Asia equities mixed, CN Caixin services PMI beats ests, but passenger car sales -5% y/y

Asia Market Update: Asia equities mixed; CN Caixin Services PMI beats ests, but passenger car sales -5% y/y; JP JGBs continue rising and BOJ responds with unscheduled JGB purchases; UK BOE rate decision today.

General trend

- Asian equities opened generally down, with the Nikkei leading the way among those down at -1.1%.

- Mixed data out of China, with Caixin Services PMI beating expectations, while passenger car sales -5% y/y.

- All the while China seemingly doubling down on “corruption” by launching probes into “suspicious commodity trades” and encouraging the public to dob in acts that might “undermine the private economy”.

- Out of Hong Kong it was reported Evergrande Property Services shares are indicated to decline by 35% when re-listed (Co. has been halted since Mar 21 2022).

- Another former Japan economy official (fmr Japan Economy Min Amari) said Japan cannot declare the end of deflation yet and that “Gov Ueda needs to see 3% steady wage growth before mapping an exit”.

- Yields on Japan 10-yr JGBs yields kept rising, to 0.64%, highest since Apr 2014, while 20-yr +2.5bps to 1.305%, highest since Feb 2022.

- Right on cue, the BOJ announced unscheduled bond buying ops in the afternoon session. However, at time of writing 10-yr JGB yields reached higher to 0.6550% before dipping back slightly to 0.6460 at time of writing.

- US equity FUTs are flat in Asia after significant drops during NY session (Nasdaq -2%).

Looking ahead (Asian time zone)

- Thu evening UK BOE rate decision.

- Thu night US ISM Services PMI.

- Fri night US non-farm payrolls and unemployment.

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,346.

- AUSTRALIA Q2 RETAIL SALES Q/Q: -0.5% V -0.5%E (3rd straight quarterly decline).

- Australia Jun Trade Balance (A$): 11.3B v 10.8Be.

- Australia July Final PMI Services: 47.9 v 48.0 prelim (confirms 1st contraction in 4 months, lowest since Dec 2022).

- Australia expects China barley tariffs to be lifted: Will go to WTO if not - Australia Trade Min Farrell.

- AOFM: through the ABSF aims to enhance the development of the securitisation market’s capacity to support both private and public transactions backed by loans to SMEs.

- Westpac bank says that now "very likely" RBA's OCR has peaked at 4.1%.

- Follow Up: Australia Senate report said ban of WeChat must be considered; relates to government devices - press [update].

- New Zealand July ANZ Commodity Price M/M: -2.6% v -2.3% prior.

- New Zealand sells total NZ$500M vs. NZ$500M indicated in 2028, 2034 and 2051 bonds.

China/Hong Kong

- Hang Seng opens -0.6% at 19,404.

- Hong Kong July PMI (whole economy): 49.4 v 50.3 prior (1st contraction in 7 months).

- Evergrande Property 6666.HK Follow Up: Shares indicated to decline by 35% (when re-listed) **Reminder Mar 21 2022 Evergrande Property Services: Halted.

- Shanghai Composite opens -0.2% at 3,254.

- CHINA JULY CAIXIN PMI SERVICES: 54.1 V 52.4E (7th straight expansion).

- China July retail passenger vehicle sales -5% y/y - prelim PCA (overnight update).

- China said to "spook" commodity traders with probe into "suspicious deals" - US financial press.

-China asks the public to report acts 'that undermine private economy' - update.

-China can launch Southbound Swap Connect at the 'proper time' - China Securities Daily.

- China PBOC sets Yuan reference rate: 7.1495 v 7.1368 prior (weakest level since July 13).

- China PBOC Open Market Operation (OMO): Sells CNY3B in 7-day reverse repo; Net drains CNY111B v net drains CNY95B prior (third consecutive net drain).

Japan

- Nikkei 225 opens -1.0% at 32,375.

- Japan July Final PMI Services: 53.8 v 53.9 prelim (confirms 10th month of expansion).

- Japan releases weekly flows data [period ended July 28th]: Japan buying of foreign bonds +¥208.9B v -¥964.1B prior; Foreign buying of Japan stocks: ¥196.0B v ¥101.1B prior.

- BOJ ANNOUNCES UNSCHEDULED BOND BUYING OPERATIONS - Offers to buy ¥100B in 3-5 year JGBs..

- Offers to buy ¥300B in 5-10 year JGBs.

- Former Japan Economy Min Amari said Japan cannot yet declare the end of deflation.

- Japan Chief Cabinet Sec Matsuno: Government in close communication with BOJ at various levels; watching FX moves while coordinating with the BOJ.

- SBI Sumishin 8473.JP to begin offering 50-year mortgages – Nikkei.

- Japan sells ¥250B in 0.005% 10-Year inflation-linked JGB Bonds; Yield at lowest accepted price: -0.51% v -0.595% prior, bid-to-cover: 2.91x v 3.50x prior.

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

South Korea

- Kospi opens +0.3% at 2,624.

- Ecopro BM reports Q2 (KRW) Consolidated Net 82.5B v 83.8Be, Rev 1.91T v 2.16Te.

- South Korea July Foreign Reserves: $421.8B v $421.5B prior (update).

Other Asia

- Singapore July PMI (whole economy): 51.3 v 54.1 prior (5th straight expansion).

North America

- (US) MBA Mortgage Applications w/e July 28th: -3.0% v -1.8% prior.

- (US) JULY ADP EMPLOYMENT CHANGE: +324K V +190KE; Continue to see a slowdown in pay growth w/o material job losses.

- (US) Treasury Quarterly Refunding Announcement; To sell $42B in 3-year notes, $37B in 10-year notes, $23B in 30-year bonds; Increases refunding auctions for 1st time in over 2 and a half yrs.

- (US) DOE CRUDE: -17M V -1.5ME; GASOLINE: +1.5M V -1.5ME; DISTILLATE: -0.8M V 0ME.

Europe

- (EU) ECB's de Guindos (Spain): Banks should be prudent on dividend payouts.

- (UK) PM Sunak: UK will still need oil and gas when reaching 'net zero'; Getting North Sea oil and gas is better than importing.

Levels as of 01:20 ET

- Nikkei 225 -1.2%, ASX 200 -0.6% , Hang Seng +0.3%; Shanghai Composite +0.3% ; Kospi -0.5%.

- Equity S&P500 Futures: flat; Nasdaq100 flat, Dax flat; FTSE100 -1.4%.

- EUR 1.0920-1.0949 ; JPY 143.16-143.88 ; AUD 0.6524-0.6555 ; NZD 0.6065-0.6191.

- Gold -0.3% at $1,970/oz; Crude Oil +0.2% at $79.62/brl; Copper +0.1% at $3.8492/lb.