CN markets trade slightly higher amid mixed PBOC rate cuts

Asia Market Update: Equity markets are mixed after the sharp losses on Wall St; CN markets trade slightly higher amid mixed PBOC rate cuts; Jackson Hole Conference also in focus [Aug 25-26th].

General trend

- CNH extended drop amid the PBOC’s easing and weaker yuan fixing; Commodity currencies rise vs the Yen.

- NZD supported by RBNZ comments.

- Reserve Bank of New Zealand (RBNZ) Deputy Gov Hawkesby said: There is some uncertainty around cash rate peak, could rise as high as 4.25%.

- USD/KRW Fell to 1,330, first time since April 2009; South Korea chip exports continue to drop.

- Japan PM Cabinet’s approval ratings hit record lows.

- HK Mainland Properties index pared rise despite the cut in the CN 5-year LPR.

- Chinese property developers continue to issue profit warnings [Times China, CIFI Holdings, Agile Group, Yuzhou Properties, Logan Property].

- Hang Seng announced index changes [Aug 19th].

- Xiaomi declines after earnings report.

- Australian firms continue to report earnings [Reliance Worldwide, Cooper Energy, oOh!Media, NIB Holdings, Adbri].

- Australia ex-dividends in focus [Aurizon, Magellan Financial, Santos, Steadfast, Vicinity Centres].

- Nikkei 225 pares decline.

- Tokyo Steel to cut prices.

- US equity FUTS extend declines.

- Companies continue to comment on the power shortages in Sichuan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opened -0.2%.

- (NZ) Reserve Bank of New Zealand (RBNZ) Deputy Gov Hawkesby: Once rates get to 4.0-4.25% will have a more balanced view on policy outlook, Strategy is to get monetary policy conditions comfortably above.

- OML.AU Reports H1 (A$) Net 6.1M v -9.3M y/y; underlying EBITDA 51.5M v 113.1M y/y; Rev 276.1M v 250.1M y/y; announces up to 10% on-market stock buyback.

- (NZ) Reserve Bank of New Zealand (RBNZ) member Richardson: Recent strong domestic and international inflation pressure was a surprise; bank using full flexibility of medium term inflation mandate, long term inflation expectations remain well anchored.

- (AU) Australia sells A$300M v A$300M indicated in 1.75% Jun 2051 bonds: Avg Yield: 3.8759%; bid-to-cover 2.36x.

Japan

- Nikkei 225 opened -1.0%.

- (JP) Japan PM Kishida tests positive for COVID, symptoms said to be mild - Press.

- (JP) Japan Cabinet approval rating -16ppt to 36% - Mainichi (record low following Cabinet reshuffling).

- 6758.JP "Dragon Ball Super: Super Hero" top movie in the N. America box office with $20.1M in its opening weekend.

- 5423.JP Cuts Sept Hot Rolled Coil price to ¥11.5K/t from ¥12.3K/t; Maintains H-beam prices at ¥12.4K/t.

- (JP) Japan considering deploying long range missiles in response to China - Japan 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].

- 7205.JP Discloses found additional problems with engine inspections.

Korea

- Kospi opened -1.0%.

- (KR) South Korea Aug 1-20 Exports Y/Y: 3.9% v 14.5% prior; Imports Y/Y: 22.1% v 25.4% prior; Chip Exports y/y: -7.5% v +13.2% prior.

- (KR) Korea Economic Research Institute (KERI) sees 2022 GDP at 2.4% (prior saw 2.5%) - Yonhap.

- (KR) Bank of Korea sells KRW900B v KRW1.00T indicated in 3-month Monetary Stabilization Bonds (MSB): Avg Yield 2.450% v 2.420% prior.

- (KR) North Korea expected to conduct nuclear tests before US mid-term elections on Nov 8th - Yonhap.

China/Hong Kong

- Hang Seng opened -1.0%; Shanghai Composite opened -0.3%.

- (CN) China PBOC monthly loan prime rate (LPR) SETTING: Cuts both 1-year and 5-year rates cut 1-Year Loan Prime Rate by 5bps to 3.65% (less than expected) and Cut 5-Year Loan Prime Rate by 15bps to 4.30% (more than expected).

- (CN) China PBOC sets Yuan reference rate: 6.8198 v 6.8065 prior (weakest since Sept 2020).

- (CN) China PBOC Open Market Operation (OMO): Sells CNY2.0B in 7-day reverse repos v CNY2.0B prior; Net CNY0B v Net CNY0B prior.

- (CN) Chongqing, China has shortened daily hours of malls due to power shortages - local media.

- (CN) China PBOC sells CNY25.0B v CNY25.0B indicated in 3-month and 1-year bills in Hong Kong.

Other

- (TW) Taiwan notes China continues military activities near its waters - press North.

Europe

- (RU) Russia Finance Ministry may resume FX purchases in Sept - Russian press.

- (NL) Netherlands July House Price Index Y/Y: 14.5% v 16.6% prior.

- (UK) Barristers ballot supports 'permanent' strike from Sept 5 - UK press.

- CSGN.CH Speculation that up to two thirds of the investment bank unit could be sold, or will fold up parts and put the remainder into wealth management unit - press.

Levels as of 01:00ET

- Hang Seng +0.1%; Shanghai Composite +0.6%; Kospi -1.3%; Nikkei225 -0.6%; ASX 200 -1.0%.

- Equity Futures: S&P500 -0.5%; Nasdaq100 -0.5%, Dax -0.3%; FTSE100 -0.3%.

- EUR 1.0046-1.0023; JPY 137.43-136.83; AUD 0.6906-0.6867; NZD 0.6206-0.6168.

- Commodity Futures: Gold -0.3% at $1,757/oz; Crude Oil -1.3% at $89.27/brl; Copper 0.0% at $3.67/lb.