Sept nervousness flows through to Asia
|Asia market update: Sept nervousness flows through to Asia; Focus on US July JOLTS tonight (and NFP on Friday night).
General Trend
- The first US trading day of Sept saw the worst sell off in equities since the early August volatility with release or weak US ISM figures. Nvdia particularly weak down -9% and a further -2% lost after hours as the US DOJ antitrust investigation noose tightened with a subpoena being issued against the company. Analysts also noted general nervousness ahead of the US Non-farm Payrolls release this coming Friday.
- Nikkei -4% and Kospi -3% not long after the opening bell, with Japan and Korean chipmakers hit hard following Nvidia: Hynix -9% Samsung -3%, Tokyo Electron -6% and Softbank -5%. After Apple reported to end LCD displays for its iPhones (in favor of OLED) Japan Display -8%. Even major Nikkei component Fast Retailing could not avoid falling -1.6% despite +25% growth y/y for July sales.
- China’s Caixin Services came in mainly inline. Note that the Shanghai Composite at 2,789 is not much more than 100 points from falling below the March 2020 Covid lows to levels not seen since 2019.
- WTI oil weakness continued, falling below $70/bbl for first time since late 2023 after overnight reports suggested a potential political deal is in the works to bring back Libya supply.
- Australia stocks also down -2.0%, with miners and energy hit, led by Apex Mining -2.5%, Rio -2.0%, BHP -2.0% amid weak iron ore prices (below $100 again). ASX Resources -3.0%, ASX Energy -3.3% with ASX IT also -2.7% and ASX Financials -2.2%.
- The most-traded January iron ore contract on China's Dalian Commodity Exchange was 1.55% lower, hitting an intraday low of CNY 689.5, its weakest level since Aug 19th.
- Australia Q2 GDP figures were largely in line, however, the Stats Agency noted that excluding the COVID-19 pandemic period, economic growth was the lowest since 1991-92; The year that included the gradual recovery from the deep 1991 recession (Note: Australia’s last recession). Further, GDP per capita was down for the sixth consecutive quarter, falling 0.4 per cent.
- US equity FUTs -0.6% to -0.8% during Asian trading.
Looking ahead (Asian time zone)
- Wednesday Sept 4th (Wed night US July JOLTS).
- Thursday Sept 5th KR 2nd prelim Q2 GDP, JP July Labor cash earnings, AU July Balance of Trade, (Thu night US initial weekly Jobless Claims, US Aug ISM Services PMI, US Fed Beige Book).
- Friday Sept 6th AU July Home Loans (Fri night US Aug NFP).
- Saturday Sept 7th CN Aug Trade Balance.
Holidays in Asia this week
- Mon Sept 2nd Vietnam, (Mon night US and Canada).
- Tue Sept 3rd Vietnam.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens -0.3% at 8,081.
- Australia Q2 GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.0% V 0.9%E; Annual financial year economic growth was the lowest since 1991-92.
- Australia July CBA Household Spending M/M: 0.8% v 0.6%; Y/Y: 2.9% v 3.3%e.
- Australia Aug Final Services PMI: 52.5 v 52.2 prelim (confirms 7th month of expansion).
- Australia sells A$1.2B vs. A$1.2B indicated in new 4.25% Dec 2035 bonds; Avg Yield: 3.9892%; bid-to-cover: 3.61x.
- New Zealand Aug ANZ Commodity Price M/M: +2.1% v -1.7% prior.
- S&P Dir in interview: Broadly comfortable with New Zealand's Sovereign Rating; Needs to see Current Account deficit narrow further.
- New Zealand PM Luxon with South Korea leaders agree to speed up elevating relations to a strategic partnership - financial press.
China/Hong Kong
- Hang Seng opens -1.0% at 17,474; Shanghai Composite opens -0.6% at 2,786.
- China Aug CAIXIN PMI services: 51.6 V 51.8E (20th month of expansion).
- Hong Kong Aug PMI (whole economy): 49.4 v 49.5 prior.
