Eyes this week on US earnings + FOMC, ECB, BOJ rate decisions

 Asia market update: CN markets ignore stimulus comments from officials, Chinese equities drop; Eyes this week on US earnings + FOMC, ECB, BOJ rate decisions; CN Politburo also in focus.

General trend

- On Friday evening JPY/USD weakened sharply to 142 following a report that the BOJ sees little need to act on Yield Curve Control (YCC) at its meeting this Friday.

- Nikkei may also have been helped by the above BOJ report.

- However, Japan’s Topix banking index fell as much as -2.5%, likely on the softer JGB yields in Asia today (JP 10-yr -0.02 to 0.4630%).

- China’s National Development and Reform Commission (NDRC) today issued more talking points about “promoting high-quality development of private investment”, but the market ignored its suggestions.

- Hang Sang -1.7%, Hang Seng Tech Index Opened -1.5%, with the Mainland Properties Index down >-5.0%.

- Country Garden among the focal points amid debt concerns and broker downgrade.

- China Lithium prices on the Guangzhou Exchange’s new futures contract continued declines today, reaching a low point of CNY 209,000 after plunging limit-down -14% on their trading debut last Friday.

- On top of a big earnings week in the US, a note that the NASDAQ 100 undertakes a special rebalancing on Monday, Jul 24 (for only the third time - previously in 1998 and 2008). Downsizing the weighting of six Big Tech and AI-heavy stocks from >50% to ~40%: Nvidia, Microsoft, Alphabet, Amazon, Apple and Tesla.

- Mitsubishi Motors stock was up +6% during early morning trading (raised guidance).

- Nissan Motors also up at a 52-Week High of ¥620.60.

- Posco Holdings of Korea was up strongly today as they released their Q2 earnings (see below), following on from 12% spike on Friday.

Looking ahead (Asian time zone)

- Wed Australia CPI.

- Wed night US FOMC rate decision.

- Thu evening EU ECB rate decision, Thu night US Q2 advance GDP growth.

- Fri Japan BOJ rate decision.

- Fri night US personal spending and PCE.

- Note that the China Politburo meeting is expected to be held later this week, perhaps over the weekend. Will see top decision makers gather to discuss the economy and set the policy tone for the second half of this year.

Holidays in Asia this week

- Fri 28 July Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,317.

- Australia July preliminary PMI manufacturing: 49.6 V 48.2 PRIOR (5th straight contraction).

- Australia Treasurer: FY22/23 budget surplus to be at least A$20.0B.

- New Zealand Jun Trade Balance (NZD): 0.0B v 0.1B prior.

- New Zealand's Justice Minister resigns after facing criminal charges in car crash, three months out from national elections (update).

China/Hong Kong

- Hang Seng opens -1.1% at 18,867.

- Hong Kong strengthens radiation inspection of seafood imports from Japan [weekend update].

- Shanghai Composite opens -0.3% at 3,157.

- China National Development and Reform Commission (NDRC): Issues notice to promote the high-quality development of private investment.

- China PBOC has ample room for RRR and rate cuts [inline]; cites analysts - China Securities Journal front page.

- China PBOC issues draft rules on data security management for the banking sector; the public comment period will last until Aug 24th [further details not disclosed].

- Some China banks cut mortgage rate with Provident Fund; relates to mortgages jointly issued by commercial banks and the Provident Fund.

- China National Healthcare Security Administration issued rules related to limiting drug price cuts; expects the new rules will help stabilize expectations of drug-makers.
PBOC announces that Central Bank Governors of Japan, South Korea and China meet for first time in four years, for 12th trilateral CB Governors meeting [weekend update].

- China Dir Foreign Affairs Commission Wang Yi reportedly proposes that China, Japan, South Korea hold high level talks.

- China property developer crisis worsens as Country Garden, Sino-Ocean, Greenland, Wanda and Evergrande continue slump - Update on the week's developments [weekend update]
Japan officials express concern to Beijing over seafood controls [weekend update].

- 07/21 (CN) Guangzhou Exchange Lithium Carbonate futures contracts tumble daily-limit on debut; Supply glut risk blamed [weekend update].

- China PBOC sets Yuan reference rate: 7.1451 v 7.1456 prior.

