Asia PMI day, while BoJ members appear nervous

Asia market update: Asia takes breather after week of volatility with CN, KR, HK on holiday; Asia PMI day, while BOJ members appear nervous; Focus on US Sept ISM Mnfg PMI and US Aug JOLTS.

General trend

- With China, South Korea and Hong Kong on holiday, the rest of Asia took stock today after a tumultuous week that saw huge market reactions to 2008-level China stimulus announcements and an unexpected winner (Ishiba) in the Japan PM leadership vote for the ruling-party LDP.

- Japan automakers and exporters rose on the weaker yen, with the overall Nikkei paring back +2% after yesterday's ~5% plunge post-Ishiba nomination as Japan's new PM. Japan Tankan surveys were also generally positive for large manufacturers.

- Meanwhile weakness in Resources after the past week’s strength saw Australia’s ASX fall -0.8% during the morning session. Australia Retail spending for August was boosted above expectations by warmer-than-usual weather. AU$ was overall flat on the day.

- Japan’s BOJ Summary of Opinions for September provided no new information but the tone of some members was more nervous, with this being the first BOJ decision since the early August volatility that saw Japan shares plunge and the Yen soar. Concerns were expressed about a sharp reversal of a weak Yen and the risk of further raising the policy rate.

- Asia PMI day saw a mix of expansion and contraction across the region during September.

- South Korea’s trade figures for Sept saw a higher than expected trade balance on the back of higher exports and lower exports.

- US CME probabilities of a smaller 25bps cut (vs 50bps) increased to 61.8 v 46.7% the day before, as some analysts speculated that Fed Chair Powell's Q&A comments overnight indicated that the Fed was not in a hurry to cut.

- US equity FUTs flat during the Asia session.

Looking ahead (Asian time zone)

- Tue Oct 1st (Tue eve EU Sept Flash CPI, Tue night US Sept ISM Mnfg PMI, US Aug JOLTS).

- Wed Oct 2nd AU Sept Industry Index, KR Sept CPI, JP Sept Consumer Confidence, US VP debate Vance (R-OH) – Walz (D-MN), Fast Retailing Sept Sales.

- Thu Oct 3rd AU Aug Trade Balance (Thu night US Sept ISM Services PMI).

- Fri Oct 4th (Fri night US Sept NFP).

Holidays in Asia this week

- Tue Oct 1st China, Hong Kong, South Korea (one-off holiday).

- Wed Oct 2nd China, India.

- Thu Oct 3rd China, South Korea.

- Fri Oct 4th China.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.2% at 8,254.

- Australia Aug Retail Sales M/M: 0.7% V 0.4%E.

- Australia Sept Final PMI Manufacturing: 46.7 v 46.7 prelim.

- Australia Aug Building Approvals M/M: -6.1% v -4.3%e.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 82.0 v 84.9 prior.

- New Zealand Aug Building Permits M/M: -5.3% v +26.4% prior (revised higher).

- Australia sells total A$150M v A$150M indicated in 2035 and 2050 Indexed Bonds.

- Australia Sept CoreLogic Home Prices M/M: 0.5% v 0.5% prior [overnight update].

- (NZ) New Zealand Treasury: Economy is at or near bottom of cycle; Signs of recovery in 2025.

- New Zealand NZIER Business Opinion Survey: Q3 Business confidence -1% v -44% q/q.

- BNZ bank now expects New Zealand's RBNZ to cut OCR by 50bps on Oct 9th meeting (up from 25bps cut expected prior) - press.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite closed for holiday Oct 1st to Oct 4th.

- China Sep new home sales -34% y/y in key cities - China Real Estate Information Corp (CRIC).

- China FX Regulator SAFE: To actively fend off cross-border capital flow risks [overnight update].

- China PBOC purchased CNY200B bonds from primary dealers in Sept; Notes targeting to keep liquidity 'reasonably ample' – press [overnight update].

- China Q2 Final Current Account: $54.5B v $54.9B prelim [overnight update].

- China Pres Xi: We must be mindful of potential dangers and be prepared for rainy days; Marching forward on irreversible rejuvenation course; Must oppose separatist activities for Taiwanese independence [overnight update].

- Hong Kong Aug M3 Money Supply Y/Y: 1.9% v 2.0% prior [overnight update].

Japan

- Nikkei 225 opens +0.8% at 38,232.

- Japan Q3 tankan large manufacturing index: 13 v 12e; large manufacturing outlook: 14 V 12E.

- Japan BoJ Sept Summary of Opinions: Some members expressed concerns about a sharp reversal of the weak Yen and the risk of rising policy rate further at this point.

