China Trade Delegation Including Vice Premier And PBOC Gov Head To The US For Trade Talks

General Trend

• All equity markets open for the first time in a week, tracking higher after moderate openings as optimism for US China trade talks rises, talks taking place in Washington DC from Oct 10-11
• US announced Chinese companies added to a trade black list as China trade delegation is on its way to the US for talks
• China confirmed Vice premier Liu He and PBOC Gov Yi Gang will attend trade talks in the US
• Trump says China’s supply chain is cracking and China needs a deal, markets remain optimistic, while observers remains more cautious
• As expected US and Japan signed a limited trade deal that is expected to go into effect Jan 1, 2020; it did not include language on auto tariffs, focused on agricultural and digital deals
• HKEX said it will not go ahead with offer for LSE after LSE management refused to engage, calling it not in the best interest of shareholders
• Samsung Electronics reported prelim Q3 higher than analysts’ expectations
• China Caixin PMI services comes in lower than expected but remains in expansion
• (HK) Hong Kong Chief Executive Lam: HK Q3 GDP is bad; aiming for fair district elections but current atmosphere is ‘complex;’ No plans to use emergency ordinance to enact new mask law; upcoming policy address will not be the ‘usual’ and comprehensive address
• US politics continue to focus on impeachment probe and Trump giving Turkey the OK to move in on Syria and the impact that will have on the Kurds and US creditability

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.2%
• ANZ.AU Guides H2 cash profit to be impacted by customer remediation post-tax charge A$559M
• BSL.AU Follow up: ACCC decides not to commence criminal cartel proceedings against either BlueScope or former employee Jason Ellis; Civil proceedings remain ongoing
• (NZ) New Zealand Fin Min Robertson: 2019 Final Budget surplus is NZ$7.51B (NZ$4.04B larger than forecast); GDP growth unlikely to reach 3% in 2019-2020; sees capacity to strengthen economy if necessary
• (AU) AUSTRALIA SEPT BUSINESS CONFIDENCE: 0 V 1 PRIOR; BUSINESS CONDITIONS: 2 V 1 PRIOR
• (AU) Australia Port Hedland Sept Iron Ore Exports: 42.0Mt v 42.4Mt y/y v 45.4 Mt m/m; Shipments to China 36.1Mt v 38.1Mt prior

Japan

• Nikkei 225 opened +0.6%
• (JP) US and Japan sign a limited trade deal that covers farming and digital trade deals, no text on auto tariffs but has been assured Japan will not come under US auto tariffs
• (JP) Japan PM Abe: Will take ample measures if downside risks materialize; fundamentals supporting domestic demand are firm
• (JP) Japan Foreign Min Motegi: To sign trade agreement with US on Monday, Oct 7th in Washington; look to have it come into effect asap
• (JP) Japan Fin Min Aso: US Japan trade deal is a win win for both sides; Will consider necessary measures to get the most out of the US Japan trade deal
• (JP) Japan Aug Household Spending Y/Y: 1.0% v 1.0%e (9th consecutive increase)
• (JP) JAPAN AUG LABOR CASH EARNINGS Y/Y: -0.2% V -0.2%E; REAL CASH EARNINGS Y/Y: -0.6% V -0.6%E
• (JP) Japan Econ Min Nishimura: Farmers are worried about US-Japan trade deal
• (JP) Japan Sept Eco Watchers Current Survey: 46.7 v 43.3e ; Outlook Survey: 36.9 v 38.7e

Korea

• Kospi opened +0.4%
• (KR) Bank of Korea (BOK) affirms will manage its monetary policy in support of an economic recovery as growth slows and inflation pressures weaken more than expected
• (KR) Bank of Korea (BOK) Gov Lee: Cannot specify if new GDP projection will be under 2%
• 005930.KR Reports prelim Q3 (KRW) Op 7.70T v 7.0Te, Rev 62.0T v 61.1Te
• (KR) South Korea Aug Current Account: $5.3B v $7.0B prior; Balance of Goods (BOP): $4.8B v $6.2B prior

China/Hong Kong

• Hang Seng opened +0.1%; Shanghai Composite opened flat
• (CN) CHINA SEPT CAIXIN PMI SERVICES: 51.3 V 52.0E (7-month low)
• (CN) China confirms Vice Premier Liu He and PBOC Gov Yi Gang to attend trade talks in the US
• (CN) China trade delegation departing China; talks to be held from Oct 10-11th – China Press
• (CN) Reportedly US Commerce Dept to place 28 Chinese govt and commercial organizations onto ‘entity list’ today; List includes Xinjiang Uighur Autonomous Region Security Bureau and some other security bureaus; also includes video surveillance firm Hikvision, Dahua Technology, Iflytek, Xiamen Meiya Pico Information, Sense Time – press
• (CN) China PBOC sets Yuan Reference Rate: 7.0726 v 7.0729 prior
• (CN) China PBoC Open Market Operation (OMO): Skips for the 2nd consecutive session; Net drains CNY250B v CNY20B drain prior
• 0175.HK Dealers noted a meaningful pick up in sales and sentiment during holiday week – press
• (CN) China Commerce Ministry says its prepared to do a partial trade deal and then negotiate the harder issues next year; China won’t change IP laws, but will deal with the issue administratively – Fox News
• (HK) Hong Kong Monetary Authority (HKMA) asked banks to immediately report any unusual capital transfer that leads to sudden changes in liquidity condition – HK press
• LSE.UK Hong Kong Exchanges and clearing will not proceed with LSE offer
• (HK) Hong Kong Chief Executive Lam: HK Q3 GDP is bad; Did not meet with any mainland officials while on mainland for holiday; aiming for fair district elections but current atmosphere is ‘complex;’ No plans to use emergency ordinance to enact new mask law; upcoming policy address will not be the ‘usual’ and comprehensive address
• (HK) China visitors to Macau on Oct 7th -6% y/y; Oct 1-7th visitors +9.4% y/y

Other

• (TR) Turkey reports that preparation for Syrian military operation has been completed

North America

• (US) Pres Trump: a trade deal with China is a ‘good possibility’; China’s supply chain is cracked; reiterates China wants to do a deal
• (US) Congressional Budget Office (CBO) sees FY19 US deficit at $984B v $779B y/y (would be the highest level since FY12)
• (MX) Mexico Central Bank Gov Diaz de Leon: Peso depreciation had a small pass through to prices
• ERIC US considering support for Nokia and Ericsson in order to compete with Huawei – FT

Europe

• (UK) Sept BRC LFL Sales y/y: -1.7% v -0.9%e
• (UK) Leaked documents detail EU’s point-by-point rejection of PM Johnson’s Brexit proposals – UK’s The Guardian
• (IE) Ireland PM Varadkar said to not want to talk to UK about Brexit, Merkel and Macron will not push Barnier unless Ireland wants to talk – German press

Levels as of 01:20ET

• Hang Seng +0.7%; Shanghai Composite +0.8%; Kospi +0.6%; Nikkei225 +1.1%; ASX 200 +0.5%
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.5%, Dax +0.4%; FTSE100 +0.2%
• EUR 1.0966-1.0978; JPY 107.21-107.43; AUD 0.6728-0.6766; NZD 0.6286-0.6320
• Commodity Futures: Gold -0.5% at $1,496/oz; Crude Oil +0.6% at $53.05/brl; Copper +0.9% at $2.59/lb