Markets mixed as US election looms
|General trend
- Asian equities traded mostly higher with Nikkei down, Hang Seng outperformed +2%.
- China think tank proposes $280B stock market stabilisation fund - Chinese press.
- MOVE bond volatility index up another 5% to just shy of 129.
- USD/JPY continued to make fresh highs, above 152 to highest levels since July 30th. Euro also continued down below $1.08 for lowest level since Aug 2nd.
- As rates rise around the world, 10 yr UST yield +2.5bps JP 40-yr JGB yields rise to highest since 2008.
- Australia equities slightly negative as AU yields continued their climb (10-yrs +17bps yesterday and a further 5bps today).
- Spot gold hit fresh record highs early in the Asian session.
- US equity FUTs flat to slightly down during the Asia session.
Looking ahead (Asian time zone)
- Wed Oct 23rd (Wed night ECB Pres Lagarde speech, Bank of Canada Rate Decision, EU Oct Advance Consumer Conf).
- Thu Oct 24th AU + JP Oct prelim Mnfg PMI, KR Q3 Advance GDP, (Thu eve EU Oct prelim PMIs, US Oct prelim PMIs.
- Fri Oct 25th JP Oct Tokyo CPI, (Fri eve DE Oct Biz Climate, Fri night US Sept prelim Durable Goods, Univ of Michigan Confidence).
Holidays in Asia this week
- Wed Oct 23rd Thailand.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens +0.1% at 8,209.
- Australia sells A$800M vs. A$800M indicated in 4.25% Dec 2035 bonds; Avg Yield: 4.4657% v 3.9892% prior; bid-to-cover: 2.66x v 3.61x prior.
- Australia Govt signs $4.7B (~A$7.0B) deal with US for cutting-edge medium and long-range missiles to arm their naval forces - press [overnight update].
- Major kiwi builder Fletcher Building said that the significant decline in residential construction activity in Australia and New Zealand is worse than the Global Financial Crisis recession.
China/Hong Kong
- Hang Seng opens +0.1% at 20,525; Shanghai Composite opens flat at 3,285.
- ~500 China companies have announced stock buyback plans since Sept 24th – China Securities Daily.
- Macau Tourism Office: Sept Visitor Arrivals 2.53M, -31% m/m, +9.9% y/y.
- China State Planner NDRC: Will continue to issue ultra-long special govt bonds in 2025; To further optimize their allocation next year [overnight update].
- IMF updates its world economic outlook (WEO): Cuts FY24 Eurozone growth forecast; raises global and US FY24 growth forecasts; Lowers China GDP growth forecast from 5.0% to 4.8% [overnight update].
- Hong Kong Sept CPI Composite Y/Y: 2.2% v 2.4%e [overnight update].
- China PBOC sets Yuan reference rate: 7.1245 v 7.1223 prior.
Japan
- Nikkei 225 opens flat at 38,397.
- Japan 40-year JGB yield at 2.535% rises to the highest since 2008.
- IMF lowers Japan 2024 GDP forecast from 0.7% to 0.3%; Raises Japan GDP forecast from 1.0% to 1.1% [overnight update].
Korea
- Kospi opens +0.2% at 2,575.
- South Korea Oct Consumer Confidence: 101.7 v 100 prior.
- Political parties in South Korea to discuss chip support measures - South Korea press.
- South Korea Fin Min Choi: South Korea cannot raise interest rates to protect currency (KRW) - Korean press.
Other Asia
- (IN) India PM Modi and Pres Xi of China to hold talks today (Wed) on sidelines of BRICS Summit - India Foreign Sec Misri comments.
- Thailand Central Bank (BOT) Gov Sethaput: Sees 'high bar' for further rate moves.
North America
- (US) Oct Philadelphia Fed Non-Manufacturing Activity: 6.0 v 4.1e.
- (US) Oct Richmond Fed Manufacturing index: -14 V -17E; Volume of new orders: -17 v -23 prior; Wages: 16 v 15 prior.
- (US) Treasury Sec Yellen: Will unveil strong new-Russia related sanctions as soon as next week targeting intermediaries aiding Moscow's Ukraine war machine.
Europe
- (EU) ECB’s Centeno (Portugal, dove): Still expect inflation to tick up; Probably won't see inflation much above 2%.
- (EU) ECB’s Nagel (Germany): EU needs clearer communication, but no dot plots - speech text.
- (EU) ECB chief Lagarde: Disinflation is on the right track; Hopes to achieve 2% goal sooner than expected; Expects inflation target to be reached by 2025.
- (FR) France farmers union FNSEA: Will stage nationwide protests in mid-Nov over issues including Mercosur trade negotiations.
- (EU) ECB's Villeroy (France): Inflation persistence is no longer sole, dominant risk; Risk of removing restrictive rates too late could rise - speech text.
- (EU) ECB's Rehn (Finland): Euro area disinflation is well on track; Rate cuts are coming, with speed and scope to be decided later - speech text.
- Turkey blocks exports of military-linked goods to Russia after US warning - FT.
Levels as of 01:20 ET
- Nikkei 225, -0.8%, ASX 200 +0.1% , Hang Seng +2.1%; Shanghai Composite +1.3% ; Kospi +1.4%.
- Equity S&P500 Futures: -0.1%; Nasdaq100 -0.1%, Dax +0.1%; FTSE100 -0.1%.
- EUR 1.0805-1.0792 ; JPY 152.27-151.02 ; AUD 0.6691-0.6662 ;NZD 0.6058-0.6028.
- Gold +0.2% at $2,764/oz; Crude Oil -0.1% at $71.64/brl; Copper -0.2% at $4.3803/lb.
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