Markets tread water ahead of FOMC, BoE, BoJ rate decisions

Asia market update: Markets tread water ahead of FOMC, BOE, BOJ rate decisions; JP chipmakers drop amid US-Japan chip curb deal nearing.

General trend

- Japanese markets reopened after yesterday’s holiday, although China and South Korea still on holiday today. Nikkei fell over 2% in morning trading as the Yen strengthened. Hang Seng outperformed +1.4% in the morning. JP chipmakers Advantest and Tokyo Electron down between -6 to -7%, much more than Nvidia’s 2% drop during NY trading. Falls amid FT reporting today that US and Japan are near a deal to curb technology exports to China.

- Japan JGB yields declined slightly after the holiday, following global yields move down yesterday.

- Currencies little moved ahead of the FOMC, BOE and BOJ rate decisions later this week. Yen moved up and down within a one cent range against USD.

- US Fed 50bps cut probability jumped further up to 69%.

- Singapore Electronic Exports for Aug rose at their highest pace in 14 years.

- Tokyo Steel cut steel prices for hot-rolled coils for the first time since Aug 2022, and cut H-Beam prices for the first time since Jun 2023.

- Poor economic outlook underscored for New Zealand with NZ Treasury projecting the economy shrank by -0.4% in Q2.

- US equity FUTs flat to slightly up during the Asia trading.

Looking ahead (Asian time zone)

- Tuesday Sept 17th (Tue eve DE Sept ZEW Sentiment; Tue night US Aug Retail Sales).

- Wednesday Sept 18th JP Trade Balance, ID rate decision, UK Aug CPI, (Wed night US Aug prelim Building Permits, US FOMC rate decision + Presser).

- Thursday Sept 19th AU Aug Employment, TW rate decision, (Thu eve BoE rate decision).

- Friday Sept 20th JP Aug CPI, CN Sept LPR, BoJ rate decision + Gov presser (02:30ET).

Holidays in Asia this week

- Monday Sept 16th China, Indonesia, Japan, Malaysia, South Korea.

- Tuesday Sept 17th China, South Korea, Taiwan.

- Wednesday Sept 18th Hong Kong, South Korea.

- Upcoming Chinese market holidays: Sat Sept 14th to Tue Sept 17th; Sept 29th (Sun); Tue Oct 1st to Mon Oct 7th; Sat Oct 12th.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,128.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 84.1 v 82.3 prior (8 week high).

- New Zealand Treasury: Projects economy shrank by -0.4% in Q2 (Prior forecast +0.2%).

- New Zealand Aug Non-Resident Bond Holdings: 60.0% v 59.6% prior.

China/Hong Kong

- Hang Seng opens -0.2% at 17,386; Shanghai Composite remains closed for holiday.

- Follow up: US and Japan said to near deal to curb chip technology exports to China - FT.

- Hong Kong Chief Executive Lee to visit Beijing on Thursday [Sept 19th] – Press.

- Italy Industry Min Urso: Talks with Chinese EV makers to build plants in Italy won't be impacted by EU duties on Chinese imports.

- China Stats Agency: Expecting economic operations to continue steady trend going forward; will step up macro policy adjustments [overnight update].

Japan

- Nikkei 225 reopens +0.1% at 36,601 (post-holiday yesterday).

- Japan July Tertiary Industry Index M/M: 1.4% v 0.9%e.

- Source ‘familiar’ with BOJ thinking said the central bank can spend time scrutinizing developments [inline].

- Japan Fin Min Suzuki: Recent FX moves have both positive and negative impacts.

- Tokyo Steel (5423.JP) Cuts hot-rolled coil steel prices to ¥92K/t (first cut since Aug 2022); Cuts H-Beam price to ¥115K/t (first cut since Jun 2023).

Korea

- Kospi remains closed for holiday.

Other Asia

- Singapore Aug Non-oil Domestic Exports M/M: -4.7% v -2.7%e; Y/Y: 10.7% v 15.0%e.

- (TW) US approves $228M spare parts for aircraft sale to Taiwan - financial press.

- Thailand Cabinet approves THB145.6B in first phase of the digital handout scheme; MOF says the first payments will boost GDP by 0.35% - financial press.

- Thailand MOF: Digital wallet beneficiaries may be less than 40M Thais (prior 50M); Expect second phase of handout to be early next year [overnight update].

North America

- (US) Fed futures now price 69% (v 59% d/d) chance of 50bps rate cut at this week's meeting.

- (US) Former Fed Vice Chair Alan Blinder (under Alan Greenspan), believes this is the beginning of an easing cycle that will go a long way - FT.

- (US) Sept Empire Manufacturing: +11.5 V -4.3E (highest since Apr 2022); New Orders: +9.4 v -7.9 prior ; Employment: -5.7 v -6.7 prior.

- (CA) Canada Aug Existing Home Sales M/M: +1.3% v -0.7% prior.

- (CZ) Czech Central Bank Holub (Chief Economist): Would be premature to end or pause monetary easing.

Europe

- (IL) Israel PM Netanyahu: Israel adds new official war goal; To return residents evacuated from areas near Northern border to their homes safely - financial press.

- (EU) ECB's Kazaks (Latvia): Interest rates will continue to be lowered - Latvian TV.

- (EU) ECB’s Lane (Ireland, chief economist): Gradual approach to easing is appropriate; decisions to be made meeting-by-meeting.

- (DE) German Chancellor Scholz: We want to promote trade, want to prevent its use in circumventing EU sanctions against Russia - Kazakhstan comments.

- (LY) Reportedly Libya's weekly crude exports beginning in Sep 9th increased three-fold w/w to 550K bpd – press.

Levels as of 01:20 ET

- Nikkei 225 -1.5%; ASX 200 +0.3%; Hang Seng -0.1%; Shanghai Composite closed; Kospi closed.

- Equity S&P500 FUTs flat; Nasdaq100 FUTs +0.1%, Dax flat; FTSE100 +0.1%.

- EUR 1.1121-1.1134: JPY 140.32-141.25; AUD 0.6741-0.6754; NZD 0.6183-0.6203.

- Gold -0.3% at $2,602/oz; Crude Oil +0.6% at $66.42/brl; Copper +0.1% at $4.2683/lb.