China reopens up, then down – JP and AU data neutral, RBNZ rate decision tomorrow

General trend

- China markets reopened after the one week holiday playing catch-up to the Hang Seng, with the Shanghai Composite reopening +10.1%.

- However, about a half hour after the open China’s state planner (NDRC) laid out a raft of further actions designed to boost the economy but announced no new plans for major stimulus. HK and Shanghai fell sharply, with Hang Seng -8% and Shanghai falling to be only up +3.0%. Hang Seng Enterprises fell -10%, the most since 2008, with Hang Seng Tech index at one point down -13%. Indices later pared the worst of the losses, but stayed well below their opening levels.

- China PBOC net drained CNY675B after its one week holiday, with the Yuan fix being set a little weaker than the offshore Yuan market level at ~7.07.

- A slew of data out of Japan was largely in line with expectations, including Japan Aug labor earnings and a slightly higher than expected Current Account, although down on last month. Household spending in Aug also slightly better than expected.

- Japan MOF reported that foreigners sold a Net -¥4.97T in Japan stocks in Sept while Japan investors purchased a Net ¥2.33T in foreign bonds.

- Key among the Australia data releases today was the NAB Business Confidence, which showed improvement for both figures. Aussie dollar pared back a little of its worst levels in three weeks to hang on to 67.50. RBA Minutes also affirmed that the Board did Not consider a rate rise due to weak economic growth and the risk that household spending may not be picking up as expected. Noted that monetary policy could be eased if economy seen worse than expected. Deputy Gov Hauser in later comments said that Australian CPI is proving very sticky.

- In rare comments from the Head of Samsung Electronic's chip division post-release of Q3 prelim figures which saw misses for both Op and Rev, Jun Young-Hyun issued an apology and noted that HMB3E chip supplies to a major customer was delayed, as well as one-off costs and inventory adjustment. Stock fell -1.3% at the open.

- Meanwhile, LG Electronics down -4% after missing Q3 prelim Op estimates, with LG Energy +4% after slightly beating its Q3 prelim estimates.

- In US politics, after having been consistently 3-4 points in Kamala Harris’ favor since early September, in recent days the betting markets have flipped, with Trump now leading by an average of 3-4% according to Real Clear Polling.

- Hurricane concern in the US as Milton leaves Mexico’s Yucatan Peninsula and barrels towards Tampa, Florida as it "explosively intensifies" with 175 mph winds, according to US NHC.

- US equity FUTs flat during the Asia session.

Looking ahead (Asian time zone)

- Wed Oct 9th RBNZ Rate Decision, AU Oct Consumer Confidence, RBI Rate Decision, (Wed night US FOMC Minutes).

- Thu Oct 10th RBA’s Hunter (Thu night US Sept CPI).

- Fri Oct 11th NZ Sept Biz PMI, KR Rate Decision, IN Oct Industrial Production (Fri night US Sept PPI, Michigan Oct prelim Consumer Sentiment).

Holidays in Asia this week

- Mon Oct 7th China.

- Wed Oct 9th South Korea.

- Thu Oct 10th Taiwan (US Sept CPI).

- Fri Oct 11th Hong Kong (US Sept PPI).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,204.

- Reserve Bank of Australia (RBA) Sept minutes.

- Australia Sept NAB Business Confidence -2 v -5 prior (revised lower).

- Australia Sept ANZ-Indeed Job Advertisements M/M: +1.6% v -1.8% prior.

- Australia Oct Westpac Consumer Confidence: 89.8 v 84.6 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 83.5 v 82.0 prior.

- RBA Dep Gov Hauser: Affirms must remain resilient in fight against inflation; CPI is proving sticky.

China/Hong Kong

- Hang Seng opens -1.1% at 22,849; Shanghai Composite reopens +10.1% at 3,674 (first trading since Sept 30th).

- Hang Seng China enterprises index -10%, worst since 2008; Hang Seng tech -12%; HangSeng -10%.

- China state planner lays out further actions to boost economy but no new plans for major stimulus.

- PBOC-backed Financial News: China bank loans are banned from entering the domestic stock market; regulator urges financial institutions to strengthen internal controls over leverage.

- China Securities Journal Front-Page Editorial: Calls for strengthening of confidence related to the equity market.

