Focus on ECB rate decision, US Aug CPI

Asia market update: Asia Market Update: JP stocks fresh all-time highs, as KR Pres Lee sets econ direction; Focus on ECB Rate Decision, US Aug CPI.

General trend and developments

- After rising 28% in after-hours trade yesterday, Oracle shares continued to surge at the US open, up a staggering ~40% over the past 24 hours (for a nearly 50-year old company) and sending its market cap towards the $1T mark following huge increase in future orders to be fulfilled. Founder Larry Ellison overtook Musk as the world’s richest man.

- Nikkei continued to hit fresh record highs on the back of Oracle / Nasdaq and a soft August PPI in both the US as well as Japan’s soft PPI released today. Sentiment for large cap All Industries and Manufacturing also rose strongly during Q3 in Japan. Meanwhile Tokyo Office Vacancies continued to improve to multi-year lows in August.

- OIS chances of a Bank of Japan rate hike in October rose further to 33% (vs 27.5% on Tuesday) and up to 65% by December (vs 55.% on Tuesday). In a financial press poll just 3 out of 68 analysts see a rate hike next week by the BOJ.

Nikkei did lose half of its gains later in the session after reports from US financial press that Japan BOJ said to signal 'final phase' of Gov Ueda's stimulus unwind, selling ETFs.

- Comments out of both South Korea and the US indicate work is urgently needed to bring qualified workers to the US in the wake of the Hyundai Motors / LG Energy battery factory raid last week.

- Kospi also hit fresh record highs from the open, but fell back during Pres’ Lee’s speech.

- South Korea Pres Lee marked his first 100 days in office by setting out some fundamental policy direction going forward for the economy.

- Lee said that KR’s economic indicators are picking up, while stating that “normalizing” the stock market is needed for "productive finance". (Reminder back in early July said that South Korea should prepare for a “Kospi 5,000 era” – currently 3,382. Lee also confirmed will not change the capital gains tax rules. Notably the Kospi dipped from its opening gains once Lee confirmed the tax rules. (Yesterday the advance stories of no-change helped power the Kospi up >2% to record levels).

- Other notable comments from Lee was a commitment to solar and wind for SK’s power needs going forward, not nuclear (KEPCO -1.4%, while solar and wind stocks in Korea jumped on his proclamation; CS Bearing & Unison each +19% and Hanwha Solution +4%).

- Lee also regards South Korea’s relationship with Japan “as difficult as that with North Korea”. Will also “discuss” with Korean pension funds why they invest so much overseas, which he cannot understand.

- Lee’s comments came the day after former BOJ Gov Shirakawa warned in Seoul that South Korea risks 'lost decades' similar to Japan's without reforms for South Korea's worsening demographics.

- South Korean exports for Sept 1st-10th rose again, powered by chip and ship exports, but were held back by a -8% fall to the US, follows earlier heavy falls in exports to the US recently. Exports to China also flat.

- RNBZ’s acting Gov admitted that the Central Bank of New Zealand is facing a test of trust and confidence.

- Australia’s ASX continues to lag Asia over the past several days after hitting record highs in August.

- US press reports of a drafted Exec Order that would impose restrictions on medicines from China. [Major US pharma have been buying the rights to Chinese created low-cost drugs instead of smaller US biotech companies working on similar medicines]. Hang Seng biotech indices fell nearly 8% today.

Note the ECB Rate Decision to come later today, followed by the closely watched US August CPI, following yesterday’s soft PPI figures.

- US equity FUTs flat during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu Sept 11th (Thu eve ECB Rate Decision, US Aug CPI).

- Fri Sept 12th NZ Aug Business PMI, (Fri eve UK July GDP, US Michigan Sept Consumer Sentiment.

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,797.

- Australia Sept Consumer Inflation Expectation: 4.7% v 3.9% prior.

- Australia sells A$100M v A$100M indicated in 1.25% Aug 2040 indexed bonds: Avg Yield: 2.3346% v 1.8659% prior; bid-to-cover: 3.36x v 3.45x prior.

