Asian Market Update: Par for the course, Asian markets take S&P US sovereign rating warning in stride

***Economic Data***

– (CH) CHINA JUN ACTUAL FOREIGN DIRECT INVESTMENT (FDI) Y/Y: 2.8% V 13.4% PRIOR; YTD FDI y/y: 18.4% v 23.4% prior (6-month high)
– (KS) SOUTH KOREA JUN EXPORT PRICE INDEX M/M: -0.7% V -1.5%; Y/Y: -0.4% V 3.3% PRIOR; IMPORT PRICES M/M: -0.4% V -2.3% PRIOR; Y/Y: 10.5% V 13.2% PRIOR
– (JP) Bank of Japan (BOJ) June 13th-14th Policy Meeting Minutes: In agreement to continue to monitor the impact of easing; Sees growing uncertainty over US and European Union outlook
– (SI) SINGAPORE MAY RETAIL SALES M/M: -0.4% V -1.7%E; Y/Y: 10.0% V 8.8%E; EX AUTO Y/Y: 8.3% V 8.5%E
– (CO) COLOMBIA MAY TRADE BALANCE: $12.7M V $540ME
– (CL) CHILE CENTRAL BANK LEAVES NOMINAL OVERNIGHT RATE AT 5.25%; AS EXPECTED
– (PH) Philippines MAY Overseas Workers Remittances: $1.7B v $1.6B prior; y/y: 6.9% v 6.3% prior
– (CH) Beijing Jun new home prices -7% m/m (update)

***Markets Snapshot (as of 04:30GMT)***
– Nikkei225 +0.1%
– S&P/ASX -0.4%
– Kospi +0.3%
– Taiex +1.1%
– Shanghai Composite unchanged
– Singapore Straits Times Index unchanged
– Hang Seng -0.3%
– S&P Futures +0.1% at 1,307
– Spot Gold -0.3% at $1,582/oz
– Aug Crude +0.1% at $95.81

***Overview/Top Headlines***
– Asian markets were mixed today, though staying calm in the new norm of uncertainty. Taiwan’s Taiex was the biggest gainer up over 1.1% on the day, S&P ASX was weighed down the most down over 0.5%. US debt ceiling talks continue with no resolution, President Obama will hold a press conference Friday but will not meet with US lawmakers, though talks are expected to continue over the weekend. S&P placed the US AAA sovereign rating on credit watch negative, EUR/USD jumped over 30 pips above $1.4190. Chambers, an analyst from S&P, commented that there is a higher change for a downgrade now, even if the debt ceiling is lifted if the US does not also reach a long term debt agreement. Spot gold hit $1,589, silver climbed over $38.50.

– China Industrial Bank Co economist Lu Zhengwei: China will be dragged into protracted war to limit liquidity and contain inflation if Fed decides on QE3. China Commerce Ministry commented that the outlook for H2 exports is uncertain due to weaker external demand and increasing costs.

– On the M&A front BHP made its first move after failing to acquire Potash, making an $12.1B offer for Petrohawk (HK) for $38.75/shr in cash. CEO Kloppers commenting on the conf call that he sees 1M bpd within 5-years of closing the Petrohawk deal. Also did not rule out a fresh share buyback program.

***Speakers/Geopolitical/In the press***
– (CH) China’s government is expected to “fine-tune” economic policy; growth in CPI expected to stabilize in Q3, decline sharply in Q4 – Xinhua Editorial
– (KS) Bank of Korea (BoK) cuts 2011 GDP forecast to 4.3% from 4.5% prior; Raises 2011 Headline CPI forecast to 4.0% v 3.9% prior
– (JP) Japan Fin Min Noda: Reiterates Yen’s recent gains are one-sided, caused by overseas factors; Declines to comment on fx levels or possibility of intervention
– (KS) Bank of Korea (BoK) Dir General Lee: Economy is expected to stay in expansionary stage for a long period; Still facing a lot of downside risks

***Equities***
– FMG.AU: Reports Q4 iron ore mined 12.4M tons v 9.7M tons q/q; Iron ore shipped 11.5M tons v 8.4M tons q/q
– FLT.AU: Raises FY11 pre-tax profit A$243-247M v A$240Me (guided A$220M-240M on Apr 5th)
– RAH: Reports prelim Q3 $1.13-1.18 (ex items) v $1.37e, Guides FY11 $5.20-5.35 (ex items) v $5.51e ($5.45-5.55 prior guidance); -4.9% after hours
– GOOG: Reports Q2 $8.74 v $7.85e, R$6.92B v $6.6Be; +12.6% after hours

***FX/Fixed Income/Commodities***
– (TT) Taiwan government sells NT$30B in 5-yr bonds at 1.18% v 1.08% prior, bid to cover: 1.9X
– (US) Fitch comments on US: There is no change to Stable Outlook on ‘AAA’ sovereign rating

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July 18th, 2011 in Forex News

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