Markets take stock after Trump-sweep and FOMC 25 bps cut

Asia market update: Markets take stock after Trump-sweep and FOMC 25 bps cut; Focus on CN CPI/PPI tomorrow (Sat).

General trend

- The FOMC cut by a further 25bps overnight, as expected, but it is Donald Trump's all-but-confirmed sweep of all three branches of govt in the US (plus a comfortable win in the popular vote) that has had leaders in politics and business around the world sit up in their chairs and figure out how to respond to what appears will be sweeping changes to how the US conducts its business and political affairs from 2025 - domestically and internationally.

- In Japanese politics minor-party leader Tamaki of the DPP is playing hardball with the LDP-Komeito ruling coalition, saying out loud that they cannot pass legislation or a budget with their current rep numbers in the Lower House. DDP holds the Kingmaker-role with a 28 seat balance of power tilt. Tamaki is aiming to get a deal for his desired tax cuts for part-time workers and also commented that the Yen can fall if US needs to raise rates under Trump and that the BOJ should be cautious about a policy change. (**A reminder that the ruling LDP party will decide PM Ishiba’s fate at its Monday, Nov 11th party meeting).

- Ahead of the much-anticipated stimulus package (CNY10T?) expected out of the China NCP Standing Committee later today, CN and HK equities gave back 0.3% to 0.5% of their gains yesterday. ASX in Australia outperformed +1% in quiet trading.

- Japan weekly flows data from last week (pre-US election) showed a record sale of foreign bonds by Japanese of ¥4.4T, potentially showing investors were already positioned for Trump's victory.

- US equity FUTs flat during the Asia session.

Looking ahead (Asian time zone)

- Fri Nov 8th (Fri night US Nov prelim Michigan Consumer Sentiment).

- Sat Nov 9th CN CPI/PPI.

Holidays in Asia this week

- Mon Nov 4th Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.7% at 8,281.

- (AU) Australia sells A$800M vs. A$800M indicated in 2.75% Jun 2035 bonds; Avg Yield: 4.5913% v 3.9849% prior; bid-to-cover: 3.26x v 3.76x prior.

China/Hong Kong

- Hang Seng opens +1.2% at 21,200; Shanghai Composite opens +0.9% at 3,502.

- CHINA OCT FOREIGN RESERVES: $3.261T V $3.287TE.

- China Pres Xi to visit Peru, Brazil; attending both APEC Forum and G20 Summit during Nov - financial press.

- China sells special 20 Year Bonds; Avg Yield: 2.3031% v 2.1596% prior.

- China PBOC sets Yuan reference rate: 7.1433 v 7.1659 prior.

- China PBOC Open Market Operation (OMO): Injects CNY12B in 7-day reverse repos; Net drains CNY5B v net drains CNY308B prior.

Japan

- Nikkei 225 opens +1.0% at 39,783.

- Japan Sept Household Spending Y/Y: -1.1% v -1.8%e.

- Japan Oct Total Reserve Assets: $1.24T v $1.25T prior.

- Japan releases weekly flows data [period ended Nov 1st]: Foreign buying of Japan equities: ¥139.4B v ¥10.3B prior; Japan buying of foreign bonds: -¥4.46T v -¥897.1B prior prior (record sale of weekly bonds by Japanese).

- Japan sells ¥4.3T v ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.0257% v 0.0086% prior; bid-to-cover: 2.40x v 2.84x prior.

- Japan Fin Min Kato: Want to congratulate Trump on election win; reiterates sees one-sided FX moves at the moment.

- Japan DPP Head Tamaki: LDP, Komeito (ruling coalition) alone cannot pass legislation or a budget; Will write my name for PM vote in first, second rounds - financial press.

- Japan Considers to resume electricity, gas subsidies - Japanese press.

Korea

- Kospi opens +0.9% at 2,586.

- South Korea said to issue first-ever Australian dollar-denominated bonds - MOF statement.

- Bank of Korea (BOK) Gov Rhee: Need to wait 1-2 weeks to assess impact of US election - press.

- South Korea Fin Min Choi: South Korea stocks, bonds, money market relatively stable; Working towards sustainable growth amid US govt change - financial press.

Other Asia

- Indonesia Pres Prabowo Subianto: Good US and China relations sought ahead of visits to China, US and then Brazil for G-20 and Peru for APEC - financial press.

North America

- (US) Pres-elect Trump names Susan Summerall Wiles as White House Chief of Staff.

- (MX) Mexico Oct CPI M/M: 0.6% v 0.5%e; Y/Y: 4.8% v 4.7%e.

- (US) Q3 preliminary nonfarm productivity 2.2% V 2.5%E; unit labor costs 1.9% V 1.0%E.

- (US) Initial jobless claims: 221K V 222KE; continuing claims: 1.892M V 1.87ME.

- (US) Sept final wholesale inventories M/M: -0.2% V -0.1%E.

- (US) Weekly EIA Natural Gas inventories: +69 BCF VS. +62 BCF TO +65 BCF indicated range.

- (US) Atlanta Fed GDPNow: Raises Q4 GDP forecast from 2.4% to 2.5%.

- (US) Reportedly Pres-elect Trump will likely allow Fed Chair Powell to serve out his term through May 2026 - CNN's Tausche.

- (US) FOMC cuts target range by 25bps to 4.50-4.75%; as expected; inflation remains elevated; labor market conditions have 'generally eased,' unemployment rate has moved up but remains low; Vote was unanimous.

- (US) Fed Chair Powell: In near term the election will have no effect on policy; It's remarkable how well the economy has been performing; Remain on a path to a more neutral stance and will have to see where the data leads us when asked about another cut in Dec.

- (US) Doubleline's Gundlach: Probably have one more rate cut coming in December; continue to cut duration because we don't want to be exposed to US fiscal situation or longer dated UST - CNBC.

Europe

- Russia Pres Putin: Trump's proposals on Ukraine deserve attention.

- (IE) Ireland Oct CPI M/M: +0.3% v -0.9% prior; Y/Y: 0.7% v 0.7% prior.

- (DE) Former Fin Min Lindner: (FDP party leader) said to call for immediate vote of confidence.

- (UK) Bank of England (BoE) cuts bank rate by 25bps to 4.75%; as expected; Need gradual approach to removing restriction; Budget is provisionally expected to boost inflation by just under 0.5pptss at peak between mid 2026 and early 2027.

- (UK) BoE Nov minutes: Vote was 8-1 to cut by 25BPS; Mann dissented voted to keep rates unchanged;

- (EU) ECB's Knot (Netherlands): Optimistic on growth outlook for region.

Levels as of 01:20 ET

- Nikkei 225 +0.1%, ASX 200 +0.8%, Hang Seng -0.5%; Shanghai Composite -0.3%; Kospi -0.4%.

- Equity S&P500 Futures flat; Nasdaq100 flat; Dax -0.1%; FTSE100 -0.3.

- EUR 1.0776-1.0806; JPY 152.55 -153.37; AUD 0.6545-0.6682; NZD 0.5999-0.6029.

- Gold -0.1% at $2,703/oz; Crude Oil -0.7% at $71.88/brl; Copper -0.8% at $4.4023/lb.