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Market Update – Asian Session: Equities Follow US Lead, USD Strengthens Asia Summary

Asia Summary

Asian equity markets opened mixed, generally following the lead of US markets. Hong Kong property names were weaker on another Chinese city adding property curves. Financial names gained on US yields rose overnight. Analysts note that Q4 volatility in China is likely to be subdued with efforts to keep markets stable ahead of Communist Party gathering on Oct 8th. RBNZ left rates unchanged as expected, noting that weaker currency is best for dealing with tradables inflation. Japan PM Abe dissolved lower house to make way for snap elections.

USD strength in the session attributed to Trump’s confirmation of proposed tax plan. USD/JPY rose giving some support to the Nikkei which opened +0.7%. The USD/KRW fell for a 3rd consecutive day, with North Korea continuing to weigh. In Japan weekly portfolio data, foreign investors sold a record amount of Japan assets, ¥3.41T, the most since mid-June. In Hong Kong, the 1-week HK$ HIBOR rose 15bps to 0.57786%, a fresh 2017 high.

Key economic data

(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) LEAVES OFFICIAL CASH RATE (OCR) UNCHANGED AT 1.75%; AS EXPECTED

(CN) CHINA AUG SWIFT GLOBAL PAYMENTS (CNY): 1.94% V 2.00% PRIOR

(KR) South Korea Sept CPI m/m: 0.1% v 0.2%e; y/y: 2.1% v 2.2%e; Core y/y: 1.6% v 1.7%e

(AU) Australia Jun- Aug Job Vacancies: 6.0% v 3.3% prior (highest on record for quarter)

Speakers and Press

China/Hong Kong

(CN) China State Council chaired by Premier Li: Will further bolster its small and micro businesses with more financial measures to increase vitality of the economy – Xinhua

(CN) China State-owned Assets Supervision and Administration Commission (SASAC) Planning 3rd phase of SOE mixed-ownership pilot

Korea

(KR) North Korea (DPRK): joint declaration issued a decade ago with South Korea on realizing peaceful national reunification "clarified the practical ways for building trust between the north and the south

(KR) South Korea to allow tax deferment to companies impacted by Thaad; to offer cheap loans to car component markers impacted by China measures

(KR) South Korea Fin Min Kim: Growth is firm despite North Korea risk

Japan

(JP) Japan considering lowering leverage limit for FX trades on grounds that both retail and institutional investors are facing greater risks should the market face sudden fluctuations – Nikkei

(JP) S&P Analyst: Japan PM Abe’s announcement to defer the FY20 primary budget balance goal will not affect S&P’s credit rating for Japan

(JP) Japan PM Abe: Election will be a fight over developing Japan’s future

US/Europe

(US) Fed’s Rosengren (moderate, non-voter): Does not offer clue on rate hike timing

(UK) BOE’s Haldane (chief economist): Was part of MPC majority that felt a reduction in monetary stimulus may be warranted in the coming months – UK press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.5%, Hang Seng -0.4%; Shanghai Composite -0.1%, ASX200 +0.1%, Kospi -0.1%

Equity Futures: S&P500 -0.0%; Nasdaq100 +0.0%, Dax +0.0%, FTSE100 -0.1%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.1756-1.1727; JPY 113.09-112.71; AUD 0.7856-0.7816;NZD 0.7233-0.7187

Dec Gold -0.3% at $1,284/oz; Nov Crude Oil -0.3% at $51.97/brl; Dec Copper -0.3% at $2.92/lb

GLD SPDR Gold Trust ETF daily holdings +0.3% to 864.7 metric tonnes

(CN) PBOC OMO: injects CNY70B in 14 and 28-day reverse repos v skips prior; drains net CNY0B v CNY40B prior

USD/CNY (CN) China PBOC sets yuan reference rate at 6.6825 v 6.6192 prior

(JP) Bank of Japan (BOJ) to accommodate T+2 JGB settlement for foreign central banks

(JP) Japan MoF sells ¥816.9B in 3-month bills; avg yield -0.1652%; bid-to-cover 4.46x\

(JP) Japan MoF sells ¥1.80T v ¥2.2T indicated in 0.1% 2-yr JGBs; avg yield -0.1190%; bid-to-cover 4.11x v 4.97x prior (lowest bid-to-cover since March)

Equities notable movers

Australia/New Zealand

OEL.AU Gives independent reserves report for the SM 71 project; +17.5%

SHJ.AU Receives statement of claim for class action; -13.5%

Japan

9064.JP Amazon has agreed to pay Yamato at least 40% more for shipping services in Japan – Nikkei; +4%

8028.JP Raises H1 guidance Net ¥23B from ¥14B; Op ¥33.5B from ¥24.6B; Rev ¥633B from ¥628.1B, +8.8%

Hong Kong/China

Hong Kong property sector weaker on additional city adding cooling measures: 884.HK -3.8%, 1030.HK -3.3%

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