- Follow up: Continued analyst speculation on China RRR rate cuts - Chinese Securities Journal.
- US to lead delegation to the Xiangshan Forum in Beijing – Chinese press.
- China PBOC sets Yuan reference rate: 7.1148 v 7.1112 prior.
- China PBOC Open Market Operation (OMO): Sells CNY0.7B in 7-day reverse repos; Net drains CNY277B v net drains CNY471B prior.
Japan
- Nikkei 225 opens -1.7% at 38,039.
- Japan Aug Final Services PMI: 53.7 v 54.0 prelim (confirms 2nd month of expansion).
- Japan ruling-party LDP lawmaker Motegi; Declares LDP leadership candidacy - financial press.
- Bank of Japan (BOJ) announcement related to outright bond buying operations: For <1 Year; 1-3 Years and 3-5 Years (Inline with prior purchases).
- X Follow up: Nippon Steel reiterates US Steel to remain a US company owned by Nippon Steel North America - financial press.
- Apple: Reportedly Japan will not supply iPhone displays as co. ends use of LCDs to focus on OLED - Nikkei.
- Fast Retailing (9983.jp) Aug domestic SSS +25.3% y/y [overnight update].
South Korea
- Kospi opens -2.8% at 2,589
- South Korea Aug Foreign Reserves: $415.9B v $413.5B prior.
- Samsung (005930.kr) Said to be considering job cuts in China sales unit - South Korean press.
- South Korea confirms to raise the pension contribution rate to 13% from 9%.
- BOK's Shin: Country's housing market is in a bubble - financial press [overnight update].
Other Asia
- Singapore Aug PMI (whole economy): 57.6 v 57.2 prior (Highest since Oct 2022).
- Vietnam Aug PMI Manufacturing: 52.4 v 54.7 prior.
- India Aug Final PMI Services: 60.9 v 60.4 prelim (confirms 37th month of expansion).
North America
- (CA) Canada Aug Manufacturing PMI: 49.5 v 47.8 prior (16th month of contraction).
- (US) Aug final S&P Manufacturing PMI: 47.9 V 48.1E.
- (US) July construction spending M/M: -0.3% V +0.1%E.
- (US) Aug ISM manufacturing: 47.2 V 47.5E; Prices Paid: 54.0 v 52.0e; New Orders: 44.6 v 47.4 prior.
Europe
- (RU) Russia Energy Min: Russia working to enhance safety of nuclear power plants - financial press.
- (RU) Kremlin spokesperson: Russia takes into account that Ukraine will use US long-range weapons in its attacks 'deep into Russia' - spokesperson cited by Russia state media.
- (PL) Poland activates aircraft to ensure airspace security after Russia launches strikes on Ukraine.
- (IE) Ireland Aug PMI Services: 53.8 v 53.6 prior (41st month of expansion).
- (UK) Chancellor of the Exchequer (Fin Min) Reeves: Autumn budget will outline tax road map for businesses - Parliament.
- (IL) Israel Fin Min Smotrich: 2024 growth forecast may be cut from current 1.9% level; fiscal deficit to GDP seen around 6.6%.
- (LY) Libya's Central Bank head al-Kabir: Expects deal leading to oil restart soon; Ready to return from Turkey to take the helm at central bank.
- (UR) Reportedly Ukrainian strategic industries minister, justice minister and environment minister tender resignations - press.
Levels as of 01:20 ET
- Nikkei 225 -4.3%; ASX 200 -2.0%; Hang Seng -1.4%; Shanghai Composite -0.7%; Kospi -3.4%.
- Equity S&P500 FUTs -0.6%; Nasdaq100 FUTs -0.8%, Dax -0.6%; FTSE100 -0.6%.
- EUR 1.1039-1.1058: JPY 144.89-145.56; AUD 0.6685-0.6716; NZD 0.6169-0.6195.
- Gold +0.1% at $2,526/oz; Crude Oil -0.5% at $69.97/brl; Copper flat at $4.0888/lb.
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