China Sept exports and imports weighed down by trade war with US

Asia Market Update: Offshore yuan and Chinese financials rise after Trump’s recent announcement on ‘Phase 1’ trade deal with China; China Sept exports and imports weighed down by trade war with US

 

General Trend:

- US canceled plan to raise tariffs on $250B in Chinese goods to 30% [tariff increase had been due to take effect on Oct 15th]; The status of the previously announced US tariffs due to take effect on Dec 15th remains unclear

- Shanghai banking and financial indices rise over 2%; China to end foreign ownership limits for mutual fund management companies as of April 1 2020 [a year ahead of schedule according to China Daily]

- Large pork producer WH Group rises over 3% in HK on above avg volume: China YTD to Sept pork imports rise over 43% y/y, Trump said China to eventually buy $40-50B in US agricultural products per year

- Energy sector leads gains in Australia; Santos rises over 6% after agreeing to purchase certain assets in Australia from Conoco

- Aussie banking sector rises amid higher 10-year bond yields, little initial impact seen from announcement of government probe into the banking sector [relates to the passing on of interest rate cuts to customers]

- Japanese markets are closed for holiday today: Various companies commented on Typhoon Hagibis

- Softbank Group speculated to consider taking control of Wework; Wework said to be expected to decide on rescue package on Monday

- Singapore Dollar rises as central bank only ‘slightly’ eased policy, domestic economy avoided technical recession in Q3; SGD also tracks general strength in the Chinese yuan

- Canada markets closed for holiday, US bond markets closed for holiday but equities remain open

- RBA due to release Oct meeting minutes on Tuesday (Oct 15th)

 

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.3%

- (AU) Australia Treasurer Frydenberg officially requests ACCC to investigate the banking sector and its refusal to pass on interest rate cuts in full to customers

- STO.AU Confirms to acquire ConocoPhillips' Northern Australia assets for $1.39B; Materially accretive ~16% expected EPS accretion and ~19% EBITDAX accretion in 2020

- (AU) Australia sells A$300M v A$300M indicated in 2.75% May 2041 bonds, avg yield 1.5699% v 1.382% prior, bid to cover: 2.01x v 1.38x prior

Japan

-Nikkei 225 closed for holiday

- WE Softbank said to be looking at taking control of WeWork in a potential financing package - financial press

Korea

- Kospi opened +1.2%

- (KR) South Korea PM Lee to attend the enthronement of new Japanese emperor Naruhito in Tokyo on Oct. 22 for 3-day visit; schedule also includes an official dinner and meeting with Japan PM Abe

China/Hong Kong

- Hang Seng opened +0.8%; Shanghai Composite opened +0.7%

- (CN) China Customs Spokesman Li: Stable economy contributed to trade resilience; domestic growth provided strong cushion to counter external challenges; full year trade will maintain trend of being overall stable; trade development in future still complicated and severe; China and US talked about future consultation plans and agreed to work on reaching final deal

- (CN) CHINA SEPT TRADE BALANCE (CNY): +280B V 253.8BE; Yuan denominated YTD Trade Balance with US 2.75T, -10.3% y/y; Pork imports YTD: 64.5Mt, +43.6% y/y

- (CN) CHINA SEPT TRADE BALANCE: $39.7B V $34.8BE; Exports Y/Y: -3.2% v -2.8%e; Imports Y/Y: -8.5% v -6.0%e

- (US) White House releases letter from China Pres Xi to Pres Trump: ...important that we address each other's concerns properly and make positive headway in the other areas as well... (Friday)

- (CN) China President Xi: "Anyone attempting to split China in any part of the country will end in crushed bodies and shattered bones, any external forces backing such attempts dividing China will be deemed by the Chinese people as pipe-dreaming!" - speaking to Nepal PM Oli

- (CN) China PBOC sets Yuan Reference Rate: 7.0725 v 7.0727 prior

- (CN) China PBoC Open Market Operation (OMO): Skips for the 6th consecutive session; Net drains CNY0B v CNY30B drain prior

- (CN) China Securities Regulatory Commission (CSRC): Will cancel foreign ownership limits in securities, futures and fund management firms by next year - SCMP

Other

- (SG) SINGAPORE CENTRAL BANK (MAS) SEMI-ANNUAL MONETARY POLICY STATEMENT: WILL REDUCE SLIGHTLY THE RATE OF APPRECIATION OF THE S$NEER POLICY BAND (No change to width of the policy band and the level at which it is centered)

- (SG) SINGAPORE Q3 ADVANCE GDP Q/Q: 0.6% V 1.2%E; Y/Y: 0.1% V 0.2%E (avoids technical recession)

- (SY) Syria Govt and Kurdish led Syrian Democratic Forces (SDF) have been holding negotiations with Turkey with Russian participation, hoping to reach a deal that would see Turkey stop its attacks

- (SY) US officials looking at a plan that would see the remaining US troops in Syria removed with in days (faster than expected)

North America

-(US) Senator Graham (R-SC): Pres Trump has agreed to work with Congress on Turkey sanctions [in line with prior reports]

- GM UAW voted Saturday morning to authorize increased strike pay to $275/week for all UAW members on strike

- NKE Notified independent retailers that it will no longer provide its products by 2021 and will only sell direct; some terminations could start in 2020 - press citing email from company

- (US) President Trump: My deal with China is that they will IMMEDIATELY start buying very large quantities of our Agricultural Product, not wait until the deal is signed over the next 3 or 4 weeks. THEY HAVE ALREADY STARTED! Likewise financial services and other deal aspects, start preparing. .I agreed not to increase Tariffs from 25% to 30% on October 15th. They will remain at 25%. The relationship with China is very good. We will finish out the large Phase One part of the deal, then head directly into Phase Two. The Phase One Deal can be finalized & signed soon! - tweet

Europe

- (UK) BOE's Deputy Gov Ramsden: There is less of a case for more accommodative policy, more cautious over potential for UK economic growth – Telegraph

- (UK) EU Chief negotiator Barnier said to have notified UK PM Johnson that his Brexit plans are not good enough to be the basis of an agreement - press

- (EU) ECB Holzmann (Austria) criticized the 'ultra-easy' monetary policy of the ECB - financial press

 

Levels as of 01:20ET

- Hang Seng +0.9%; Shanghai Composite +1.3%; Kospi +1.2%; Nikkei225 closed; ASX 200 +0.5%

- Equity Futures: S&P500 +0.2%; Nasdaq100 +0.1%, Dax +0.1%; FTSE100 +0.3%

- EUR 1.1024-1.1040; JPY 108.20-108.53; AUD 0.6772-0.6802; NZD 0.6298-0.6337

- Commodity Futures: Gold +0.2% at $1,490/oz; Crude Oil -0.5% at $54.42/brl; Copper +0.2% at $2.63/lb