Profit-taking in Asia after record-breaking equities yesterday
|Asia market update: Profit-taking in Asia after record-breaking equities yesterday; Trump-Takaichi to produce investment Fact Sheet as JP companies gung-ho for $400B as JPY/USD is bid back to last week's levels.
General trend and developments
- Profit-taking in Asia after fresh all-time highs for the Nikkei and Kospi yesterday, however, the Shanghai Composite did touch 4,000 for the first time since 2015 [although still a long way from the 2015 high of 5,000 and the all-time highs of 6,000 all the way back in 2007]. Kospi underperformed -1.9%.
- Japan PM Takaichi welcomed Pres Trump to Japan, watching some baseball (Shohei Ohtani’s LA Dodgers) and promising a new “Golden Age” of the Japan-US alliance, while also backing Trump for the Nobel Peace Prize. A forthcoming Japan-US Fact Sheet to include power generation, auto-relateds as potential US investment projects and large Japanese companies such as Mitsubishi Heavy Industries to be named.
- US Treas Sec Bessent and Japan Finance Min Katayama discussed exchange rates (no details released); Bessent highlighted the role of 'sound' monetary policy.
Late breaking news prior to this release saw Japanese press claim that about 10 Japanese companies said to be interested in $400B worth of US investment projects (out of a total $550B US investment package).
- Bank of Korea (BOK) said to consider buying gold for the first time since 2013.
- Aussie dollar outperformed all other currencies and bond yields rose last night as RBA Gov Bullock commented that the Board is cautious on monetary policy, taking away some of the rate cut bets placed for the November RBA decision, with the RBA Tracker probabilities for a rate cut next week down to 62% on Monday vs 67% Friday. Strongest CNY fix in more than a year by the PBOC yesterday also helped the Aussie dollar.
- US equity FUTs -0.1%% during Asia trading.
Looking ahead (Asian-weighted releases, using Asian time zone)
Mon 26th through Fri Oct 30th; Trump to visit ASEAN in Malaysia (26th), PM Takaichi in Japan (27-29th), then meet Xi at APEC in South Korea (Oct 30th, Nov 1st).
- Tue Oct 28th KR Oct Consumer Confidence, KR Q3 Adv GDP, DE Nov Consumer Confidence.
- Wed Oct 29th KR Oct Business Confidence, AU Q3 CPI, JP Oct Consumer Confidence (Wed night BOC rate decision, US FOMC rate decision, GOOG + META + MSFT earnings).
- Thu Oct 30th JP BOJ rate decision, BOJ Quarterly Outlook; KR Trump-Xi meeting at APEC, (Thu eve various EU GDP releases, DE Oct CPI, EU ECB rate decision, AAPL + AMZN earnings).
- Fri Oct 31st JP Sept Industrial Prod + Retails Sales, CN Oct Manufacturing PMI (Fri eve EU CPI).
- Sat Nov 1st KR Oct Exports, New US tariffs to take effect on CN if no Trump/Xi agreement reached (additional 100% on various imports.
Holidays in Asia this week
- Mon Oct 27th New Zealand.
- Wed Oct 29th Hong Kong.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens -0.3% at 9,028.
- Dominos Pizza Enterprises (Australia): Bain said to consider up to A$4.0B buyout - AFR; Later denied by the company after having hit limit-up 20%.
- Australia regulator ASIC proposes to remake clearing rules for derivatives to support OTC central clearing regime.
- Australia sells A$1.2B vs. A$1.2B indicated in 3.75% Apr 2037 bonds; Avg Yield: 4.2678% v 4.3877% prior; bid-to-cover: 2.85x v 1.98x prior.
- RBA Gov Bullock: Believe policy remains a little bit restrictive; Board cautious on monetary policy; Think we’re in ‘pretty good’ position on jobs and CPI [overnight update].
- New Zealand Sept Filled Jobs M/M: 0.3% v 0.2% prior.
China/Hong Kong
- Hang Seng opens +0.3% at 26,508; Shanghai Composite opens -0.3% at 3.986.
- Shanghai Composite rises to 4,000, which is the highest level since Jul 2015.
- China MOFCOM: Firmly opposed to UK actions against 11 Chinese firms (regarding Russian oil trading and defense sector cooperation).
- China Securities Regulator (CSRC): To deepen reform of growth enterprise market.
- China PBOC Gov Pan Gongsheng: Reiterates to implement properly loose monetary policy; keep social financing condition relatively loose.
- China PBOC to take steps to keep liquidity stable [inline]; China press also comments on PBOC bond trading plan - Chinese press.
- TTN Research Alert: China’s advantage in the AI race is not mystical algorithms but an industrial machine that scales hardware, power, and projects faster than the United States, and the proof is visible in export-control calendars and gigawatt-class buildouts since Oct 2022.
- Hong Kong Sept Trade Balance (HKD): -50.2B v -49.5Be.
- China PBOC sets Yuan reference rate: 7.0856 v 7.0881 prior [strongest since Oct 15, 2024].
- China PBOC Open Market Operation (OMO): Injects CNY475B in 7-day reverse repos; Net injects CNY316B v injects CN148B prior.
