China
was once again a focus with Hong Kong’s Hang Seng index plunging
again, on approach to 20% down from its high in January this year.
After falling circa 2% it has found support and as I post its only
down around 1% on the day. Rumours are circulating that Chinese
authorities have told funds and banks not to sell stocks. While I
haven’t confirmed this information at this stage such instructions
are not unusual at all in China. It’s a one-party state and the
Chinese Communist Party is very accustomed to getting its way. Of
course, bullying investors is only a short-term solution and really
only locks in deeper malaise over time.
The People’s Bank of China set the USD/CNY reference rate nearly 10 big figures under the estimated (modelled) rate, its most aggressive setting divergence in this episode of yuan weakness so far and a sign the Bank want to slow the descent of the currency.
Apart
from China, the other notable event was the July jobs report from
Australia. This was a poor one, with 24K full time job losses and the
unemployment rate climbing to 3.7% vs. 3.5% expected. The Australian
Bureau of Statistics warned of holiday-time distortion in the data
(see bullets above) but headlines are headlines for a reason and
AUD/USD was marked lower immediately on the job loss and unemployment
rate numbers. At its session low it was down around 60+ points on the
day. NZD/USD is lower alongside.
EUR
and GBP are lower against the USD also. A little more hawkish tone
from the FOMC minutes publicised on Wednesday saw UST yields rise
further here in the region and thus weigh on ‘risk’. USD/JPY ticked higher, popping above 146.50 at one stage and is just under there as I update.
Asian
equity markets:
-
Japan’s Nikkei 225 -0.9%
-
China’s Shanghai Composite -0.2%
-
Hong Kong’s Hang Seng -0.9%
-
South Korea’s KOSPI -0.6%
-
Australia’s S&P/ASX 200 -0.9%