ASX breaks 9K – META puts brakes on AI hiring

Asia market update: ASX breaks 9K; META puts brakes on AI hiring; CN joins stablecoin rush.

General trend

- On a day the ASX broke 9,000 for the first time as it outperformed Asia +1.0%, Australia’s Aug prelim PMI Manufacturing saw a healthy bump up to nearly the 53 handle for its 8 month of expansion, while Japan prelim PMI Manufacturing stayed down for a second month of contraction, but only just at 49.9.

- However, Australia Consumer Inflation Expectation for August unexpectedly fell to just 3.9%, approaching pandemic low levels. Meanwhile top ASX gainers all reported earnings: Super Retail (+13%); Codan (+11.7%); Brambles (11%); Bega Cheese (+7.7%); Downer EDI (+5%) . However, materials builder James Hardie lost nearly another 10% today after losing 30% yesterday, suggesting deeper trouble at the company than simply poor earnings.

- META reported to have frozen AI hiring after a “blockbuster spending spree” with over 50 researchers and engineers hired at salaries and signing bonuses of up to 9 figures. Japan chip-related Advantest +4.4% at open pared to only be +1.9%. Nasdaq FUTs dipped but then rose back to session highs after a clarification statement from Meta saying that it only temporarily paused 'some' hiring at the AI unit.

- China, perhaps in response to the Trump Admin charging ahead with making crypto a part of the Wall St economy (USD-backed stablecoins currently account for >99% of global stablecoin supply), has done a 180-degree about-face from its 2021 ban of crypto trading and mining to now be considering using CNY-backed stablecoins for cross-border trade in an attempt to drive international usage of the Chinese Yuan. (Note that CNY’s share of SWIFT payments has fallen to 2.88% in June and July, the lowest in 2 years).

- China PBOC set the Yuan reference rate up in the 7.12 handle for the first time since early Nov, 2024. Offshore Yuan (CNH) quickly strengthened to its strongest level since last week.

- South Korea August 1-20th exports saw +7.6% growth. Chip exports again leading at +29.5% y/y but autos and ship exports not far behind in y/y gains.

- The day after Japanese July exports fell across the board, Taiwan’s July exports remained in positive territory y/y, but m/m fell -2.7%, with orders from China, US and Japan at significantly reduced levels.

- New Zealand maintained a small trade surplus for the month of July, without any overt signs of significantly lower exports compared to recent Asian nations such as Japan, China and Taiwan.

- In follow up comments after yesterday’s dovish rate cut, RBNZ’s acting Gov recognized that New Zealand’s economy has been slow to react to the cumulative 250bps of cuts thus far, and revealed that the two dissenters wanting a bigger 50bp cut was due to businesses and consumers being overly cautious and needing a “substantial kick”.

- Indonesia cut rates by 25bps overnight, not expected, citing the need to support GDP growth.

- 20-year Japan JGB yield ticked higher to their highest level since 1999 launch.

- US Fed’s FOMC Minutes were overall hawkish, despite the two dissenters wanting to cut, overall the board seeing the risk of inflation still higher than employment risks and other concerns (although this July FOMC meeting did take place a couple of days before the severe downward revision of May and June Nonfarm Payrolls).

- Central bank leaders have started to gather in Jackson Hole, highlighted by Powell’s speech Friday.

- Still waiting for Trump Admin to announce additional tariff levels on chips, steel and pharma this week.

- US equity FUTs slightly down to flat during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu Aug 21st Global Flash PMIs, (Thu night EU Aug Consumer Confidence, US July Home Sales).

- Fri Aug 22nd JP July CPI, (Fri eve UK July Retail Sales, US Fed Chair Jackson Hole speech).

Holidays in Asia this week

- Thu Aug 21st Philippines.

Headlines/economic data

Australia/New Zealand

- ASX opens +0.6% at 8,967.

- Australia's ASX 200 breaks 9,000 for the first time.

- Australia Aug preliminary PMI Manufacturing: 52.9 V 51.3 prior (8th month of expansion).

- Australia Aug Consumer Inflation Expectation: 3.9% v 4.7% prior.

- New Zealand July Trade Balance (NZD): -0.58B v +0.1B prior.

- RBNZ Acting Gov Hawkesby: Reaction to interest rate cuts has been slower than anticipated; Global uncertainties had a prolonged impact on New Zealand's business and consumer confidence.

- New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030, 2035 and 2041 bonds.

China/Hong Kong

- Hang Seng opens +0.2% at 25,216; Shanghai Composite opens +0.1% at 3,770.

- China July Swift Global Payments (CNY): 2.9% v 2.9% prior.

- HKMA: China PBOC to issue CNY45.0B in Bills in Hong Kong (CNY15B one-year bills and CNY30B three-month bills).

- Chinese cities said to seek 70% AI chip self-sufficiency by 2027 to counter Nvidia and other US chips - Nikkei.

- China said to consider use of CNY-backed stablecoins for first time to drive Chinese Yuan (CNY)'s international usage efforts – press.

- China Premier Li Qiang: Urges biomedical industry to improve its drug R&D; China has huge potential for the health industry market - Chinese press.

- China initiates WTO dispute with Canada centered on steel and aluminum surtaxes and quotas.

