CN/HK equities back positive ahead of Sat CN MOF briefing which promises “intensifying” support

Asia market update: CN/HK equities back positive ahead of Sat CN MOF briefing which promises “intensifying” support; Focus on Milton reaching Florida & US Sept CPI.

General trend

- Hang Seng +4% and Shanghai Composite +3%, back in the green today, with markets looking ahead to promised “intensifying” fiscal support from the China MOF on Saturday morning 10am local time / 02:00 GMT(thus markets will be closed, interestingly). Rest of Asian equity markets were mildly green today.

- Milton has reached Florida as a Cat 3 Hurricane, bringing devastating rains and damaging winds inland over portions of Central Florida. However, max sustained winds have decreased to 105 mph, down significantly from yesterday’s Cat 5 designation with max sustained winds of 160mph. Minimum Central Pressure has also increased to 954mb from 907mb earlier.

- On the back of a weaker Yen overnight, Japan Sept PPI came in hotter than expected. Yen pared some of its overnight losses back to 149.0 even before creeping back and then piercing through the Aug 15th lows of 149.37 to hit 149.55.

- New Zealand govt issued its 12-month financial statements showing a wider than expected deficit of NZ$12.9B for FY23/24. Total Crown debt of $175.5B stands at 42.5% of GDP, +$20B y/y. Govt aims to bring debt below 40% of GDP over time.

- Australia inflation expectations by consumers for October saw the lowest figure since late 2021 (4.0%).

- Berkshire Hathaway confirmed rumors by offering to sell ~¥282B in Yen bonds, presumably for further Japanese investments, it is largest Yen offering since 2019.

- US equity FUTs flat during the Asia session.

Looking ahead (Asian time zone)

- Thu Oct 10th (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.

- Fri Oct 11th Hong Kong.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,190.

- Australia Oct Consumer Inflation Expectation Survey: 4.0% v 4.4% prior [lowest since late 2021].

- Follow up: Australia PM Albanese: Confirms agreement to the end-of-2024 timeline for resumption of full lobster trade with China - press.

- Australia govt to introduce legislation to reform M&A rules; Treasurer Chalmers to introduce legislation to overhaul Corporate Merger rules – press.

- Australia PM: To travel to China in 2025 [follows China visit by Chalmers].

- New Zealand Govt issues 12-month Financial Statements (NZ$): FY23/24 budget deficit 12.9B, 1.8B wider than forecast; To release half-year economic fiscal update on Dec 17th.

China/Hong Kong

- Hang Seng opens +2.0% at 21,046; Shanghai Composite opens +0.6% at 3,277.

- Follow up: PBOC confirms to set up Securities, Funds, Insurance company swap facility of CNY500B - financial press.

- China's Foreign Min Wang Yi: Japan should promote stable ties and avoid external interference [overnight update].

- China PBOC sets Yuan reference rate: 7.0742 v 7.0568 prior (weakest since Sept 19th).

- China PBOC Open Market Operation (OMO): Injects CNY150B in 7-day reverse repos; Net drains CNY142B v net drains CNY136B prior.

Japan

- Nikkei 225 opens +0.8% at 39,575.

- Japan Sept PPI (domestic CGPI) M/M: 0.0% v -0.3%e; Y/Y: 2.8% v 2.3%e.

- (JP) Japan Sept Bank Lending Y/Y: 2.7% v 3.0% prior; Bank Lending (ex-trusts) Y/Y: 3.1% v 3.3% prior (revised lower).

- Japan releases weekly flows data [period ended Oct 4th]: Foreign buying of Japan equities: ¥919.3B v ¥767.6B prior; Japan buying of foreign bonds: +¥696.7B v -¥55.8B prior.

- Japan Sept Tokyo Avg Office Vacancies: 4.6% v 4.8% prior [lowest since late 2020].

- Bank of Japan (BOJ) Quarterly Public Opinion of Household Sentiment Survey for September 2024.

- Japan sells ¥2.3T VS. ¥2.3T indicated in 5-year JGB bonds; avg yield: 0.5620% V 0.5210% prior, bid-to-cover: 3.73X V 3.76X prior.

- Japan is mulling whether to extend energy subsidies over the Winter; the subsidies are scheduled to end in Oct - Japanese press [update]

- Japan PM Ishiba: Seeking majority win with Komeito Coalition on Oct 27th elections [overnight update]..

