Equity markets fall to multi-year lows tracking overnight weakness in US markets

Asia Market Update: Equity markets fall to multi-year lows tracking overnight weakness in US markets; Mnuchin and Williams meet with PBOC Gov Yi Gang

General Trend:

- Equities open sharply lower tracking volatile day in the US markets, many hitting multi-year lows

- Declines in technology shares weigh on markets

- Taiwan’s Taiex has largest decline since early 2008 (-6%)

- Nasdaq Futures extend losses during Asian trading

- Softbank and Tencent each decline over 6%

- Ganfeng Lithium declines over 25% in first day of trading in HK

- BMW to become majority owner of Chinese auto jv

- Iron ore miner Fortescue rises after announcing buyback

- EUR/USD rises in Asian trading, Trump again criticized the Fed

- China said to receive over $10B in orders for planned USD bond issuance

- Upcoming Japanese earnings in focus include Fast Retailing, FamilyMart and Lawson

- Taiwan’s Largan also expected to report

- Singapore’s Central Bank is expected to release its policy statement and Q3 Advance GDP data on Friday

- Reserve Bank of Australia (RBA) Financial Stability Report due on Friday

 

Headlines/Economic Data

Japan

- Nikkei 225 opened -2.0%

- (JP) Japan Securities Clearing Corporation (JSCC): Emergency margin call triggered for Index Futures trading

- (JP) Japan said to consider a supplementary budget of at least ¥900B in FY18 - Japanese Press

- (JP) JAPAN SEPT PPI (CGPI) M/M: 0.3% V 0.2%E; Y/Y: 3.0% V 2.9%E

- 7532.JP Confirms to acquire 60% stake in UNY from Familymart; Family to acquire 20% stake in Don Quijote at ¥6,600/share or ¥212B (~9% premium to prior close) [+7%]

- (JP) Bank of Japan (BOJ) Sakurai: Reiterates need to continue with easing persistently, need to continue easing cautiously

- (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.90% 30-year JGBs, avg yield 0.8980% v 0.850% prior, bid to cover: 3.92x v 4.68x prior

Korea

-Kospi opened -2.4%

- (KR) US Envoy Biegun may meet with North Korea's Choe next week - Korean press

- (KR) South Korea Aug Current Account Balance: $8.4B v $8.8B prior; Goods Balance: $11.2B v $11.43B prior

- (KR) South Korea: Denies report President Moon is considering replacing Finance Min Kim

- (KR) North Korea, China and Russia all share view on need to corresponding steps and adjusting sanctions

- (KR) South Korea exports more than double in first 10-days of October - Korean press

China/Hong Kong

- Hang Seng opened -3.1%, Shanghai Composite -3.0%

- (CN) China Premier Li Keqiang: China will promote a higher level of opening up and will continue to be an ideal place for foreign investment (yesterday after the close)

- (CN) China PBoC Open Market Operation (OMO): Skips OMO v skipped prior: Net: CNY0B drain v CNY0B drain prior (5th consecutive skip)

- (CN) China PBoC set yuan reference rate: 6.9098 v 6.9072 prior

- (US) US Treasury Sec Mnuchin met with PBOC Gov Yi Gang and discussed important economic issues

-(CN) China PBoC Gov Yi Gang met with US Fed member Williams during this week’s IMF meetings: The two officials discussed recent economic and financial developments, along with monetary policy

- (CN) China state-backed Global Times reiterated China should prepare more powerful steps to support economy, depending on the economic situation

- (CN) China PBoC Backed Financial News: Lowering the reserve ratio requirement (RRR) is good, but it does not cure all illnesses

- (CN) China govt said to be planning a major expansion of its 'too big to fail' rules - financial press

- (CN) China said to suspend approvals for new applicants to the Qualified Domestic Limited Partnership (QDLP) scheme - financial press

Australia/New Zealand

-ASX 200 opened -0.6%

- (AU) RBA Assistant Gov Ellis: Monetary policy cannot increase economy's speed limit, productivity

- FMG.AU To buyback up to A$500M in stock, to commence after Oct 25th [+1.6%]

- TNG.AU Announces title agreement related to Mount Peake [+14%]

Other Asia

- (SG) Singapore Central Bank (MAS): Keeping a close watch on property market

- (TH) Bank of Thailand official: Economy is capable of absorbing rate hike as it would not have much impact on borrowing

North America

- (US) Pres Trump: I think the Fed has "gone crazy" and is too tight; the Fed is making a mistake

- (US) Fed's Bostic (dove, voter): US unemployment rate of 3.7% is "very very low"; on many measures the economy is operating as desired

- VOXX Reports Q2 -$0.85 v -$0.74 y/y, Rev $108.9M v $113.5M y/y [-10%]

- TSLA CEO Musk: Earlier report of James Murdoch being the lead candidate for Chairman position is not correct – Tweet [-2%]

- (US) Weekly API Oil Inventories: Crude: +9.8M v +0.9M prior

Europe

- (UK) UK and EU are said to have agreed in principle on an all-UK backstop plan - UK's Telegraph

- (UK) Sept RICS House Price Balance: -2% v 1%e

- (IT) ESM's Regling says no immediate danger of Italy losing market access nor being downgraded below Inv Grade

- Bayer [BAYN.DE]: Reportedly courts could award new trial in Roundup punitive damages case over glyphosate (Round up weed killer) - press

 

Levels as of 01:30ET

- Hang Seng -3.9%; Shanghai Composite -4.5%; Kospi -3.9%; Nikkei225 -4.3%; ASX 200 -2.7%

- Equity Futures: S&P500 -1%; Nasdaq100 -1.1%, Dax -0.8%; FTSE100 -0.3%

- EUR 1.1573-1.1519 ; JPY 112.33-111.96 ; AUD 0.7081-0.7045 ;NZD 0.6480-0.6444

- Dec Gold +0.3% at $1,196/oz; Sept Crude Oil -1.6%at $71.97/brl; Sept Copper -0.5% at $2.736/lb