Major Japanese firms shutter production in China amid continued tensions; China property sector slowdown eases tightening concerns
Economic Data
(CN) CHINA AUG NEW HOME PRICES M/M: FELL IN 19 OF 70 CITIES V 9 PRIOR; Y/Y: FELL IN 53 OF 70 CITIES V 57 PRIOR
(SL) SRI LANKA REPURCHASE RATE UNCHANGED AT 7.75% V 7.75%E; REVERSE REPO RATE UNCHANGED AT 9.75% v 9.75%E
(PH) PHILIPPINES JUL UNEMPLOYMENT RATE: 7.0% V 6.9% PRIOR
Markets Snapshot (as of 03:30GMT)
Nikkei225 -0.1%
S&P/ASX -0.2%
Kospi +0.1%
Shanghai Composite -0.5%
Hang Seng flat
Dec S&P500 +0.1% at 1,455
Dec gold -0.7% at $1,759/oz
Oct Crude oil +0.4% at $97.03/brl
Notes/Observations
Equity markets in China opened modestly weaker after mild profit-taking on Wall St but are paring their losses late in the session after a tepid home price data eased some of the overnight concerns over more housing curbs. China August new home prices rose in 35 of the 70 major cities, which was lower than 49 cities that saw prices rise in July - the highest total in 14 months. On y/y basis, new home sales in Shanghai and Beijing both fell, however those declines were also no worse than those of the prior month.
Concurrently, Reserve Bank of Australia released its Sept policy meeting minutes that reiterated domestic economy is growing around trend and policy is appropriate. RBA acknowledged that China economy was growing weaker as of late, but also defused speculation it would be more willing to act because of the recent strength in AUD after last week's Fed meeting. While RBA discussed the extent of high AUD on economy, members suggested the currency is overvalued only somewhat rather than substantially.
AUD/USD pared the initial spike lower, rising to session highs above $1.0480 following the release of China housing and RBA minutes. Elsewhere, USD majors traded in narrow ranges, with the euro oscillating around $1.31 and USD/JPY falling about 20pips toward ¥78.50. Earlier, Japanese press speculated the recent weakness in JPY was the function of rising Sino-Japan tensions over the weekend. A number of major Japanese firms were forced to shutter production in China as protests over Senkaku purchase by Japan govt escalated beyond a simmer over the weekend.
Fixed Income/Currencies/Commodities
(AU) Australia MoF (AOFM) sells A$200M in 2030 indexed bonds at 1.04% issue yield; bid-to-cover 3.72x
(AU) Australia Bureau of Agricultural and Resource (ABARES): Sees global output of wheat in FY12/13 falling -4% y/y to 665M tons
(AU) Australia Bureau of Resources and Energy Economics (BREE): Sees FY12/13 mineral, energy exports at A$189.2B
SLV: iShares Silver Trust ETF daily holdings rise to 9,841 tons from 9,768 tons (highest level since 9,875 on Jun 28th)
US corn crop across 18 select states: 24% good/excellent v 22% last week
USD/JPY: (JP) Recent weakness in JPY increasingly attributed to rising Sino-Japanese tensions potentially hurting Japan's economy - Nikkei News
JGB: Yield on 20-yr JGB hit 1-month high at 1.68%
Speakers/Political/In the Papers
(JP) Japan Chief Cabinet Sec Fujimura: No information regading China fishing fleet near disputed Senkaku islands (Some 1,000 fishing boats from China said to be headed toward waters surrounding Senkaku islands - Nikkei News)
(JP) China Foreign Min spokesperson Hong Lei: Japan is responsible for the damage to Japanese businesses across China cities this weekend because it engaged in illegal purchase" of Senkaku islands - Nikkei News
(NZ) New Zealand Fin Min English: Still focused on achieving fiscal surplus in FY14/15; Forecasts vary with sentiment - NZ press
(AU) ANZ Bank forecasts RBA rate cut of 25bps in Oct, Nov - financial press
(AU) Australia Resource Min Ferguson: Reiterates end of commodity price boom is inescapable reality
(CN) Shanghai CPI rose to 2.2% in Aug from 2.1% in July - Shanghai Daily
Asia Equities
RIO: Exec: Concerns over deceleration in Chinese growth are overstated - financial press
BHP: CEO: Remains confident in long-term outlook and future demand
FMG.AU: Receives underwritten commitment for up to $4.5B in lending facility - financial press
- (JP) Fitch: Panasonic and Sony revenue exposure to China significant for FY12
TM: To suspend operations at some production facilities in China today - Kyodo press
Komatsu 6301.JP: Spokesperson: Production facilities to remain suspended today; have yet to decide tomorrow's status
Fast Retailing 9983.JP: Closed 42 of its stores operating in China
Seven & I 3382.JP: Closes all of its stores in Beijing and Chengdu
Aeon 8267.JP: Closed 30 out of 35 stores operating in China
U.S. Equities
DOLE: To sell worldwide packaged foods, asia fresh produce business to Itochu for $1.68B in cash - financial press; +3.7% afterhours
HNI: Lowers Q3 EPS to around $0.55 v $0.67e (guided $0.65-0.70 prior); Rev +7-10% y/y (implies $539.5-554.6M v $568Me; prior guidance +11-14%); -12.0% afterhours
Economic Data
(CN) CHINA AUG NEW HOME PRICES M/M: FELL IN 19 OF 70 CITIES V 9 PRIOR; Y/Y: FELL IN 53 OF 70 CITIES V 57 PRIOR
(SL) SRI LANKA REPURCHASE RATE UNCHANGED AT 7.75% V 7.75%E; REVERSE REPO RATE UNCHANGED AT 9.75% v 9.75%E
(PH) PHILIPPINES JUL UNEMPLOYMENT RATE: 7.0% V 6.9% PRIOR
Markets Snapshot (as of 03:30GMT)
Nikkei225 -0.1%
S&P/ASX -0.2%
Kospi +0.1%
Shanghai Composite -0.5%
Hang Seng flat
Dec S&P500 +0.1% at 1,455
Dec gold -0.7% at $1,759/oz
Oct Crude oil +0.4% at $97.03/brl
Notes/Observations
Equity markets in China opened modestly weaker after mild profit-taking on Wall St but are paring their losses late in the session after a tepid home price data eased some of the overnight concerns over more housing curbs. China August new home prices rose in 35 of the 70 major cities, which was lower than 49 cities that saw prices rise in July - the highest total in 14 months. On y/y basis, new home sales in Shanghai and Beijing both fell, however those declines were also no worse than those of the prior month.
