News Headline Summary

ASIA-PACIFIC MID-SESSION UPDATE - 22/07/13: Buy the rumour, sell the fact! Nikkei 225 pares opening gains as Abe's win was widely expected

Asian equity markets began the trading week with a mixed tone, in a relatively light session in terms of economic data releases. The ASX 200 climbed higher and broke the psychologically significant 5000 level, as all 10 sectors in the index traded with gains. In individual stock news, Perseus Mining is the biggest gaining stock, as gold stocks dominate the best performers list following advances in gold prices. The Nikkei 225 pared opening gains as ‘buy the rumour, sell the fact’ seems to be the case with Japanese asset classes after Sunday’s election results where Japan's ruling coalition gained control of the upper house, which cemented PM Abe’s grip on power and is seen as a resounding nod to Abenomics. NEC shares are the outperformers in the local bourse, amid reports the Co. will join forces with HP to build high-powered servers, taking advantage of the U.S. firm's scale to speed development and lower production costs. Chinese markets underperform with both the Hang Seng and Shanghai Comp. in minor negative territory.

In the FX markets, AUD strength is prevalent following reports on Friday that China is to scrap banks’ lending rate floor, which brings China a step closer to liberalization of their interest rates. Elsewhere, USD/JPY initially opened higher following PM Abe’s ruling coalition upper house election victory. USD/JPY then fell during the session, as market participants widely expected Sunday’s election result, which saw USD/JPY dip below the 100.00 level. There were also comments from BoJ board member Sato that the BoJ won’t hesitate to fine tune policy flexibly if unexpected risks to the economy materialize and that the chance of Japan seeing 2% inflation in 2 years is not necessarily high. These comments resulted in brief support to USD/JPY, which was minor as USD/JPY still trades with a 99.00 handle.

Looking forward, Japanese Supermarket Sales is scheduled for release at 0600BST/0000CDT.

As of 0403BST:
ASX 200 (+0.59%), Nikkei 225 (-0.02%), Hang Seng (-0.03%), KOSPI (+0.68%), Shanghai Comp. (-0.17%)

21 Jul 2013 - 22:04 - Forex Bank Speaker - Source: RANsquawk

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