Asian equities trade mixed as opening gains were trimmed amid the latest rhetoric from US President Trump

US President Trump says he is willing to shutdown government to build the wall and is likely to scrap NAFTA at some stage

Looking ahead, highlights include Eurozone and US PMIs, DoEs, ECB’s Draghi and Fed’s Kaplan

ASIA

Asia equity markets traded mixed as the region somewhat failed to sustain the impetus from Wall St, where the Nasdaq led the surge after rebounding from a 3-day losing streak. ASX 200 (-0.2%) and Nikkei 225 (+0.4%) were both initially higher with outperformance in the Japanese bourse due to early JPY weakness. However, majority of gains were later pared amid comments from President Trump regarding shutting down the government to build the wall, while ASX 200 slipped into the red as losses in Healthscope and IAG post-earnings dampened healthcare and financials. Shanghai Comp. (-0.2%) traded choppy despite a firmer liquidity injection by the PBoC of CNY 180bln via reverse repos, as this still amounted to a daily net drain once maturing repos were taken into account, while Hang Seng remained closed due to Typhoon Hato.

PBoC injected CNY 100bln via 7-day reverse repos and CNY 80bln in 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6633 (Prev. 6.6597).

EUROPE/UK

Britain is set to soften its stance today on new legal laws, requesting to only end ‘direct jurisdiction’ of the ECJ after Brexit. In the paper set to be released today, it will show an acceptance that EU judge or officials could play a role in settling disputes. (FT)

FX

Antipodean currencies weakened with NZD the underperformer after the Pre-Election Economic & Fiscal Update where surplus forecasts were lowered for 2019-2021, which in turn also dampened AUD in sympathy. USD/JPY and JPY crosses were led lower by cross-related flows vs. AUD and NZD, while USD was subdued and MXN was heavily pressured amid comments from US President Trump who tspaneatened to shut down government to get funds to build the border wall, while he added that he personally doesn't think a deal can be made on NAFTA and will probably terminate it at some point.

COMMODITIES

Commodities were range-bound overnight with gold prices flat amid similar price action in USD after US President Trump’s comments in Phoenix. Elsewhere, copper was also indecisive amid a mixed risk tone in Asia, while WTI crude futures were marginally lower following the API release which showed crude inventories at a drawdown that was in-line with expectations, although gasoline and distillate inventories showed builds.

US API Crude Oil Inventory Report (Aug 18) W/W -3595K (Prev. -9155K). (Newswires)

US

US Treasuries ground lower as risk ticked higher, although the trade in the space was uneventful. It is worth noting that the JPMorgan client survey revealed that the bank’s Treasury clients were holding relatively neutral positions heading into the Fed’s annual Jackson Hole Symposium later this week. US Sep’17 10y T-note futures settled at 126.18, down 9 ticks.

Federal Reserve discount rate meeting minutes reveal that Federal Reserve banks unanimously voted to leave the discount rate unchanged at 1.75% at its most recent meeting. (Newswires)

US President Trump said that that employee wages will now increase and that if we have to shut down government, we will build the wall. Trump said he respects the fact that Kim Jong Un is starting to respect the US and that maybe something positive can come about, while added that he personally doesn't think a deal can be made on NAFTA and will probably terminate it at some point. (Newswires)