Back to Daily DR Market Summary

StreetAccount Summary - Asian Market Recap: Nikkei +1.49%, Hang Seng +2.01%, Shanghai Composite +2.06% as of 04:10 ET

Jul 31 ,2024

  • Synopsis:

    • Asia equities ended mostly higher Wednesday. Gains led by Greater China boards with strong buying in Shenzhen and Hong Kong, while the gains were across most sectors. Gains in South Korea on the back of SEC's results, Taiwan flat. Southeast Asia higher, India higher in morning trade. Japan equities paring early losses on BOJ's 'dovish hike'. US futures higher, Europe higher in early trading. Dollar lower, yen weaker against a basket of currencies, AUD lower on inflation reading. Treasury yields mixed, JGB yields higher across tenors. Crude higher on escalating Middle East tensions, gold also higher, base metals better than of late.

    • Asia equities shrugged off this week's risk events to gain almost everywhere Wednesday. Japan markets pared early losses on BOJ decision to hike base rate to 0.25%. Markets responding to the strong rally in US futures, despite a sharp decline in Microsoft post the close on Wall Street Tuesday, with the Hang Seng notably higher as CGB yields recovered and the country's July PMIs showed only a mild contraction. South Korea's Kospi also higher following better-than-expected results from Samsung Electronics, and Australia's ASX outperformed as cooler-than-expected inflation and cooling retail sales pointed to the RBA likely holding rates steady and could bring forward later rate cuts.

    • In other macro developments, South Korea industrial production data for June eased slightly from last month despite a strong surge in semiconductor output, but retail sales improved. Japan industrial output fell m/m but was less of a contraction than expected while retail sales growth hit four-month high.

    • Samsung Electronics (005930.KS) Q2 operating profit surged as chip unit returns to profit. Abu Dhabi and Qatar wealth funds are said to be backing Adani Energy Solution's (539254.KS) $1B share sale. Vedanta Limited (500295.KS) said it got approval from the majority of its secured creditors for the demerger of the group into six separate companies. Rio Tinto (RIO.AU) says it expects good demand from China just as its H1 profits met estimates. BYD Company (1211.HK) is exploring entry into the Canada market, according to regulatory filings.

  • Digest:

    • BOJ hikes policy rate, guides monthly JGB purchases to JPY3T in 1Q26:

      • BOJ voted 7-2 to raise the uncollateralized OCR to 0.25% from 0~0.1%. Market consensus technically looked for no change this time, though a move was widely perceived to be a risk. BOJ also unanimously endorsed a reduction to JGB purchases to a monthly pace of ~JPY3T ($19.6B) in 1Q26, generally in line with expectations, while also guiding consistent cutbacks of JPY400B per quarter in principle. With macro developments generally in line with current projections, BOJ judged it appropriate to adjust the degree of monetary accommodation from the perspective of stably achieving the 2% inflation target. Noted that real rates expected to remain significantly negative after the rate hike, reaffirming accommodative financial conditions will continue. Guidance signaled further rate hikes on the cards if the July outlook scenario is realized. July Outlook Report showed FY24 core CPI forecast revised down to 2.5% from 2.8%, FY25 upgraded to 2.1% from 1.9%, while FY26 was unchanged at 1.9%. Cited impacts from government measures, alluding to restoration of energy subsides from August to October. Tweaks to GDP forecasts were prompted by technical data revisions, both of which were discussed in press previews. Outlook report also indicated that risks to the inflation outlook are skewed to the upside for FY24/25.