- Japan Aug jobless rate: 2.5% V 2.6%E.

- Japan Sept Final Manufacturing PMI: 49.7 v 49.6 prelim (confirms 3rd month of contraction).

- Japan Fin Min Suzuki: Reiterates weak Yen has both positive and negative impact on economy – press.

- Japan top FX Diplomat Mimura: Reiterates that FX should move stably and reflect fundamentals.

- New PM Ishiba's Japan cabinet said to have Kato be named Fin Min, Iwaya as Foreign Min - Nikkei.

- Bank of Japan (BOJ) announcement related to Q4 outright bond buying operations; Cuts planned 1-3 yr JGBs, 3-5 yr and 5-10 yr JGBs purchases [overnight update].

Korea

- Kospi closed for holiday.

- South Korea Sept Trade Balance: $6.7B v $5.0B.

Other Asia

- Taiwan Sept PMI Manufacturing: 50.8 v 51.5 prior (6th month of expansion).

- Indonesia Sept PMI Manufacturing: 49.2 v 48.9 prior (3rd month of contraction).

- Malaysia Sept PMI Manufacturing: 49.5 v 49.7 prior (4th month of contraction).

- Philippines Sept PMI Manufacturing: 53.7 v 51.2 prior (13 month of expansion).

- Thailand Sept PMI Manufacturing: 50.4 v 52.0 prior (5th month of expansion).

- Vietnam Sept PMI Manufacturing: 47.3 v 52.4 prior (moves into contraction after 6 months).

- Taiwan to raise power prices by ~12.5% for industries; effective from Oct 16th – press [overnight update].

North America

- (US) Follow up: International Longshoremen’s Association (ILA): Rejects latest USMX Ports contract offer, labeling it as 'unacceptable' - press, citing sources.

- CVS Reportedly working with financial advisors to explore options including a potential breakup - press.

- (US) Sept Chicago purchase manager’s index (PMI): 46.6 V 46.0E.

- (US) Sept Dallas Fed Manufacturing activity index: -9.0 V -10.3E.

- (US) Fed's Goolsbee (non-voter for 2024; voter for 2025): There will be a lot of rate cuts; Rates will have to come down a lot over the next 12 months - Fox Business interview.

- (US) FDIC Vice Chair Hill: New Basel Endgame draft still has problems.

- (MX) US Biden admin to toughen asylum ban at US-Mexico border to keep it in place longer - press.

- (US) Fed's Bostic (hawk, voter for 2024; non-voter for 2025): Will be focused on whether the economy is "still producing net jobs" and, in particular, whether monthly job growth stays around 100,000 positions or above; Will be watching jobs data closely.

- (US) Fed Chair Powell: If economy evolves as expected, it would mean 2 more cuts this year for a total of 50bps; Going to take longer to slow housing inflation - Q&A comments.

Europe

- (IE) Ireland Sept PMI Manufacturing: 49.4 v 50.4 prior (1st contraction in 3 months).

- (IL) Follow up: Israel has started its ground incursion into Lebanon - Israel military statement.

- (UK) Sept British Retail Consortium (BRC) LFL Sales Y/Y: -0.6% v -0.3%e.

- (IE) Ireland Sept Preliminary CPI EU Harmonized Y/Y: 0.2% v 1.1% prior.

- (DE) Germany Sept preliminary CPI M/M: 0.0% V 0.1%E; Y/Y: 1.6% V 1.7%E; Harmonized M/M: -0.1% v 0.1%e; Y/Y: 1.8% v 1.7%e (1st time below 2% since Feb 2021).

- (LY) Libya oil officials reportedly to restart halted output on Tuesday, though no formal decision has been made - press.

- (EU) NATO Sec Gen Stoltenberg: NATO hasn't see any changes in Russian nuclear posture that require changes from NATO - press interview.

- (IL) Israel told US Govt that it's planning limited ground operation in Lebanon that could begin imminently - Washington Post.

Levels as of 01:20 ET

- Nikkei 225, +2.0%, ASX 200 -1.0% , Hang Seng closed; Shanghai Composite closed; Kospi closed.

- Equity S&P500 Futures: flat; Nasdaq100 flat, Dax +0.1%; FTSE100 +0.2%.

- EUR 1.1127-1.1143; JPY 143.38-144.43; AUD 0.6907-0.6839; NZD 0.6320-0.6350.

- Gold +0.2% at $2,664/oz; Crude Oil +0.2% at $68.28/brl; Copper +0.1% at $4.5570/lb.