General trend
– After yesterday’s carnage amid multiple limit-down trading suspensions in Asia, especially in Japan, today the opposite occurred with the Nikkei225 and Kospi markets both having UPPER-trading limits imposed in early trading. (**Note that the main markets affected on both days were Japan and Korea, with HK, CN and AU markets much more subdued both days).
– It was all roses in stark contrast to yesterday’s bloodbath, with stocks making back a lot of yesterday’s Oct 2008-sized daily losses. The Nikkei and TOPIX were both up >10% within the first hour of trading. Megabank Mitsubishi UFJ (which lost -21% limit yesterday) gained back 12% in the first few minutes. Chip-makers Renesas limit-up at 20%, Tokyo Electron +17% and Advantest +15%. Broad based gains were also seen with Honda +16% after beating Q2 profit expectations, Kikkoman +20% limit and Toyota up more than 13% – close to making up for all of Friday and Monday’s losses combined.
– The Kospi also went a long way to wiping out all of yesterday’s losses, with the Kospi quickly up 5%, and recoveries in chip-makers Samsung +5% and SK Hynix +6%.
– Yields also broke back up across the curve (as per the US overnight), with JP 10-yr JGBs +14bps in early trading. AU 10-yrs also +14bps. China 30-year Treasury FUTs also fell by ~1% after having recently risen to 2002 levels. In a side-note, Japan’s 10-yr JGB auction at 50bps had its lowest tail demand since 2003.
– In data that will affirm the BOJ’s view of sustainable inflation finally being achieved, Japan’s June Labor Cash Earnings finally showed after more than 30 years that Japanese consumers are being paid much more than last year, +4.5% y/y, nearly double the forecast. Real Cash earnings came through at a positive figure, the opposite of the negative number expected. Cash Earnings also rose over 5%.
– Late in the session Australia’s RBA left the OCR unchanged and moreover said that its forecasts based on unchanged OCR until mid-2025. Reiterated that the Board is not ruling anything in or out.
– US equity FUTs +1.4% to +1.8% during Asian trading.
Looking ahead (Asian time zone)
– Wed Aug 7th AU Group Industry Index.
– Thu Aug 8th JP Summary of Opinions (July 31st meeting), AU NAB July Bus Confidence, CN July Balance of Trade, RBI rate decision.
– Fri Aug 9th CN July CPI.
Holidays in Asia this week
– Fri Aug 9th Singapore.
Headlines/economic data
Australia/New Zealand
– ASX 200 opens flat at 7,650.
– Reserve Bank of Australia (RBA) leaves cash rate target unchanged at 4.35%; as expected.
– Reserve Bank of Australia (RBA) statement on monetary policy (SOMP).
– Australia July ANZ-Indeed Job Advertisements M/M: -3.0% v -2.2% prior.
– Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 81.3 v 83.1 prior.
– Bank of New Zealand (BNZ) now sees RBNZ cutting rates in Aug 2024, not Nov 2024.
China/Hong Kong
– Hang Seng opens +1.0% at 16,861.
– Follow up: Chinese firms said to be stockpiling Samsung HBM high-bandwidth memory chips ahead of expected US trade curbs – financial press.
– China Jul CPI seen rising, PPI expected to continue declines; cites analysts – China Securities Daily.
– Reportedly China State Banks sold govt bonds in large sizes – press [overnight update].
– China PBOC sets Yuan reference rate: 7.1318 v 7.1345 prior.
– China PBOC Open Market Operation (OMO): Sells CNY0.6B in 7-day reverse repos; Net drains CNY216B v net drains CNY301B prior.
Japan
– Nikkei 225 opens +2.0% at 32,077; Shanghai Composite opens +0.6% at 2,878.
– Nikkei FUTs trading suspended after touching UPPER limit (Market pre-open).
– Japan Jun labor cash earnings Y/Y: 4.5% V 2.4%E.
– Japan Jun Household Spending Y/Y: -1.4% v -0.8%e.
– BOJ Gov Ueda to attend lower house parliament finance committee to be held on ‘volatile’ equity market; the meeting will be held in the ‘coming days’ – Japanese press.