- China to increase support of existing public-private partnership (PPP) projects.

- CAICT: Jun shipments of phones within China at 22.6M, -9.3% y/y.

- China PBOC sets Yuan reference rate: 7.1287 v 7.1384 prior (strongest since Nov 6th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY253B in 7-day reverse repos; Net injects CNY124B v injects CNY498B prior.

Japan

- Nikkei 225 opens -0.3% at 42,770.

- Japan Aug preliminary PMI Manufacturing: 49.9 V 48.9 PRIOR 2nd month of contraction).

- Japan releases weekly flows data [period ended Aug 15th]: Foreign buying of Japan equities: ¥1.16T v ¥495.5B prior; Japan buying of foreign bonds: -¥313.6B v +¥254.7B prior.

- 20-year Japan JGB yield rises to the highest level since 1999.

- Japan MOF sells ¥649B v ¥650B indicated of JGBs in liquidity enhancement auction; bid-to-cover: 3.10x v 3.64x prior (July 25th).

- Follow Up: Japan ruling party LDP's report on election to be delayed until early Sept - Japanese press.

- Reportedly US DEA is investigating the Japan ops of a Chinese fentanyl ring, smuggling precursor chemicals into Japan – Nikkei.

- (IN) Japan said to consider investing ¥10.0T in India [timeframe not certain] -Japanese press.

Korea

- Kospi opens +0.3% at 3,140.

- South Korea July PPI Y/Y: 0.5% v 0.5% prior.

- South Korea Aug Exports 1-20 Days Y/Y: +7.6% v -2.2% prior; Imports 20 Days Y/Y: +0.4% v -4.3% prior.

- South Korea Pres Lee to visit US shipyard in Philadelphia after Pres Trump Summit (Aug 25th) - President's Office statement.

- Follow Up: South Korea companies to announce $150B investment plans in the US - Korean press.

- Reportedly North Korea maintaining secret long-range missile base near its border with China - WSJ.

Other Asia

- Follow up: Taiwan govt plans to raise debt during 2026 of total NT$400B - Taiwan press, citing sources.

- India Central Bank (RBI) Aug Minutes: Inflation continued its downward trajectory.

- Indonesia Q2 Current Account: -$3.0B v -$2.8Be.

- Indonesia central bank (BIi) cuts bi rate by 25BPS TO 5.00%; Not expected.

- Taiwan July export orders Y/Y: 15.2% V 16.7%E; Export orders declined by 2.7% m/m sa in July after a 1.0% expansion in June [overnight update].

North America

- (US) Pres. Trump: Big WIN for the Great State of Texas!!! Everything Passed, on our way to FIVE more Congressional seats - Truth Social post.

- (US) Nasdaq FUTs rise after clarification statement from Meta.

- META *SAID TO FREEZE AI HIRING AS COSTS MOUNT - WSJ, citing sources.

- (UR) Pentagon official says US will take only a "small role" in Ukraine's security guarantees; European officials concerned they will have to take on the bulk of the responsibility for keeping peace in Ukraine - Politico.

- (US) MBA Mortgage Applications w/e Aug 15th: -1.4% v 10.9% prior.

- (US) Trump: We will not approve wind or farmer destroying Solar.

- (US) Pres. Trump: Fed's Cook must resign, now!!!

- (US) DOE CRUDE: -6.0M V -1.5ME; GASOLINE: -2.7M V -1.5ME; DISTILLATE: +2.3M V +1ME.

- (US) Pres Trump said to consider firing Fed's Cook (voter 2025-27) for cause - WSJ.

- (US) Fed's Waller (voter, dovish dissenter): Fed could benefit from more engagement with innovators; Doesn't comment on economic outlook or monetary policy - speech text.

- (US) Treasury $16B 20-year bond auction draws 4.876% V 5.047% prior, bid-to-cover 2.54 V 2.46 prior.

- (US) FOMC July minutes: Near-term inflation rise seen as likely; magnitude, timing and persistence uncertain; majority saw inflation risk outweighing employment risk.

Europe

- (RU) Russia Central Bank official Gangan: May be able to cut its key interest rate this year if inflation slows rapidly.

- (RU) Russia Foreign Min Lavrov: In favor of a security guarantee for Ukraine being reliable; US has an increasingly clear understanding of the root causes of the Ukraine crisis.

- (SE) Sweden Fin Min Svantesson: Do not see risk of very high inflation in short term - post forecast comment.

- (IL) Israel central bank (BOI) leaves base rate unchanged at 4.50%; as expected.

Levels as of 01:20 ET

- Nikkei 225 -0.6%, ASX 200 +0.9%, Hang Seng -0.2%; Shanghai Composite +0.3%; Kospi +0.3%.

- Equity S&P500 Futures -0.1%; Nasdaq100 flat; DAX flat; FTSE100 flat.

- EUR 1.1641-1.1656; JPY 147.26-147.51; AUD 0.6415-0.6437; NZD 0.5814-5833.

- Gold -0.2% at $3,381/oz; BTC +0.1% at $114,020; Crude Oil +0.5% at $63.02/bbl; Copper -0.1% at $4.4315/lb.