Weak and choppy summer trading ahead of Nvidia's Q2 tomorrow – Inflation in Australia still tough

General trend

– Asian stocks are trending down to flat ahead of Nvidia's highly anticipated Q2 earnings release tomorrow morning (Asia time).

– Unlike other economies in the developed world, inflation in Australia remains sluggish. The consumer price index for July, while slightly above estimates, was 0.3% lower than the previous month. Officials noted that electricity rebates led to a decline of -6.4% for the month. Without the discounts, electricity prices would have risen by +0.9% in July instead. The Australian dollar and bonds did not move due to the CPI data.

– In Australia, construction work in the second quarter was significantly lower than expected.

– Aussie gains continued; mining company Fortescue initially +1.5% to a monthly high due to confirmed forecast and larger dividend than expected (the share had lost -36% over the year). However, the share later lost its gains and was at -1.7%; supermarket retailer Woolworths +2.5% Despite the sharp decline in statutory profits due to key items, underlying earnings were in line, with EBIT slightly beating estimates. The CEO said customers are looking for “good value for money”.

– In the ongoing “bond war” between investors seeking stability and the PBoC demanding higher interest rates than current levels, (HK) The one-year offshore yuan (CNH) HIBOR falls to 2.30909%, the lowest since data became available.

– Bitcoin price collapsed from $62,000 to $57,000 in early Asian trading with no major news.

– US equity FUTs unchanged at -0.1% during Asian trading.

Outlook (Asian time zone)

– Wednesday, August 28 (Wednesday evening of the German GfK consumer conference).

– Thu., 29 August (Thursday evening DE preliminary CPI for August, US GDP in the 2nd quarter, 2nd estimate).

– Friday, August 30, JP Industrial Production and Retail Sales in July, AU Retail Sales, JP Consumer Conference in August (Friday evening various preliminary European Consumer Price Index for August, Friday evening India GDP in Q2, CA GDP in Q2, US Core PCEConsumer sentiment in Michigan).

– Saturday, August 31 CN, national PMIs for August.

Holidays in Asia this week

– Monday, August 26, Philippines.

Headlines/Economic data

Australia/New Zealand

– ASX 200 opens -0.1% at 8,061.

– Australia, July CPI, y/y: 3.5% vs. 3.4%E.

– Australia: Construction work completed in Q2: 0.1% vs. 0.7%e.

– Australia's Finance Minister Chalmers: Inflation data is a promising result, but we are not complacent [follows Jul CPI data].

– Australia sells A$800 million versus A$800 million stated in 3.50% bonds for December 2034; Average yield: 3.9148% versus 3.9818% previously; Bid to cover: 2.31x versus 2.74x previously (August 14, 2024, local time).

– New Zealand job openings in July M/M: -0.1% compared to -0.3% previously.

China/Hong Kong

– Hang Seng opens -0.2% at 17,847; Shanghai Composite opens -0.2% at 2,844.

– Country Garden (2007.HK) reportedly considering further delays in repayment of Chinese Yuan (CNY) bonds – Press [overnight update].

– Chinese Ministry of Commerce (MOFCOM): Canada's tariff measures will disrupt the stability of global supply chains; firmly opposes tariffs and calls on Canada to immediately correct its misconduct; [overnight update].

– The Chinese PBoC sets the yuan reference rate: 7.1216 compared to 7.1249 previously.

– Open market operation (OMO) of the Chinese PBoC: sale of CNY 277 billion in 7-day reverse repo transactions; net injections of CNY 19 billion compared to the previous net injections of CNY 323 billion.

Japan

– Nikkei 225 opens -0.2% at 38,221.

– Bank of Japan (BOJ) Deputy Governor Himino: As uncertainty increases, the extent of easing will be adjusted – speech to local politicians in Yamanashi Prefecture.

– Japan's Cabinet Secretary Hayashi: Ministerial meeting on nuclear power to take place next week – Financial Press.

– Announcement by the Bank of Japan (BOJ) regarding direct bond purchase operations: For 3-5 years, 5-10 years, 10-25 years and >25 years (consistent with previous purchases).

South Korea

– The Kospi opens unchanged at 2,690.

– Follow-up: Korea's finance chief reiterates South Korea will help boost consumer spending – Financial Press.

Rest of Asia

– (HK) The one-year offshore yuan (CNH) HIBOR falls to 2.30909%, the lowest since data became available.

– Central Bank of Thailand (BOT), Governor Sethaput: The momentum of the economic recovery is likely to slow in the second half of the year compared to the first half of the year.

– Thailand's foreign minister considers economic stimulus measures, including digital handout program worth about $13 billion – Financial Press.

– Taiwan's leading indicator for July monitoring: 35 compared to 38 previously [overnight update].

– Governor Warjiyo of the Indonesian Central Bank (BI): Exports will still contribute to GDP growth in 2025, but to a lesser extent than in 2024 [overnight update].

North America

– (USA) S&P Corelogic Home Price Index for June (20-CITY) M/M: 0.42% V 0.30%E; Y/Y: 6.47% V 6.14%E.

– (USA) FHFA House Price Index for June M/M: -0.1% V 0.1%E; Q/Q: +0.9% V 1.1% previously.

– (USA) Richmond Fed manufacturing index in August: -19 vs. -14E (lowest since May 2020); new orders -26 vs. -23 previously (lowest since May 2023).

– (USA) Consumer confidence in August: 103.3 V 100.7E.

– (USA) Dallas Fed service sector activity in August: -7.7 versus -0.1 previously.

– USD 69 billion 2-year (US) Treasury bond auction yields 3.874% vs. 4.434% previously; bid-to-cover ratio: 2.68 vs. 2.81 previously and 2.65 over the past 12 years.

– (US) Fed discount rate minutes: Directors in Chicago and New York voted in favor of a cut.

Europe

– (UK) CBI retail sales in August: -27e vs. -10e.

– (EU) ECB Node (Netherlands): Will wait for data to assess September rate cut.

– (EU) ECB Centeno (Portugal, Dove): The interest rate path seems relatively clear – Podcast.

– (RU) Ukrainian President Zelensky: Ukraine has successfully tested its first ballistic missile. The war will end through dialogue, but Ukraine must be in a strong position.

– (IT) Prime Minister Meloni: Trying to close the 12 billion euro budget gap through budget cuts.

– (HU) The Hungarian Central Bank (MNB) leaves the key interest rate unchanged at 6.75%, as expected.

As of 01:20 ET

– Nikkei 225 unchanged; ASX 200 -0.2%; Hang Seng -1.1%; Shanghai Composite -0.5%; Kospi unchanged.

– Stock FUTs S&P500 unchanged; Nasdaq100 FUTs -0.1%, Dax +0.2%; FTSE100 +0.2%.

– EUR 1.1145-1.1186: JPY 143.69-144.54; AUD 0.6783-0.6813; NZD 0.6237-0.6253.

– Gold -0.4% to USD 2,544/oz; crude oil unchanged at USD 75.50/brl; copper -0.9% to USD 4.2637/lb.