Markets trade mixed as they weigh China US trade tensions ahead of mid-Oct meeting

Asia Market Update: Markets trade mixed as they weigh China US trade tensions ahead of mid-Oct meeting, while China manufacturing PMIs beat expectations; NZ$ under pressure as business confidence comes in at over a decade low

 

General Trend:

- Markets trade cautiously, as risk off sentiment weighs on markets due to China US trade concerns continue to linger. Reports came out the that US would be blocking or limiting China IPOs in the US and was later was denied by US Treasury Dept

- Bank of Japan (BOJ) Summary of opinions showed that the board discussed risks and merits of adding monetary stimulus at its Sept meeting. Affirmed that all options remain on the table

- NZD fell 0.5% after business confidence came in at an 11-year low

- China PBOC in its quarterly statement shows no indication that it would be changing its policy and it will increase efforts in smoothing out the transmission of monetary policy and take market-oriented reform measures to cut real interest rates

- China headline manufacturing PMI had its 5th consecutive contraction, while new orders rose into expansion for the 1st time since April; Caixin manufacturing P- BOJ cut JGB purchases for the 4th time in September

- Looking ahead: China markets to remain closed the rest of the week for National holiday, Hong Kong closed tomorrow

 

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened -0.1%

- FCG.NZ Gives Sept global dairy update: Aug Total NZ collections 97.6M v 96.5M y/y

- NUF.AU Reports FY18 (A$) underlying Net 89.1M v 98.4M y/y; Rev 3.76B v 3.31B y/y; sells South America unit to Sumitomo for A$1.19B (does not include Nuseed)

- (NZ) Reserve Bank of New Zealand (RBNZ) 2018/19 annual report: The economy is resilient

- (NZ) New Zealand Sept ANZ Business Confidence: -53.5 v -52.3 prior (11-year low); Activity Outlook: -1.8 v -0.5 prior

- (AU) Australia Aug Private Sector Credit M/M 0.2% v 0.3%e; Y/Y: 2.9% v 3.0%e
- (AU) Australia sells A$400M in 2029 bonds; avg yield 0.9509%; bid to cover 4.54x (lowest btc since Dec 2016)

Japan

- Nikkei 225 opened -0.4%

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Raises 1-3 year; Cuts 3-5 year (4th cut in Sept)

- (JP) JAPAN AUG ANNUALIZED HOUSING STARTS: 891K V 901KE; Y/Y: -7.1% V -5.9%E

- (JP) Japan Aug Preliminary Industrial Production M/M: -1.2% v -0.5%e; Y/Y: -4.7% v -3.9%e (2nd decline in 3 months)

- (JP) Japan Aug Retail Sales M/M: 4.8% v 2.4%e; Y/Y: 2.0% v 0.7%e

- (JP) Bank of Japan (BOJ) Summary of Opinions from Sep 18-19 meeting: BOJ must communicate to public that it always has all options on the table when easing policy

- (JP) Japan Govt preparing tax incentives to drive cash M&A deals and investing retained earnings – Nikkei

- 7181.JP Expect 26,000 customers to seek relief on insurance sales scandal

- (JP) Japan approves export of fluorinated polymide exports to South Korea - Korean press

Korea

-Kospi opened -0.2%

- (KR) South Korea Aug Industrial Production M/M: -1.4% v -1.0%e ; Y/Y: -2.9% v -0.2%e

- (KR) South Korea Aug Cyclical Leading Index Change: -0.1 v -0.3 prior

- (KR) Bank of Korea (BOK): South Korea will not face any serious problems due to its low inflation; recent record-low inflation largely stems from issues related to the supply side and that they will soon go away – Yonhap

- (KR) Bank of Korea (BOK) Gov Lee: 2019 GDP likely to miss 2.2% forecast (Friday)

- (KR) North Korea has warned the US not to ask for too much and stop asking for it to cancel its nuclear weapons first if it wants to produce a "new breakthrough" in stalled dialogue - Korean press

