War in Mid East drives safe havens higher with currencies and stocks generally lower

Asia market update: War in Mid East drives safe havens higher with currencies and stocks generally lower; JP, KR & TW markets closed today as China mainland markets reopen after 10-day holiday.

General trend

- Middle East war tensions between Israel and Hamas threatened to widen, dominating the opening of the new trading week, with WTI Crude Oil trading up >+5% to more than $87/bbl; Gold up +1.0%.

- Currencies down -0.3% to -0.5% against safe havens USD & JPY.

- Aussie ASX however, opened up and climbed +0.5% during the morning, as AU energy stocks up significantly on the tensions; Woodside Energy (WDS.AU) +3.4%, Santos (STO.AU) +2.7%, Origin Energy (ORG.AU) +0.5, Beach Energy (BPT.AU) +4%.

- China markets resumed trading after a full week’s holiday last week. Shanghai Composite initially >-1.0% but pared losses through the morning to be down -0.7% at lunch.

- China 8-day holiday tourism spending at CNY753.4B +1.5% v 2019 levels and +130% y/y; Trips 826M +4.1% v 2019 levels - China state press [weekend update].

- After a 10-day break, China’s PBOC continued with a strong Yuan fix, ~1400 pips above market.

- Japan, Korea and Taiwan equities closed for holidays.

- US equity FUTs down -0.8% in Asian trading.

Looking ahead (Asian time zone)

- Tue Australia Business & Consumer Confidence, Japan Current Account.

- Wed night China New Yuan Loans, US PPI & FOMC Minutes.

- Thu night US CPI.

- Fri CN CPI, PPI & Trade Balance, Singapore Advance GDP (q/q, y/y).

Holidays in Asia this week

- Mon Oct 9: Japan, South Korea, Taiwan.

- Tue Oct 10: Taiwan.

- Fri Oct 13: Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 6,966.

- BNZ New Zealand Sept job ads M/M: -2.3% (6th straight decline).

- Australia Senate probe calls for Australia airline breakup powers to boost competition.

- Chevron (CVX) says in response to new strike threats that it continues to work with all parties to draft a final agreement based on the recommendation of the Australian FWC (labour regulator) [weekend update].

- Chevron (CVX) *Australia offshore alliance union members vote to recommence strike at Chevron LNG facilities (as speculated) [weekend update].

China/Hong Kong

- Hang Seng delayed opening due to typhoon - potential opening at 2pm local time pending weather.

- Hang Seng to resume trading at 2pm after cancellation of Typhoon No. 8.

- Shanghai Composite opens -0.3% at 3,100 (Note: reopens after China holidays all last week).

- China aims to boost AI and computing power by >30% over 3 years, to more than 300 exaflops of computing power.

- China Finance Ministry (MOF): To issue CNY23.0B in 30-yr bonds and CNY115.0B in 5-yr bonds on Oct 13, 2023 [weekend update].

- Hong Kong Sept Foreign Reserves: $415.7B v $418.4B prior [weekend update].

- China Sept foreign reserves: $3.115T V $3.160T prior; Gold reserves: 70.46M v 69.62M troy oz prior (11th straight rise) [weekend update].

- China 8-day holiday tourism spending at CNY753.4B +1.5% v 2019 levels and +130% y/y; Trips 826M +4.1% v 2019 levels - China state press [weekend update].

- Trip.com (TCOM) Reports 8x surge y/y in international travel demand during China's Golden Week [weekend update].

- China PBOC Open Market Operation (OMO): Sells CNY200B in 7-day reverse repos v CNY200B prior; Net drains CNY625B v Net injects CNY412B prior (Note: First OMO ops since Sept 28th China time due to national holidays) [Saturday update].

- China PBOC Open Market Operation (OMO): Sells CNY20B in 7-day reverse repos v CNY200B prior; Net injects CNY20B v Net drains CNY625B prior (update for Sunday ops).

- Weekly Shanghai copper inventories cancelled due to China market holiday [weekend update].

- US Pres Biden: No meeting with China's Xi has been set up, but it’s a possibility [weekend update].

- TTN Research Alert: China's Economic Slowdown has forced Copper Prices to Drop [weekend update].

- USD/CNH (CN) China PBOC sets Yuan reference rate: 7.1789 v 7.1798 prior (Note: Today was the first Yuan reference fix since Sept 28th due to China holidays).

- China PBOC Open Market Operation (OMO): Sells CNY20B in 7-day reverse repos v CNY20B prior; Net drains CNY299B v Net injects CNY20B prior (Note: OMO post-holiday ops started again over the weekend).

Japan

- Nikkei 225 closed for holiday.

- Japan gov’t officials and regulators reportedly discussing with bank chiefs, M&A advisers and PE executives on how to boost appetite for higher-yielding debt ahead of an anticipated wave of domestic deal-making [weekend update].

- Japan Aug Preliminary Leading Index CI: 109.5 v 109.1e; Coincident Index: 114.3 v 114.2e [weekend update].

South Korea

- Kospi closed for holiday.

Other Asia

- Indonesia Sept Consumer Confidence: 121.7 v 125.2 prior.

- Thailand Sept Consumer Confidence: 58.7 v 56.9 prior.

- China Commerce Ministry (MOFCOM): To extend investigation into Taiwan trade barriers against China to Jan 12, 2024.

- Vietnam Party Chief Trong; Expects 2023 GDP at ~5%.

- China and Vietnam reportedly prepare for possible Pres Xi visit to Vietnam in Nov [weekend update].

North America

- WTI crude oil +5.3% to $87.19/bbl on fears the Israel-Hamas war may widen.

- US Sec of State Blinken calls Saudi Foreign Min Faisal: Discussed Hamas attacks on Israel.

- VOLVA.SE UAW: Union workers at Volvo Group owned MACK Truck overwhelmingly reject proposed five-year contract; To strike from 7am, Oct 9th.

- Citi Group (C) confirms agreement to sell China onshore consumer wealth portfolio to HSBC with AUM ~$3.6B; Terms not disclosed.

- TSLA Co's Sept China-made EV sales -10.9% y/y - Korea press.

- Disney (DIS) Nelson Peltz reportedly seeks multiple board seats at Disney - WSJ.

- US Senate Majority Leader Schumer (D-NY) 'very disappointed' with China statement on Israel.

- US Senate Majority Leader Schumer (D-NY) leads bipartisan US Senate delegation as they arrive in Shanghai, China [first such visit since 2019] [weekend update].

- White House official: Too soon to say if Iran was directly involved in supporting Hamas attack on Israel; US will be looking closely at this. [weekend update].

Europe

- Ireland Sept Construction PMI: 48.6 v 44.9 prior.

- USD/ILS Israeli Shekel falls to nearly 8-year low, >-3% against USD at 3.9581.

- (IL) Iran helped plot the attack on Israel since August according to senior Hamas, Hezbollah members - WSJ.

- (IL) Palestinian militant group Hamas launched surprise attack on Israel, claims it launched up to 5,000 rockets; At least 22 Israeli's killed; Israel PM responded saying Israel is now at war with Hamas [weekend update].

Levels as of 01:20 ET

- Nikkei 225 closed; ASX 200 +0.2%; Hang Seng late open; Shanghai Composite -0.6%; Kospi closed.

- Equity S&P500 Futures -0.7%; Nasdaq100 -0.7%; Dax -0.8%; FTSE100 flat.

- EUR 1.0548-1.0578; JPY 149.00-149.25; AUD 0.6344-0.6381; NZD 0.5962-0.5989.

- Gold +1.0% at $1,863/oz; Crude Oil +3.6% at $85.74/brl; Copper +0.5% at $3.6567/lb.