    • China official manufacturing PMI loses further momentum, services stall:

      • Official manufacturing PMI was 49.4 in July, compared to consensus 49.3. Follows 49.5 in the previous month, marking the third straight month in contraction. Production slowed to virtually neutral, while decline in new orders strengthened slightly and export weakness eased. Inflation metrics continued to soften with input prices turning negative combined with accelerated declines in output prices. Improved pricing dynamics in petroleum, coal and other fuel sectors were noted as the exception. By industry size, stronger expansion among large firms contrasted with contractions in small and medium-sized firms. NBS cited production off-season, insufficient market demand and extreme weather events as the main factors. Incremental developments were concentrated in the nonmanufacturing PMI falling to 50.2, matching expectations, from 50.5 in June and latest reading marks the lowest since November. Construction sub-index underwent further deceleration to its lowest to a one-year low amid bad weather effects. Services activity also softened to the neutral level as growth in logistics, transport and leisure was negated by ongoing weakness in retail, real estate and financial services. Overall, composite PMI slid to 50.2 from 50.5.

    • Australian underlying inflation eases, triggering increase in RBA rate cut bets:

      • Australia Q2 headline CPI inflation unchanged as expected at 1.0% q/q, bringing up yearly rate to in-line 3.8% from 3.6% in Q1. Driven by pickup in food and alcohol categories. More important trimmed mean inflation slowed to 0.8% q/q from prior quarter's 1.0% (also consensus), bringing down yearly rate to 3.9% from 4.0% (also consensus). Non-tradeables inflation unchanged at 5.0%. Breakdown showed inflation moderation in categories typically less responsive to rate changes such as health, education and insurance. Discretionary categories such as clothing and footwear (new season stock), and recreation and culture (international holiday demand) saw an uptick. Housing rose, reflecting upward impact on utilities from rebate fadeout. Rental inflation also slowed. Separate monthly figure showed June CPI inflation eased back to 3.8% y/y from 4.0%. Dovish market reaction with front-end Australian yields moving sharply lower in a bull steepening move. Markets wound back already slim odds of an August rate hike while moving to price in 67% chance of rate cut in Dec-2024 (Bloomberg).

    • China Politburo increases emphasis on private consumption growth:

      • Xinhua reported Politburo meeting was held Tuesday to discuss economic priorities for H2. In a review of H1, members observed more adverse impacts from changes in external environment, and effective domestic demand remains insufficient. Tasks of reform and development and maintaining stability in H2 described as "arduous," while underscoring importance of pursuing progress while ensuring stability. Repeated calls to foster "new productive forces" and reaffirmed steadfast efforts to achieve this year's economic and social development goals. Members suggested reforms should be the driving force in promoting steady growth, signaling examples such as property rights protection, market access and corporate bankruptcy proceedings. Key macro policy language remained supportive, calling for more effective policies, stronger counter-cyclical adjustments, accelerated issuance and usage of special bonds, and further promotion of the existing equipment upgrade/trade-in program. Members also suggested domestic demand should be expanded with a focus on boosting consumption (long called for by IMF and international investors) and mentioned services as a growth area. On the property market, members endorsed support for purchases of housing inventory to be used for affordable housing while urging accelerated defusing of debt risks faced by local financing platforms.

    • China equities in risk-on mode:

      • China equities in rebound mode Wednesday with CSI 300 recording its biggest daily advance since mid-April. Some attention drawn to July Politburo meeting, where leaders pledged near-term incremental policy support to boost consumption. Sell-side takeaways mixed on stimulus implications though broadly concurred on likelihood of more piecemeal support in H2. HSBC eyeing acceleration of special bond issuance to boost manufacturing and investment. Goldman Sachs expects further cuts to RRR, reverse repo rate and mortgage rates in H2, as well as increased bond issuance to fund manufacturing and investment. UBS saw similarly modest policy support but no major stimulus. JP Morgan noted potential for new measures aimed at supporting service consumption. Outside of Politburo takeaways, Wednesday's rally thought to have been influenced by suspected state-buying (Bloomberg). Stocks had veered into oversold territory with Hang Seng's 14-day RSI nearing typical buy signals (SCMP). Valuations also highlighted recently with 10Y bond yield below CSI 300's dividend yield (Bloomberg).