Concurrently, Reserve Bank of Australia released its Sept policy meeting minutes that reiterated domestic economy is growing around trend and policy is appropriate. RBA acknowledged that China economy was growing weaker as of late, but also defused speculation it would be more willing to act because of the recent strength in AUD after last week's Fed meeting. While RBA discussed the extent of high AUD on economy, members suggested the currency is overvalued only somewhat rather than substantially.
AUD/USD pared the initial spike lower, rising to session highs above $1.0480 following the release of China housing and RBA minutes. Elsewhere, USD majors traded in narrow ranges, with the euro oscillating around $1.31 and USD/JPY falling about 20pips toward ¥78.50. Earlier, Japanese press speculated the recent weakness in JPY was the function of rising Sino-Japan tensions over the weekend. A number of major Japanese firms were forced to shutter production in China as protests over Senkaku purchase by Japan govt escalated beyond a simmer over the weekend.
Fixed Income/Currencies/Commodities
(AU) Australia MoF (AOFM) sells A$200M in 2030 indexed bonds at 1.04% issue yield; bid-to-cover 3.72x
(AU) Australia Bureau of Agricultural and Resource (ABARES): Sees global output of wheat in FY12/13 falling -4% y/y to 665M tons
(AU) Australia Bureau of Resources and Energy Economics (BREE): Sees FY12/13 mineral, energy exports at A$189.2B
SLV: iShares Silver Trust ETF daily holdings rise to 9,841 tons from 9,768 tons (highest level since 9,875 on Jun 28th)
US corn crop across 18 select states: 24% good/excellent v 22% last week
USD/JPY: (JP) Recent weakness in JPY increasingly attributed to rising Sino-Japanese tensions potentially hurting Japan's economy - Nikkei News
JGB: Yield on 20-yr JGB hit 1-month high at 1.68%
Speakers/Political/In the Papers
(JP) Japan Chief Cabinet Sec Fujimura: No information regading China fishing fleet near disputed Senkaku islands (Some 1,000 fishing boats from China said to be headed toward waters surrounding Senkaku islands - Nikkei News)
(JP) China Foreign Min spokesperson Hong Lei: Japan is responsible for the damage to Japanese businesses across China cities this weekend because it engaged in illegal purchase" of Senkaku islands - Nikkei News
(NZ) New Zealand Fin Min English: Still focused on achieving fiscal surplus in FY14/15; Forecasts vary with sentiment - NZ press
(AU) ANZ Bank forecasts RBA rate cut of 25bps in Oct, Nov - financial press
(AU) Australia Resource Min Ferguson: Reiterates end of commodity price boom is inescapable reality
(CN) Shanghai CPI rose to 2.2% in Aug from 2.1% in July - Shanghai Daily
Asia Equities
RIO: Exec: Concerns over deceleration in Chinese growth are overstated - financial press
BHP: CEO: Remains confident in long-term outlook and future demand
FMG.AU: Receives underwritten commitment for up to $4.5B in lending facility - financial press
- (JP) Fitch: Panasonic and Sony revenue exposure to China significant for FY12
TM: To suspend operations at some production facilities in China today - Kyodo press
Komatsu 6301.JP: Spokesperson: Production facilities to remain suspended today; have yet to decide tomorrow's status
Fast Retailing 9983.JP: Closed 42 of its stores operating in China
Seven & I 3382.JP: Closes all of its stores in Beijing and Chengdu
Aeon 8267.JP: Closed 30 out of 35 stores operating in China
U.S. Equities
DOLE: To sell worldwide packaged foods, asia fresh produce business to Itochu for $1.68B in cash - financial press; +3.7% afterhours
HNI: Lowers Q3 EPS to around $0.55 v $0.67e (guided $0.65-0.70 prior); Rev +7-10% y/y (implies $539.5-554.6M v $568Me; prior guidance +11-14%); -12.0% afterhours