- China PBOC sets Yuan reference rate: 7.0709 v 7.0074 prior [Sept 30th].

- China PBOC Open Market Operation (OMO): Injects CNY42B in 7-day reverse repos; Net drains CNY675B v net injects CNY52B prior (Sept 30th).

Japan

- Nikkei 225 opens -0.8% at 39,021.

- JAPAN AUG LABOR CASH EARNINGS Y/Y: 3.0% V 2.9%E.

- Japan Aug Current Account: ¥3.804T v ¥2.955Te.

- Japan Aug Household Spending Y/Y: -1.9% v -2.6%e.

- Japan Sept Eco Watchers Current Survey: 47.8 v 49.2e.

- Japan MOF: Foreigners sold Net -¥4.97T in Japan stocks in Sept; Japan investors purchased Net ¥2.33T in foreign bonds.

- Japan Economy Min Akazawa: Decline in real wages not good news [comments on Aug labor data].

- Japan Fin Min Kato: To consider exit from gasoline subsidy.

- Japan sells ¥900B vs. ¥900B indicated in 30-Year JGB Bonds; Avg Yield: 2.1520% v 2.0430% prior; Bid-to-cover: 3.34x v 3.40x prior.

Korea

- Kospi opens -0.7% at 2,592.

- South Korea Aug Current Account: $6.6B v $9.0B prior (revised lower).

- Samsung Electronics Reports prelim Q3 (KRW) Op 9.1T v 11.1Te, Rev 79.0T v 82.0Te.

- South Korea Pres Yoon: Agrees to enter Strategic Partnership with Singapore next year - press.

Other Asia

- Philippines Aug Unemployment Rate: 4.0% v 4.7% prior.

North America

- (US) Fed's Williams (voter): US economy is 'well-positioned' for a soft landing - FT article entitled "I don't want to see the economy weaken".

- Colombia Sept CPI M/M: 0.2% v 0.3%e; Y/Y: 5.8% v 5.8%e.

- (US) Fed's Musalem (non-voter): Personal rate outlook is 'slightly' above median view of Fed.

- US) Sept Manheim wholesale used vehicle Index: 203.0 v 203.6 prior; -0.1% m/m; -5.3% y/y.

- (US) Fed's Kashkari (non-voter for 2024 and 2025): There is huge uncertainty about what neutral Fed funds rate is; Now see neutral rate as close to 3% - seminar comments.

- (US) Cleveland Fed’s Inflation Nowcast forecasting Oct US CPI Y/Y to accelerate to 2.5% from 2.3% projected for Sept US CPI Y/Y (to be out this week); Sees Oct US PCE Y/Y also to accelerate to 2.2% from 2.0% projected for Sept US PCE Y/Y.

- (US) NHC: Hurricane Milton "explosively intensifies" with 175 mph winds.

- (US) Aug consumer credit: $8.9B V $12.0BE.

Europe

- (UK) Oct British Retail Consortium (BRC) LFL Sales Y/Y: 1.7% v 0.8% prior [the highest since Mar].

- (DE) Germany Economy Ministry spokesperson confirms forecast that 2024 GDP to contract by 0.2%.

- (GR) Greece fiscal council: Draft budget targets 2025 debt at 149.1% of GDP.

- (EU) EU Economic Commissioner Gentiloni (Italy): Aware of French budget difficulties; Italy will not be far from 0.8% Euro-Zone 2024 growth forecast.

- (LY) Libya Oil production said to be back above 1M bpd - press.

- (EU) ECB’s Holzmann (Austria, hawk): Inflation fight is not over - press interview.

Levels as of 01:20 ET

- Nikkei 225 -1.3%, ASX 200 -0.4%, Hang Seng -7.0%; Shanghai Composite +3.3; Kospi -0.7%.

- Equity S&P500 Futures: flat; Nasdaq100 flat, Dax -0.5%; FTSE100 -0.6%.

- EUR 1.0972-1.0987; JPY 147.51-148.20; AUD 0.6715-0.6759; NZD 0.6108-0.6146.

- Gold -0.2% at $2,662/oz; Crude Oil -1.6% at $75.95/brl; Copper -2.2% at $4.4580/lb.