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AUD initially declines after mixed CPI data

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Asia Market Update: Equity markets remain cautious ahead of Fed decision [Jul 27th]; AUD initially declines after mixed CPI data.

General trend

- Australian bond yields also dropped; Swap markets see 0% chance of 75bps rate hike at the Aug RBA meeting [Aug 2nd].

- Aussie Treasurer commented on growth.

- Expected that US President Biden to speak to China President Xi on Thurs (July 28th).

- The Philippines was impacted by a strong earthquake.

- Chinese money market rates extend declines.

- Asian equity markets trade mixed.

- Hang Seng underperforms; Alibaba declines after prior gain.

- China property developers weighed down by Country’s Garden’s capital raise.

- Corporate earnings remain in focus.

- Canon Inc declined after issuing results.

- Japanese companies expected to report results include Fanuc and Mitsubishi Motors.

- Rio Tinto to report earnings later today.

- Fortescue to issue production update on Thurs.

- Hynix declines after issuing cautious outlook.

- Samsung Electronics’ earnings call is due on Thurs [Jul 28th].

- US equity FUTs rose on tech earnings [Google, Microsoft].

-Companies due to report during the NY morning include Bristol-Myers, Boeing, ADP, CME Group, Sherwin Williams, Waste Management, Humana, General Dynamics, Norfolk Southern, Shopify, TE Connectivity, Hilton Worldwide, Hess, Spotify, Garmin, Bunge, Kraft Heinz.

- Australia to release budget review on Thurs.

Headlines/Economic data

Australia/New Zealand

- ASX 200 opened -0.0%.

- (AU) AUSTRALIA Q2 CPI Q/Q: 1.8% V 1.9%E; Y/Y: 6.1% V 6.3%E; CPI Trimmed Mean (core) Q/Q: 1.5% v 1.5%e; Y/Y: 4.9% v 4.7%e.

- (AU) Australia Treasurer Chalmers: CPI will get worse, will need to raise CPI forecast and cut GDP.

- SBM.AU Reports Q4 Gold production 86.4K oz v 82.7K oz y/y; ASIC of A$2,007/oz v A$1,623/oz y/y.

Japan

- Nikkei 225 opened -0.3%.

- (JP) Semiconductor Equipment Association of Japan (SEAJ) Jun Chip Equipment Billings Y/Y: +14.1% v +0.8% prior - US financial press.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 25bps; Opens window to buy unlimited amount of 10-year JGBs at 0.25% [as expected].

- (JP) Japan Cabinet Office (Govt) July Economic Report: Raises overall economic assessment and now sees domestic economy picking up moderately (1st raise since Apr) (later in session yesterday).

Korea

- Kospi opened 0.0%.

- (KR) South Korea Jul Consumer Confidence: 86.0 v 96.4 prior (21-month low); Inflation expectation highest on record.

- 000660.KR Reports Q2 (KRW) Net 2.87T v 2.0T y/y (2.9Te); Op 4.19T v 2.7T y/y (4.07Te); Rev 13.8T v 10.3T y/y (14.3Te).

- 003605.KR SK chairman Chey Tae-won affirms $22B investment in US for chips, EV batteries, green energy, biotech - Korean press citing comments after meeting with Biden.

- (KR) According to Bank of Korea (BOK) North Korea 2021 GDP -0.1% v -4.5% y/y, Trade was $710M, -17.3% y/y.

China/Hong Kong

- Hang Seng opened -1.1%; Shanghai Composite opened -0.2%.

- (CN) China Securities Journal: ~70 cities will make a move to support the property market in July.

- (CN) Shanghai adds additional 12 high and medium risk areas to lockdown.

- (CN) China Jun Industrial Profits Y/Y: +0.8% v -6.5% prior (1st rise in 3 months).

- (CN) China Jun YTD gold production 174.7Kt, +14.4% y/y - Gold Association.

- (HK) Hong Kong Fin Sec Chan: Must raise interest rates but unlikely to see a wild swings in property prices, trend is unavoidably to raise rates, but do not need to exactly follow US rate hikes – SCMP.

- (CN) China PBOC sets Yuan reference rate: 6.7731 v 6.7483 prior.

- (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B in 7-day reverse repos v CNY5.0B prior; Net drain CNY1.0B v Net drain CNY7.0B prior.

- 2007.HK To place 870M shares at HK$3.25/shr to raise HK$2.83B (opened down 11%).

Other

- (PH) Philippines reports earthquake of 6.8 magnitude in Luzon, Magnitude 7.1 earthquake strikes Dolores, strongly felt in Manila, shuts down public transportation.

- (ID) Indonesia President Widodo: Confirmed changes to agreement with Japan on economic partnership, to be signed at G20; Japan to extend ¥43.6B loan for things like infrastructure and disaster prevention.

North America

- (US) Expected that US President Biden to speak to China President Xi on Thurs.

- (US) Consumer Protection Agency (CFPB): To closely look at the use of cryptocurrencies for real-time payments and publish a report this fall on "buy-now, pay later" (BNPL) products, and expects to propose a rule to boost consumer finance competition around early next year.

- GOOGL Reports Q2 $1.21 v $1.27e, Rev $57.5B (Ex-tac) v $57.6Be.

- CMG Reports Q2 $9.30 v $9.03e, Rev $2.21B v $2.24Be; authorizes additional $300M for share repurchases (0.8% of market cap); to raise prices.

- MSFT Reports Q4 $2.23 v $2.29e, Rev $51.9B v $52.3Be.

- (US) Weekly API Crude Oil Inventories: -4.0M v +1.9M prior.

- PYPL Elliot Management said to have a stake in Company - Press.

Europe

- (UK) July BRC Shop Price Index Y/Y: 4.4% v 3.1% prior (record high).

Levels as of 00:15ET

- Hang Seng -1.4%; Shanghai Composite -0.1%; Kospi -0.4%; Nikkei225 +0.4%; ASX 200 +0.3%.

- Equity Futures: S&P500 +0.9%; Nasdaq100 +1.5%, Dax +0.4%; FTSE100 +0.6%.

- EUR 1.0152-1.0115; JPY 137.15-136.80; AUD 0.6958-0.6913; NZD 0.6253-0.6227.

- Commodity Futures: Gold -0.2% at $1,713/oz; Crude Oil +0.2% at $95.20/brl; Copper -0.1% at $3.39/lb.

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