– Japan Chief Cabinet Sec Hayashi: Clear that wages trends are positive; wage rises will likely spread toward Fall with strong Shunto results.
– Japan Fin Min Suzuki: Will continue to monitor and analyze financial market moves and work closely with relevant authorities (inline) – financial press.
– Japan PM Kishida: Important to make judgement on markets ‘calmly’; closely watching market moves with a sense of urgency.
– Japan Chief Cabinet Sec Hayashi: Reiterates closing watching FX moves; Will not comment on levels (comments post -12% crash on Nikkei 225 yesterday).
– Japan MOF sees corporate tax revenues down ¥1.3T/yr from FY24 due to wage hike-oriented tax cuts – Japanese press [overnight update].
– Nikkei 225 index closed lower by -12.0% on Monday at 31,458 [overnight update].
South Korea
– Kospi opens +3.8% at 2,533.
– Korea Exchange activates sidecar on Kospi after FUTs +5%; Program trading halted for 5 minutes.
– South Korea Fin Min Choi: FX and money markets show a ‘stable trend’.
– Kospi closed lower yesterday by -8.8% (biggest drop since 2008) at 2,441 [overnight update].
Other Asia
– Thailand July Consumer Confidence: 57.7 v 58.9 prior (lowest since Aug 2023).
– Philippines Central Bank (BSP): Reiterates balance of risks to inflation outlook has shifted to the downside.
– Philippines July CPI M/M: 0.7% v 0.4%e; Y/Y: 4.4% v 4.1%e.
– Thailand Fin Min Pichai: Stock market fall is driven by external factors and should be supported by govt measures.
North America
– Nvidia: Follow up: Next-gen AI chip roll out confirmed to be slowed by engineering issues – financial press.
– Follow up: US Official: US Pres Biden and VP Harris were told by National Security team that it is unclear when Iran and Hezbollah are likely to launch an attack against Israel and specifics of such at attack.
– (US) Fed’s Daly (voter): July jobs report reflected a lot of temporary layoffs and hurricane effects; We will look at data in totality; Policy needs to be proactive.
– (US) Fed’s Goolsbee (non-voter for 2024): Jobs data does not yet indicate recession; Fed can wait for more data before Sept 18th’s meeting; Everything is always on the table, regarding emergency rate cut; Will respond if necessary – CNBC.
– (US) July final S&P services PMI: 55.0 V 56.0E.
– (US) July ISM services index: 51.4 V 51.3E; New Orders Index: 52.4 v 47.3 prior; Prices Paid: 57.0 v 56.3 prior.
– (US) US VP Harris has narrowed pool of potential running mates down to Gov. Josh Shapiro (D-PA) and Gov. Tim Walz (D-MN) – press.
– (US) Fed July Senior Loan Officer Survey (SLOOS): 7.9% of large and medium banks tightened standards for commercial and industrial loans in Q2 vs 15.6% Q/Q.
– (US) US Supreme Court declines to halt former Pres Trumps’ hush money case sentencing and gag order until after the election.
Europe
– (IE) Ireland July PMI Services: 53.6 v 54.2 prior (40th month of expansion).
– UK) July British Retail Consortium (BRC) Y/Y: +0.3% v +0.2%e (-0.5% prior).
– Libya said to have fully halted production at its largest oil field, Sharara (~300K bpd capacity) – press.
– (IL) Germany preparing to evacuate German nationals out of Lebanon concerning potential escalation between Iran and Israel – press.
Levels as of 01:20 ET
– Nikkei 225 +9.1%; ASX 200 +0.6%; Hang Seng -0.3%; Shanghai Composite -0.3%; Kospi +3.2%.
– Equity S&P500 FUTs +1.1%; Nasdaq100 FUTs +1.3%, Dax +0.4%; FTSE100 +0.5%.
– EUR 1.0943-1.0963: JPY 143.62-146.37; AUD 0.6492-0.6541; NZD 0.5923-0.5980.
– Gold +0.3% at $2,450/oz; Crude Oil +1.6% at $74.11brl; Copper -0.9% at $3.9730/lb.
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Publish date : 2024-08-05 18:46:00
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