Japan
- Nikkei 225 opens -0.4% at 50,322.
- About 10 Japanese companies said to be interested in $400B worth of US investment projects - NHK.
- Takaichi welcomes Pres Trump to Japan; Both leaders confirm signing of agreement on 'US-Japan' alliance related to rare earth and critical minerals.
- Japan Economic Revitalization Min Kiuchi: Weak Yen pushes up domestic inflation via rising import costs - financial press.
- Japan PM Takaichi reportedly recommending Pres Trump for Nobel Peace prize - Japanese press.
- Reportedly KDDI and Google Japan to form JV related to creation of an AI media search tool – press.
- BOJ Outright Bond Purchase Operation for 3~5 Years; 5~10 Years; 10~25 Years; >25 Years maturities and inflation-indexed bonds; (Leaves purchase amounts unchanged).
- Japan Fin Min Katayama: Explained to US Treas Sec Bessent about Japan's finance stance; Bessent said Takaichi’s policy has sent a positive signal to markets - comments from Tokyo after meeting Bessent.
- US Treasury: Secretary Bessent and Japan Finance Min discussed exchange rate; Bessent highlighted the role of 'sound' monetary policy; cites readout between US Treasury Sec Bessent and Japan Fin Min Katayama.
- Commerce Sec Lutnick: Japan's US investment will start with power - Nikkei.
- Commerce Sec Lutnick: Japan's $550B package focuses on power, pipelines, things that are fundamental to national security and have virtually no risk.
- Moody's affirms Japan sovereign rating at 'A1'; Outlook stable.
Korea
- Kospi opens -0.8% at 4,010.
- South Korea Q3 advance GDP Q/Q: 1.2% V 1.0%E; Y/Y: 1.7% V 1.5%E.
- South Korea Oct Consumer Confidence: 109.8 v 110.1 prior.
- Bank of Korea (BOK) said to consider buying gold for the first time since 2013 - US financial press.
- Nvidia CEO Huang expected to meet with executives from Samsung and Hyundai on Oct 30th - South Korea press.
- The leaders of Japan and South Korea are arranging to meet on Oct 30th (sidelines of APEC) - Japanese press.
Other Asia
- Philippines Central Bank (BSP): Allows FX rate to be determined by market forces; To continue to maintain robust reserves.
- Thailand Central Bank (BOT) Gov Vitai: Economy will improve in Q1, 2026.
- Philippine Peso (PHP) falls to fresh record low of 59 vs USD.
North America
- (MX) Mexico Central Bank (Banixco) Tapia: Moving gold to China would require 'competitive offer'.
- (US) Importers from the US said to be placing spring orders early; the article focuses on small importers for large US retailers - financial press [update].
- (CA) Canada Energy Regulator (CER) said to pause Trans Mountain toll process - financial press.
- (US) Oct Dallas Fed Manufacturing activity: -5.0 V -7.8e; New orders: -1.7 v -2.6 prior.
- (US) Treasury $69B 2-year note auction draws 3.504% V 3.571% prior; bid-to-cover ratio: 2.59 V 2.51 prior and 2.61 over the last 12 auctions.
- (US) Treasury $70B 5-Year note auction draws 3.625% V 3.710% prior, BTC 2.38 V 2.34 prior and 2.37 over the last 12 auctions.
- (MX) Mexico Pres Sheinbaum: Spoke with US Pres Trump on Sat (Oct 25th); Will give it a few more weeks to close issue of 54 pending trade barriers (with US); US has extended the tariff deadline by several weeks; We're close to reaching US deal on non-tariff related barriers.
Europe
- (UK) Oct BRC Shop Price Index Y/Y: 1.0% v 1.6%e.
- (UR) Ukraine Pres Zelensky: Will work on plan for ceasefire with allies in next 10 days - press interview.
- (HU) Hungary Foreign Min Szijjarto: PM Orban and US Pres Trump to discuss US sanctions on Russian energy sector at meeting next week.
- (UK) Oct CBI Retailing Reported Sales: -27 v -29 prior.
- OPEC+ said to prefer another modest oil production increase at meeting on Sun (Nov 2nd) - press.
- (EU) Council Pres Costa: We need to have good trade relations with China; High-level officials to visit Brussels in coming weeks to discuss rare earth curbs and other issues.
- (UK) Trade Min Bryant: Govt seeking to form 'Steel Club' with US and EU to address Chinese oversupply - FT interview.
Levels as of 01:20 ET
- Nikkei 225 -0.6%, ASX 200 -0.5% Hang Seng -0.1%; Shanghai Composite -0.1%; Kospi -1.9%.
- Equity S&P500 Futures -0.1%; Nasdaq100 -0.1%; DAX -0.3%; FTSE100 -0.2%.
- EUR 1.1644-1.1668; JPY 151.77-152.90; AUD 0.6552-0.6565; NZD 0.5767-0.5784.
- Gold -0.7% at $3,990/oz; BTC -1.5% at $113,880; Crude Oil -0.2% at $61.19/bbl; Copper -0.4% at 5.1365/lb.
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