- RBNZ Hawkesby: It has been a challenging time at the Bank of New Zealand; We face a test of trust and confidence; Central projection for OCR is to fall around 2.50% by the end of 2025, but that could occur faster or slower depending on the data.

China/Hong Kong

- Hang Seng opens -0.8% at 25,987; Shanghai Composite opens -0.2% at 3,806.

- Hong Kong moves to ease capital rules for banks holding licensed crypto; cites consultation paper issues by the HKMA on Mon - Chinese press.

- China State Planner: Will better coordinate domestic economic work and international economic and trade struggles in H2 2025 - China state media [overnight update].

- Mexico Fin Min Amador: Raising tariffs on Asian car imports to 50% from 20%, particularly from China [overnight update].

- US considers severe restrictions on medicines from China, while also mulls speeding up FDA review procedure same time – NYT [overnight update].

- EU Commission reportedly considering listing some independent Chinese refineries (teapots) in 19th sanctions package against Russia – [overnight update].

- China Defense Minister Admiral Dong Jun: Committed to maintaining peace in South China Sea - video call with US Sec Def Hegseth [overnight update].

- (US) Sec Def Hegseth: Made clear that US not seeking regime change in China or strangulation of China; US not seeking conflict with China [overnight update.

- Reportedly travel bookings for October’s Golden Week holiday have jumped 130% y/y as of Sept 8th and some popular destinations were sold out three months in advance - Chinese press [overnight update].

- China reportedly to 'crack down' on malicious online attacks against its automakers; To rectify network chaos in automobile industry - Chinese press [overnight update]

- (UK) China and UK officials meet to promote steady economic ties - [overnight update].

- China PBOC sets Yuan reference rate: 7.1034 v 7.1062 prior.

- China PBOC Open Market Operation (OMO): Injects CNY292B in 7-day reverse repos; Net injects CNY79B v injects CNY75B prior.

Japan

- Nikkei 225 opens +0.2% at 43,907.

- Japan Aug PPI (domestic CGPI) M/M: -0.2% v -0.1%e; Y/Y: 2.7% v 2.7%e.

- Japan Q3 BSI large all industry Q/Q: +4.7 V -1.9 PRIOR.

- Japan Aug Tokyo Avg Office Vacancies: 2.9% v 3.2% prior [multi-year low].

- Japan releases weekly flows data [period ended Sept 5th]: Foreign buying of Japan equities: +¥108.6B v -¥785.7B prior; Japan buying of foreign bonds: ¥245.1B v 1.42T prior.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: 1-3 Years; 5-10 Years; 10-25 Years and >25 Years; (Purchase amounts as planned for Sept).

- Japan BOJ said to signal 'final phase' of Gov Ueda's stimulus unwind, selling ETFs - financial press.

Korea

- Kospi opens +0.7% at 3,336.

- South Korea Sept 1-10 Exports Y/Y: +3.8% v -4.3% prior; Imports Y/Y: +11.1% v -13.6% prior.

- South Korea Industry Min to visit the US for trade talks on Thurs [Sept 11th] - Yonhap.

- South Korea and US agree to swiftly discuss new visa status for South Korean workers – press.

- South Korea Pres Lee: Domestic economic indicators are showing signs of pickup; confirms will not change capital gains tax rules, will leave it to Parliament focus discussion on stock tax, desirable to design tax in a way to revitalize the equity market. - comments to mark first 100 days in office.

- South Korea Trade Min Yeo: US ICE raid (on Hyundai Motors' Georgia plant) is 'unbelievable' - financial press.

- South Korea Spy Agency: North Korea's Leader Kim Jong Un's daughter likely firming up her status as Kim's successor on their recent visit to China - South Korea press.

- South Korea Foreign Min Cho: Koreans were shocked by the arrest of workers in the US; Could have led to a crisis between the two countries, but (instead) created a chance to improve systems - financial press.

- Former BOJ Gov Shirakawa: South Korea risks 'lost decades' similar to Japan's without reforms for South Korea's worsening demographics - comments in Seoul (update).