    • Notable Gainers:

      • +6.6% 6902.JP (DENSO Corp.): reports Q1 revenue ¥1.754T vs FactSet ¥1.739T, operating income ¥120.57B vs FactSet ¥113.84B

      • +5.6% 4091.JP (Nippon Sanso Holdings): reports Q1 revenue ¥329.27B vs FactSet ¥317.28B, core operating income ¥48.36B vs FactSet ¥43.48B

      • +4.3% 1913.HK (Prada): reports H1 net income €383.5M vs StreetAccount €350.8M

      • +3.8% 6762.JP (TDK): reports Q1 operating profit ¥57.87B vs StreetAccount ¥42.32B

      • +3.6% 005930.KS (Samsung Electronics): reports Q2 operating profit KRW10.444T vs preliminary KRW10.40T and StreetAccount KRW8.598T

      • +2.6% 532155.IN (GAIL (India)): reports Q1 standalone EPS INR4.14 vs FactSet INR3.35

      • +2% 2379.TT (Realtek Semiconductor): reports Q2 EPS NT$8.55 vs StreetAccount NT$6.85

    • Notable Decliners:

      • -5.9% 902.HK (Huaneng Power International): reports H1 revenue CNY118.81B, (6%) vs year-ago CNY126.03B

      • -5.9% 4661.JP (Oriental Land): reports Q1 revenue ¥148.42B vs FactSet ¥154.21B, operating profit ¥33.34B vs FactSet ¥35.85B

      • -4.9% 128940.KS (Hanmi Pharmaceutical Co.): reports Q2 revenue KRW378.13B vs StreetAccount KRW384.80B

      • -4.6% 6981.JP (Murata Manufacturing): reports Q1 operating profit ¥66.38B vs StreetAccount ¥71.70B

  • Data:

    • Economic:

      • China

        • July Non Manufacturing PMI y/y 50.2 versus consensus 50.3 and 50.5 in prior month

        • July official Manufacturing PMI y/y 49.4 versus consensus 49.3 and 49.5 in prior month

      • Japan

        • June Industrial Production m/m (preliminary) (3.6%) versus consensus (4.5%) and +3.6% in prior month

        • June Retail Sales y/y +3.7% versus consensus +3% and +2.8% in prior month

        • June Retail Sales m/m +0.6% versus +1.6% in prior month

        • June Housing Starts y/y (6.7%) versus consensus +1.8% and (5.2%) in prior month

      • Australia

        • Q2 CPI q/q +1% versus consensus +1% and +1% in prior quarter

        • June Private Sector Credit m/m +0.6% versus consensus +0.5% and +0.4% in prior month

      • New Zealand

        • June Building Permits m/m (13.8%) versus (1.9%) in prior month

        • July ANZ Business Confidence +27.1% versus +6.1% in prior month

    • Markets:

      • Nikkei: 575.87 or +1.49% to 39101.82

      • Hang Seng: 341.69 or +2.01% to 17344.60

      • Shanghai Composite: 59.45 or +2.06% to 2938.75

      • Shenzhen Composite: 51.27 or +3.29% to 1610.78

      • ASX200: 139.10 or +1.75% to 8092.30

      • KOSPI: 32.50 or +1.19% to 2770.69

      • SENSEX: 252.52 or +0.31% to 81707.92

    • Currencies:

      • $-¥: (2.59) or (1.70%) to 150.1910

      • $-KRW: (11.32) or (0.82%) to 1373.0300

      • A$-$: (0.00) or (0.73%) to 0.6493

      • $-INR: (0.09) or (0.11%) to 83.7297

      • $-CNY: (0.03) or (0.42%) to 7.2213

This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
Please refer to "Terms Of Use".

DEPOSITARY RECEIPTS:
NOT FDIC, STATE OR FEDERAL AGENCY INSURED
MAY LOSE VALUE
NO BANK, STATE OR FEDERAL AGENCY GUARANTEE