2%

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

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

EUR 1.1993-1.1964; JPY 110.29-109.98; AUD 0.8039-0.8011; NZD 0.7298-0.7257

Dec Gold +0.2% at $1,335/oz; Oct Crude Oil 0.0% at $48.24/brl; Sept Copper -0.3% at $3.03/lb

GLD SPDR Gold Trust ETF daily holdings +0.4% to 838.6 metric tonnes

USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5382 V 6.5277 PRIOR (2nd straight weaker yuan fix)

(CN) PBOC injects combined CNY70B in 7,14 and 28-day reverse repos v skipped prior

(AU) Australia sells A$900M in Nov 2028 bonds, avg yield 2.7414%, bid to cover 4.03x

USD/PHP Philippines Central Bank (BSP) spent PHP5B over the last 2 months defending the peso

Equities notable movers

Australia/New Zealand

SEA.AU Reports H1 (A$) Net loss 5.7M v loss 20.1M y/y; Rev 44.5M v 24.2M y/y; +5%

OIC.NZ WSP NZ raises offer to NZ$1.85/shr; Board unanimously recommends offer; +6.8%

Hong Kong/China

2020.HK UBS Raised 2020.HK to Buy from Neutral; +6.4%

066570.KR To showcase car components at German motor show; +4.6%

Japan

6502.JP Board resolved to sign MOU with Bain for chip unit; targeting final decision on board meeting next week - Nikkei; +0.3%

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