Other Asia

- Thailand Aug Consumer Confidence: 50.1 v 51.7 prior (lowest since Dec 2022).

- (IN) India Trade Min Goyal: Indian auto companies not seeking protection in free trade talks; India trade deals allow more variety of cars to be imported - comments at auto industry event.

- (ID) Indonesia Fin Min Purbaya Yudhi: Resilient GDP is capital for 8% growth in the medium term - financial.

North America

- (US) Reportedly DOJ probes subprime car lender Tricolor over irregularities on car loans - FT.

- Follow up: Brazil Supreme Court votes to acquit Former Pres Bolsonaro of all charges.

- (BR) Brazil Aug IBGE Inflation IPCA M/M: -0.1% v -0.2%e; Y/Y: 5.1% v 5.1%e.

- (US) AUG PPI final demand M/M: -0.1% V +0.3%E; Y/Y: 2.6% V 3.3%E (1st negative M/M print since Apr); (ex-food/energy) M/M: -0.1% v +0.3%e; Y/Y: 2.8% v 3.5%e.

- (US) Pres. Trump: 'Just out: No Inflation!!! “Too Late” must lower the RATE, BIG, right now. Powell is a total disaster - Truth Social post.

- (PL) US White House: Trump Admin is tracking the reports out of Poland and there are plans for Trump to speak with Pres Nawrocki today.

- (US) DOE CRUDE: +3.9M V -1ME; GASOLINE: +1.5M V -0.5ME; DISTILLATE: +4.7M V -0.5ME.

- (US) Pres. Trump: "What’s with Russia violating Poland’s airspace with drones? Here we go!" - Truth Social.

- (US) Trump Admin to appeal court ruling that blocked removal of Fed Gov Lisa Cook (as expected).

- (US) Treasury's $39b 10-year note reopening draws 4.033% v 4.362% prior; bid-to-cover ratio: 2.65 v 2.61 prior and 2.59 over last 8 reopenings.

- (US) Sec Def Hegseth: Made clear that US not seeking regime change in China or strangulation of China; US not seeking conflict with China.

- Prominent conservative talk show host Charlie Kirk has been assassinated at college event in Utah – press.

Europe

- (UK) Aug RICS House Price Balance: -19% v -10%e [lowest since Jan 2024].

- EU confirms that sanctions against Russia will be 'significantly ramped up' following Poland incident.

- (IR) Iran Foreign Minister Araghchi: New agreement with IAEA does not allow for access by its inspectors; IAEA inspections still need to be discussed in future talks - Iranian state press.

- (UK) Chancellor Reeves: Treasury is looking at British Private Equity and Venture Capital Association’s (BVCA) proposed NOVA initiative.

- (CH) SNB President Schlegel: To start publishing summary of interest rate discussions to show how we apply monetary strategy; Starting from next quarterly decision.

- (UK) Defense Sec Healey: Asked armed forces to assess options to bolster NATO air defense over Poland.

- (EU) NATO Sec Gen Rutte: Allies determined to defend 'every inch' of NATO territory; Full assessment of [Russian drone incursion into Poland] violation is ongoing.

- (RU) EU reportedly unlikely to raise tariffs on India and China following Trump's request - press.

- (RU) Russia Aug CPI M/M: -0.4% v -0.2%e; Y/Y: 8.1% v 8.3%e.

- (IL) Reportedly US Pres Trump had a heated call with Israel Pres Netanyahu over Israel's strike in Qatar.

Levels as of 01:20 ET

- Nikkei 225 +0.6%, ASX 200 -0.3%, Hang Seng +1.2%; Shanghai Composite +0.2%; Kospi +0.5%.

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

- EUR 1.1693-1.1707; JPY 147.27-147.48; AUD 0.6606-0.6623; NZD 0.5934-5948.

- Gold -0.4% at $3,667/oz; BTC +2.0% at $114,020; Crude Oil -0.4% at $63.43/bbl; Copper -0.1% at $4.6008/lb.