China/Hong Kong

-Hang Seng opened -0.4%; Shanghai Composite opened -0.1%

- (CN) US Treasury spokesperson Crowley: There is no truth to media reports US is planning to block China companies from IPOs in the US

- (CN) CHINA SEPT NBS MANUFACTURING PMI: 49.8 V 49.6E (5th consecutive contraction); Non-Manufacturing: PMI: 53.7 v 53.9e; Composite: 53.1 v 53.0 prior

- (CN) China PBOC sets Yuan Reference Rate: 7.0729 v 7.0731 prior

- (CN) China PBoC Open Market Operation (OMO): Skips v injects CNY30B prior in 14-day; Net drains CNY20B v CNY10B drains prior

- (CN) CHINA SEPT CAIXIN PMI MANUFACTURING: 51.4 V 50.2E (highest level since Feb 2018, second consecutive expansion)

- (CN) China PBOC quarterly monetary policy meeting statement: Will increase efforts in smoothing out the transmission of monetary policy and take market-oriented reform measures to cut real interest rates; affirms maintain prudent monetary policy "neither too loose nor too tight" and refrain from using a deluge of stimuli - Xinhua

- 857.HK Updates that have made significant progress in the exploration of unconventional oil and gas in Ordos and Sichuan basins

- (HK) Hong Kong Monetary Authority (HKMA) to meet with bankers who are active in lending to small and medium sized businesses in mid-Oct - HK press

- 600026.CN Looking at impact of blacklist by US of its unit Dalian Tanker

- (HK) Hong Kong Monetary Authority (HKMA) Chief Chan: Property prices ease amid protesting; monetary system remains stable, running smoothly amid social unrest

- (CN) China Vice Premier Hu Chunhua: Calls on producers to increase hog inventory as soon as possible to make sure there is enough supply for late January China New Years

North America

- NDAQ Making it more difficult for China companies to IPO by slowing down approval process and increasing restrictions - US financial press

- (US) President Trump tweets he wants to meet Ukraine whistleblower, says there is big consequences for spying

Europe

- (SA) Saudi Arabia Crown Prince bin Salman: Non-military pressure on Iran is favored; war with Iran would crash the world economy - US Press

- (EU) Bank of Italy's Visco: Analysis shows risks of re-emergence of the threat of deflation; new stimulus was necessary to counter deflation risk (update)

- (AT) Austria parliament elections leaves conservative leader Sebastian Kurz (took 37.1% of the vote) with the option to form a Govt with either the Greens of the far right Freedom Party (FPO)

- (UK) PM Johnson: Will not step down as PM even if I fail to secure a Brexit deal, only Conservative Govt can deliver a Brexit for Oct 31 deadline - speaking at party's annual conference

- (UK) Minister Gove: UK govt knows the outline of what it would like its Brexit deal to look like, deal would differ significantly from the one negotiated by former PM May - speaking at party's annual conference

- (IR) Ireland Northern Ireland’s Democratic Unionist Party (DUP) leader Foster: Supports PM Johnson, but cannot accept leaving the EU on different terms to the rest of the country

- (AT) Austria parliament elections leaves conservative leader Sebastian Kurz (took 37.1% of the vote) with the option to form a Govt with either the Greens of the far right Freedom Party (FPO)

 

Levels as of 01:20ET

- Hang Seng +0.6%; Shanghai Composite -0.1%; Kospi +0.5%; Nikkei225 -0.9%; ASX 200 -0.0%

- Equity Futures: S&P500 +0.4%; Nasdaq100 +0.5%, Dax +0.3%; FTSE100 +0.2%

- EUR 1.0930-1.0946; JPY 107.83-108.02; AUD 0.6754-0.6770; NZD 0.6257-0.6295

- Commodity Futures: Gold -0.5% at $1,499/oz; Crude Oil -0.1% at $55.87/brl; Copper +0.4% at $2.61/lb