Uncategorized

FC: ASIAN CLOSING REPORT: WEDNESDAY – 23RD – AUGUST – 2017at 05:25AM

Asian equity markets traded mixed (NIKKEI +0.3%, S&P/ASX -0.2%, SHANGHAI COMPOSITE -0.2%) despite a mostly higher open after the positive close on Wall Street, while markets in Hong Kong were closed for the morning session after Typhoon Hato’s warning was upgraded to 10. We heard from US President Trump who spoke at a rally in Phoenix, AZ, he said we are building that wall, even if we have to close down government. Trump, speaking on North Korea, stated he respects the fact that Kim Jong-Un is beginning to respect the US and that maybe something positive can come about. On NAFTA, Trump said at some point the US will probably end up terminating NAFTA at some point. Trump’s remarks on a government shutdown over the proposed border wall saw USD/JPY fall to session lows, while gold also popped higher. Elsewhere, we saw the release of New Zealand’s pre-election economic and fiscal update which was a mixed a bag. The NZ Treasury slashed its 2017-18 year GDP growth forecast to +3.5% from +3.7% in the budget forecast, while lowering expected future OBEGAL surpluses. They did however, improve their cash balance forecasts. Immediately after the release, NZ Finance Minister Joyce said unless economic conditions are better than anticipated, the government will not consider tax cuts until 2020. The update and Joyce’s comments prompted the Kiwi to lose aground against a basket of currencies. Data wise, Japan’s preliminary manufacturing PMI for August topped expectations, rising to 52.8 (f/c 52.3).
Key Headlines:
* New Zealand Pre-Election Economic & Fiscal Update

• Sees 2016-17 operating surplus before gains and losses of NZ$2.869 Bln (Budget Forecast +NZ$1.621 Bln)

• Sees 2018-19 OBEGAL surplus of NZ$3.515 Bln (Budget Forecast +NZ$4.051 Bln)

• Sees 2016-17 net debt at 22.5% of GDP (Budget Forecast +23.2%)

• Sees 2016-17 cash balance at a surplus of NZ$1.497 Bln (Budget Forecast +NZ$0.071 Bln)

• Sees 2017-18 cash balance at a deficit of NZ$1.356 Bln (Budget Forecast -NZ$1.789 Bln)

• Sees 2017-18 year GDP growth at +3.5% (Budget Forecast +3.7%)
* NZ Finance Minister Joyce said in 2020, government is considering a second family income package, adding unless economic conditions are better than anticipated, the government will not consider tax cuts until 2020.
* Japan Manufacturing PMI (Aug P) 52.8 versus 52.3 expected, previous 52.1
* The PBoC set the yuan mid-point at 6.6633 against the Dollar

• The PBoC injected 100 Bln yuan via 7-day reverse repos

• The PBoC injected 80 Bln yuan via 14-day reverse repos
* Hong Kong upgraded the typhoon alert warning to 10
* US President Trump said we are building that wall, even if we have to close down government. Trump, speaking on North Korea, stated he respects the fact that Kim Jong-Un is beginning to respect the US and that maybe something positive can come about. On NAFTA, Trump said at some point the US will probably end up terminating NAFTA at some point.