Korea

- Kospi reopens +0.7% at 2,611 (post-one day holiday).

- South Sept Foreign Net Investment In Local Equities: -$5.6B v -$1.9B prior [largest outflow since May 2021].

- South Korea Fin Min Choi: South Korea inflation stabilizing at a downward trend - press.

Other Asia

- Thailand Sept Consumer Confidence: 55.3 v 56.5 prior (14-month low).

- Taiwan Pres Lai: People's Republic of China has no right to represent Taiwan - National Day speech.

North America

- (MX) Mexico takes first steps to expand Federal control over energy - financial press.

- Amazon adds AppleTV+ to its channels store for streaming video; To be available via Prime Video in US for $9.99 per month add-on subscription.

- (UK) Sept RICS House Price Balance: 11% v 10%e.

- (US) Fed’s Daly (voter): Fully supported the 50bp rate cut; One or two additional rate cuts likely this year.

- (US) Fed's Collins (non-voter for 2024; voter for 2025): Reiterates support for additional rate cuts.

- (US) MBA Mortgage Applications w/e Oct 4th: -5.1% v -1.3% prior.

- (US) NHC on Hurricane Milton: Milton is still category 4 hurricane, moving toward the northeast near 16 mph v 12 mph prior; Northeastward motion is expected through tonight. A turn toward the east-northeast and east is expected on Thursday and Friday.

- (US) Fed’s Logan (non-voter): Sees 'meaningful risk' inflation could stick >2%; Favors 'more gradual path' back to normal for rates - speech text.

- (BR) Brazil Sept IBGE Inflation M/M: 0.4% v 0.5%e; Y/Y: 4.4% v 4.4%e.

- (MX) Mexico Sept CPI M/M: 0.1% v 0.1%e; Y/Y: 4.6% v 4.6%e.

- (US) Doe crude: +5.8M V +1.5ME; GASOLINE: -6.3M V -0.5ME; DISTILLATE: -3.1M V -1ME.

- (US) Fed's Jefferson (voter): Pleased by improvements in discount window readiness; Reiterates policy outlook expressed on Tuesday; Decisions will be made meeting by meeting - Charlotte speech.

- (US) Treasury's $39B 10-year note reopening draws 4.066% V 3.648% prior; bid-to-cover ratio: 2.48 V 2.64 prior and 2.54 over last 8 reopenings.

- (US) FOMC Sept minutes: some officials would have preferred a 25BPS cut; almost all saw lower inflation risks and higher risk to labor market.

- (US) White House Press Sec: Biden and Netanyahu spoke for 30 minutes, had a direct and productive talk.

Europe

- (EU) ECB's Patsalides (Cyprus, voter): Reiterates room left for more rate cuts; Should discuss all new data as usual.

- (UK) PM Starmer: Need a better deal with EU - Weekly Question Time in House.

- (HU) Hungary Econ Min Nagy: Favorable inflation trend likely prevailed in Sept; Looks more certain that we have managed to wrestle down inflation.

- (DE) Germany Econ Ministry cuts 2024 GDP growth forecast from +0.3% to -0.2%.

- (EU) ECB’s Wunsch (Belgium): Warns against interest rates being lowered too quickly; Undecided on Oct rate cut.

- (EU) ECB’s Makhlouf (Ireland): Remain on track to reach 2% inflation in Q4 2025; Services inflation and wage growth present some uncertainty.

- (IL) Israel central bank (BOI) leaves base rate unchanged at 4.50%; as expected.

- (RU) Russia Dep PM Novak: No plans for additional measures to curb diesel exports; No changes to OPEC+ deal are currently being discussed.

- Iran's state-run Irna cites Chief Aide to IRGC Ebrahim Jabbari: We're prepared to launch 1000s of missiles at Israel.

Levels as of 01:20 ET

- Nikkei 225 +0.3%, ASX 200 +0.4%, Hang Seng +3.9%; Shanghai Composite +2.6%; Kospi +0.7%.

- Equity S&P500 Futures flat; Nasdaq100 flat; Dax flat; FTSE100 flat.

- EUR 1.0938-1.0947; JPY 149.00-149.55; AUD 0.6712-0.6743; NZD 0.6058-0.6093.

- Gold +0.1% at $2,629/oz; Crude Oil +0.8% at $73.84/brl; Copper +0.3% at $4.4280/lb.