Quiet start in Asia ahead of big data releases later in the week – Equities recover some lost ground
|General trend
- WTI Crude opened higher by ~$1 a barrel at the Monday open on fears of a flaring of Middle East tensions, following the killing of 12 Israeli children in the Golan Heights by what appears to be an Iranian-made missile fired by Hezbollah. Israel struck back via fighter jets shortly after the attack, but has vowed further retaliation into Lebanon against Hezbollah. Oil stayed at the slightly elevated level for the rest of the morning in Asia.
- More conflicting opinions out of Japan concerning whether the BOJ will hike or not this Wed, July 31st.
- Nikkei +2.5% outperformed a general equities recovery in Asia following last week's losses, with Hang Seng also +1.8%.
- Bitcoin hit $70K for first time since early June, as it continued recent gains amid further comments from former US Pres Trump, who said he would make Bitcoin a part of the US National Strategic Reserve.
- Big data releases from Wednesday onward, with AU CPI; The BOJ, Fed and BOE rate decisions; US July ISM Mfg PMI: US July NFP’s.
- US equity FUTs +0.4% to +0.6% during Asian trading.
Looking ahead (Asian time zone)
- Tue 30th AU building permits (Tue eve EU, DE, FR, IT prelim Q2 GDP, Tue night DE July CPI, US Jun JOLTS).
- Wed 31st AU Q2 CPI, CN NBS Mfg PMI, JP Jun Ind Prod + Retail Sales, JP BOJ rates/bond purchase decisions (Wed eve EU July flash CPI, Wed night US Fed rate decision + Presser).
- Thu 1st AU Balance of Trade, CN Caixin Mgf PMI, (Thu eve BOE rate decision, Thu night US ISM July Mfg PMI).
- Fri 2nd KR July CPI, AU Q2 PPI, (Fri night US July NFP).
Holidays in Asia this week
- Mon July 29th Thailand.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.1% at 7,932.
- Australia sells A$900M v A$900M indicated in 2.75% Nov 2028 bonds; Avg Yield: 3.9319% v 3.973% prior; bid-to-cover: 4.44x v 2.46x prior.
- (AU) Australia PM Albanese sacks two Ministers in major Cabinet reshuffle - Australian press [weekend update].
- New Zealand Jun Filled Jobs M/M: -0.1% v -0.3% prior (revised lower).
- New Zealand PM Luxon: Expects interest rates to drop as inflation eases - press conference.
China/Hong Kong
- Hang Seng opens +0.1% at 17,196; Shanghai Composite opens -0.1% at 2,889.
- China Gold Association: H1 gold output 179.6Mt, +0.6% y/y; Gold consumption 523.8Mt, -5.6% y/y.
- Macau June Hotel Occupancy Rate: 82.7% v 83.6% y/y.
- Evergrande New Energy Vehicle announces that creditors of two subsidiaries have applied for bankruptcy re-org; Matter will have major impact on Co and units' production and operational activities - filing.
- China Jun Industrial Profits Y/Y: 3.6% v 0.7% prior [weekend update].
- China's Foreign Min Wang Yi: China to promote regular issuance of infrastructure REITs [weekend update].
- China PBOC revises rules on QFII and RQFII (Qualified Foreign Institutional Investor), effective Aug 26th; To improve cross-border fund flow management – press [weekend update].
- China PCA sees July Retail Passenger Vehicle Sales -2.2% y/y v -6.7% y/y prior month – press [weekend update].
- China launches special guarantee plan to aid tech innovation – press [weekend update].
- China PBOC sets Yuan reference rate: 7.1316 v 7.1270 prior.
- China PBOC Open Market Operation (OMO): Sells CNY302B in 7-day reverse repos; Net injects CNY243B v net injects CNY299.1B prior.
Japan
- Nikkei 225 opens +1.3% at 38,139.
- Two sources familiar with BOJ thinking: review of prior policy will help the central bank make the case that the domestic economy can deal with the impact of steady increase in rates; Japan deflationary norm has changed – financial press.
- Former BOJ official says Jul rate hike is ‘risky’ – US financial press.
- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 3-5 Years; 5-10 Years ; 10-25 Years and >25 Years (inline with prior purchases).
- Mitsubishi Motors to join Honda-Nissan alliance for EV development - financial press (update).
- Japan to reform policies to speed up entry of new (foreign) drugs - Nikkei.
- US-Japan commit to further military, cyber cooperation; Say China seeking to reshape international order at expense of others - financial press.
- Japan MOF reportedly want BOJ to cut bond purchases gradually and to consider bank capacity in bond plan – press [weekend update].
- (G20) Japan Fin Min Suzuki: G20 reaffirmed existing Forex commitments that excessive volatility or disorderly movements in exchange rates have adverse implications for economic and financial stability [weekend update].
South Korea
- Kospi opens +0.6% at 2,748.
Other Asia
- Indonesia Q2 Foreign Direct Investment (FDI): IDR217.2T, +16.6% y/y.
- Vietnam July CPI Y/Y: 4.4% v 4.3%e.
- Vietnam July Industrial Production Y/Y: 11.2% v 10.9% prior.
- Vietnam July Retail Sales Y/Y: 9.4% v 9.1% prior.
- Vietnam July Trade Balance: $2.12B v $2.0Be v $2.9B prior.
- Taiwan Central Bank (CBC) Jun Minutes: Decision was unanimous to keep rates unchanged [weekend update].
North America
- BTC/USD Hits $70K for first time since early June.
- (VE) Venezuela Presidential Election results: Pres Maduro wins with 51.2% of the Presidential vote for his third term - Venezuela Electoral Authority [Exit polls pointed to an opposition win, in disputed election outcome].
- (US) On Monday, Pres Biden will reportedly announce proposal to dramatically reform the Supreme Court – Politico [weekend update].
- (US) Former Pres Trump: If we don't embrace crypto and Bitcoin technology, then China will dominate; Bitcoin is going to the moon and I want the US to lead the way; Confirms plan to create a strategic national Bitcoin stockpile [weekend update].
Europe
- (RU) Russia Pres Putin; If US deploys long-range missiles in Germany then Russia would station similar missiles in striking distance of the West - financial press.
- (IL) Israel vows to hit back hard at Hezbollah following rocket attack killing 12 on soccer field in Majdal Shams, Golan Heights, including children and teenagers - financial press.
- (IL) Israel Foreign Min Katz: We are approaching the moment of an all-out war against Hezbollah and Lebanon after rocket attack in Golan [weekend update].
- US State Dept spokesperson: US does not believe that the Russian and Chinese bombers intercepted by US and Canadian fighter jets near Alaska posed a security threat [weekend update].
- (RU) US Treasury Sec Yellen: 'Things look good' for G7 countries agreeing on terms for a $50B Ukraine loan by October – interview [weekend update].
Levels as of 01:20 ET
- Nikkei 225 +2.5; ASX 200 +0.7%; Hang Seng +1.8%; Shanghai Composite +0.2%; Kospi +1.3%.
- Equity S&P500 FUTs +0.4%; Nasdaq100 FUTs +0.7%, Dax +0.4%; FTSE100 flat.
- EUR 1.0851-1.0870: JPY 153.03-154.36; AUD 0.6547-0.6589; NZD 0.5885-0.5901.
- Gold +0.5% at $2,439/oz; Crude Oil +0.5% at $77.52/brl; Copper +0.4% at $4.1315/lb.
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