China PMIs were mixed

Asia Market Update: Equity indices trade mixed; Nikkei outperforms, LDP exceeded media expectations in elections; China PMIs were mixed; AU yields drop ahead of RBA decision [Nov 2nd].

General trend

- UST yields have risen at the start of the new month.

- Nikkei 225 has extended rise.

- Japan LDP wins outright majority in Parliament elections over the weekend. Speculation that PM could replace the second in command in the party.

- China manufacturing PMI has its second consecutive contraction, while the Caixin manufacturing PMI has its second consecutive expansion.

- Australia opens its borders to international flights today, NZ looking at re-opening retail soon.

- Increased calls and speculation for the RBA to drop or change its bond yield target and or forward guidance. Tomorrow's rate decision should be closely watched.

- Japanese cos. due to report earnings include Kyocera, Shionogi and AGC.

- Hang Seng and Shanghai Composite have lagged; Property indices decline, Travel-sensitive firms drop amid the focus on the rise in COVID cases; CN Banks rise after earnings results.

- S&P ASX 200 has moved higher after opening flat [REITs rise after prior drop; Westpac’s results weigh on Financials].

- Companies due to report during the NY morning include ON Semiconductor, PG&E, Timken.

Headlines/Economic Data

Australia/New Zealand.

-ASX 200 opened 0.0%.

- WBC.AU Reports FY21 (A$) Cash Net 6.95B v 2.6B y/y; adj Cash net 5.35B v 5.2B y/y, announces A$3.5B share off market buyback.

- AST.AU To be acquired by Brookfield led consortium at A$2.65/shr cash.

- (AU) Australia Oct Melbourne Institute Inflation M/M: 0.2% v 0.3% prior; Y/Y: 3.1% v 2.7% prior.

- (AU) Westpac calls on Reserve Bank of Australia (RBA) to scrap its bond yield target and forward guidance that rate will remain on hold until 2024 at tomorrow's meeting.

- (AU) AUSTRALIA SEPT HOME LOANS VALUE M/M: -1.4% V -2.0%E; INVESTMENT LENDING M/M: +1.4% V -4.0% PRIOR.

- (AU) Reserve Bank of Australia (RBA) Offers to buy A$1.60B in Govt bonds v A$1.60B prior; No offers for Apr 2024 yield target bond for YCC.

- (AU) Australia opened boarders to international flights as of Nov 1st (1st time in 19 months).

- (NZ) New Zealand PM Ardern: Auckland retail may reopen starting next week, Auckland will remain at level 3.

- Apollo Consolidated: Ramelius increases unconditional offer for company to A$0.621/shr (Prior A$0.562/shr); Board unanimously recommends offer.

Japan

-Nikkei 225 opened +1.5%.

- (JP) Japan Election Results: Ruling LDP wins outright majority (as expected), Wins 261 seats in Parliament v 465 seats available (prior held 276 seats).

- 9432.JP CFO: Company market cap should be worth at least ¥15T within 2 years (20% higher from current level), additional buybacks may take place - press.

- (JP) Japan PM Kishida: To pass extra budget ASAP; Will reveal full extent of coronavirus plan by mid Nov.

- (JP) Japan Oct Final PMI Manufacturing: 53.2 v 53.0 prelim (confirms the 9th straight month of expansion, highest since April).

- (JP) Japan Ruling bloc said to consider a special diet session for Nov 10th - press.

- (JP) Japan MoF sells ¥2.6T v ¥2.6T indicated in 0.1% 10-year JGBs; avg yield 0.1070% v 0.0490% prior; bid to cover: 3.14x v 2.45x prior.

Korea

-Kospi opened +0.5%.

- (KR) South Korea Oct Trade Balance: $1.7B v $2.1Be; Chip exports y/y: 37.8%.

- (KR) South Korea Oct PMI Manufacturing: 50.2 v 52.4 prior (12th month of expansion).

- (KR) Korea sells 30-year bonds: avg yield 2.435% v 2.205% prior.

China/Hong Kong

-Hang Seng opened -0.4%; Shanghai Composite opened -0.5%.

- (CN) CHINA OCT MANUFACTURING PMI (GOVT OFFICIAL): 49.2 V 49.7E (2nd consecutive contraction).

- (CN) CHINA OCT CAIXIN PMI MANUFACTURING: 50.6 V 50.0E (2nd consecutive expansion, 4 month high).

- (CN) PBOC Newspaper: PBOC Local branches have provided a window guidance to local banks on Property loans; To keep property loans stable.

- (CN) China PBOC backed Financial News: Yuan might remain under pressure, US dollar will likely strengthen as the Fed tapers bond purchases.

- (HK) Macau Sept Casino Rev (MOP) 4.37B v 5.88B prior; Y/Y +57.3% v 165.9% prior.

- (CN) China Foreign Min Wang and US Sec of State Blinken met for the first time since Alaska meeting, all talk focused on Taiwan – press.

- (CN) China PBOC sets Yuan reference rate: 6.4192 v 6.3907 prior.

- (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY200B prior; Net Drain CNY190B v Net inject CNY100B prior.

- (CN) China Securities Journal: China PBOC not likely to cut RRR in the near term (in line with other speculation).

Other

- 2454.TW Expected to increase wafer chip prices by ~10% in 2022 – Press.

- (TW) Taiwan Central Bank Gov Yang: Conditions for raising interest rates include inflation and rate increases in neighboring countries; Price rises will not spark inflation.

North America

- (US) White House Press Sec Psaki: Tested positive for COVID on Sunday; Have not had close contact with Biden since Wednesday.

- (CN) US Treasury Sec Yellen: Wants China to meet trade deal commitments; Looking at eventual reciprocal lowering of tariffs.

Europe

- (UK) Govt spokesperson Blain: UK ready to respond to France in Brexit fish row; It is up to French govt to step back from threats.

- (FR) French Pres Macron: G-20 agreed to coordinate on energy prices between energy consumers and producers.

- (FR) France Oct Car Registrations Y/Y: -30.7% v -20.5% prior.

- (IE) Ireland Oct PMI Manufacturing: 62.1 v 60.3 prior.

Levels as of 01:15ET

- Hang Seng -1.1%; Shanghai Composite +0.1%; Kospi +0.4%; Nikkei225 +2.5%; ASX 200 +0.8%.

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

- EUR 1.1565-1.1546; JPY 114.31.-114.03; AUD 0.7525-0.7499; NZD 0.7180-0.7153.

- Commodity Futures: Gold +0.1% at $1,785/oz; Crude Oil -0.4% at $83.25/brl; Copper +0.3% at $4.39/lb.