- China PBOC Open Market Operation (OMO): Sells CNY14B in 7-day reverse repo; Net drains CNY19B v net drains CNY7B prior (second consecutive net drain).

Japan

- Nikkei 225 opens +1.1% at 32,648.

- Japan July preliminary PMI manufacturing: 49.4 V 49.8 PRIOR (2nd straight contraction and weakest since Mar).

- Japan Dep Chief Cabinet Sec Isozaki: Reiterates specific monetary policy is up to the BOJ.

- Former BOJ Official Wakatabe reiterates BOJ will probably this week [Jul 28th] raise inflation forecast for the current fiscal year, unsure if inflation momentum will be maintained in the next fiscal year and beyond [inline].

- Mitsubishi Motors (7211.JP) Reports Q1 Net ¥48.0B v ¥38.6B y/y, Op ¥45.2B v ¥30.8B y/y, Rev ¥635.9B v ¥528.7B y/y; Raises FY24 guidanceGuides FY24 Net ¥110B, Op ¥170B, Rev ¥2.78T (prior Net ¥100B, Op ¥150B, Rev ¥2.70T).

- 07/21 Bank of Japan (BOJ) said to see little need to act on YCC (yield curve control) now and prefers to wait for more data; likely to discuss YCC change even if no tweak at July 28th's rate decision [weekend update].

- 07/21 Japan top FX diplomat kanda: Reiterates excessive FX moves are undesirable; considering all options [weekend update].

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

South Korea

- Kospi opens flat at 2,608.

- South Korea's financial watchdog (FSS) Governor to meet Head of Japan's FSA on Monday 24 July [weekend update].

- Posco Holdings (005490.KR) Reports Q2 (KRW) Final Net 700B v 803.6Be, Consolidated Op 1.30T v 1.30T prelim, Rev 20.1T v 20.1T prelim.

Other Asia

- Indonesia PM Jokowi to visit China - China MOFA.

- Indonesia Q2 Foreign Direct Investment (FDI) Y/Y: 14.2% v 39.7%prior [weekend update].

- Malaysia Jun CPI Y/Y: 2.4% v 2.4%e (2nd straight month within target range).

- Singapore Jun CPI M/M: 0.5% v 0.3% prior; Y/Y: 4.5% v 4.4%e.

North America

- Chevron [CVX]: Reports Q2 prelim $3.08 v $3.06e, Total Earnings $6.01B v $11.6B y/y; appoints Eimear Bonner as new CFO, current CFO to retire in 2024; board waived the co's mandatory retirement age of 65 for its Chairman and CEO.

- SDI Holdings (006400.KR) Signs MOU with Stellantis related to new battery plant [2nd battery manufacturing plant in the US]; to build number 2 battery plant in the US in 2027; annual capacity is expected at 34GWh.

- 07/21 Ford: House China Committee is demanding documents from Ford about its deal with China's CATL – CNBC- US commercial bank deposits (non-adjusted) week ended July 12th fell to $17.29T v $17.37T w/w [largest deposit withdrawal since the week of Apr 26th] - Fed Assets & Liabilities of Commercial US Banks - H.8 [weekend update].

- 07/21 *(US) Note: On Mon, July 24th, for 2nd time in 12 years and 3rd time in its history, NASDAQ 100 index to conduct a special rebalance [weekend update].

- US Chip-maker CEOs urge US to study impact of China curbs and take pause [weekend update].

Europe

- Spain's Election result inconclusive; Conservative People's Party (PP) falls short of majority.

- UK Jun retail sales (ex-auto/fuel) M/M: 0.8% V 0.2%E; Y/Y: -0.9% V -1.6%E [Friday update].

Levels as of 01:20 ET

- Nikkei 225 +1.2%; ASX 200 flat; Hang Seng +1.6%; Shanghai Composite -0.1% ; Kospi +0.8%.

- Equity S&P500 Futures flat; Nasdaq100 +0.1%, Dax -0.3%; FTSE100 +0.2%.

- EUR 1.1117-1.1133 ; JPY 141.34-140.82 ; AUD 0.6715-0.6741 ; NZD 0.6256-0.6177.

- Gold -0.2% at $1,962/oz; Crude Oil -0.3% at $76.85/brl; Copper -0.1% at $3.8810/lb.