Asia markets struggle again ahead of CB announcements

Asia market update: Asia markets struggle again ahead of CB announcements; UAW strike in US may spread to Canada; AU RBA Minutes reveal no surprises.

General trend

- Asian equities struggled again today as eyes look ahead to the Fed, BOE and BOJ rate decisions this week.

- Japan’s Nikkei led the soft tone, dragged down >-1% by tech and electronic as Japan played catch up following yesterday’s holiday.

- Canada’s UNIFOR union may join in the US UAW strikes, initially against Ford if no agreement reached tonight.

- Toyota, Honda and Yokohama Rubber all hit record highs today, with Nissan also +3%; All possibly gaining from the strike issues currently affecting their US competitors in North America.

- The Australian RBA reiterated that in their Sept rate decision they believed the case for a pause at 4.1% was stronger than the case for a further hike – although more may be required later. The RBA did flag a weakening China economy and higher petrol prices as risks to the outlook.

- Japan’s economy minister signaled that Japanese firms need to be able to respond to higher rates.

- US equity FUTs down slightly in Asian trading.

Looking ahead (Asian time zone)

- Wed 20 Sep JP Balance of Trade, CN LPR, UK CPI.

- Wed night US FOMC Rate Decision.

- Thu NZ Q2 GDP.

- Thu evening UK BoE Rate Decision.

- Fri JP CPI (national) and JP BOJ Rate Decision.

Holidays in Asia this week

- Tue 19 Sept India.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,221.

- Reserve Bank of Australia (RBA) Sept minutes: Reiterates that further policy tightening may be required, but decided the case for a pause at 4.1% was stronger.

- Australia ANZ/Roy Morgan Weekly Consumer Confidence: 80.9 v 78.7 prior (highest since week ending Feb 5th).

- Reserve Bank of New Zealand (RBNZ): Plans debt-to-income framework consultation in early 2024.

China/Hong Kong

- Hang Seng opens flat at 17,942.

- Shanghai Composite opens -0.1% at 3,123.

- China might keep the LPR unchanged in Sept [decision expected on Wed (Sept 20th)], loan prime rate could be cut further in Q4 - Chinese press.

- HKMA: China PBOC sells CNY15.0B v CNY15.0B indicated in 6-month bills at 3.38% coupon in Hong Kong.

- US State Dept: US Sec of State Blinken met with China VP Han about Russia/Ukraine war, North Korea and Taiwan Strait.

- China PBOC Gov Gongsheng: China will improve policies and create market-oriented international level business climate.

- China PBOC reportedly lifted temporary curbs on gold imports for some lenders recently imposed to defend the CNY currency – FT (overnight update).

- China Foreign Ministry spokesperson avoids question on if Pres Xi will go to APEC summit in US in Nov; Notes China values it (overnight update).

- Former China Foreign Min Qing Gang was ousted after alleged affair with TV presenter led to birth of child in the US.

- China Finance Ministry: Offers tax reduction for R&D costs of integrated circuit firms (overnight update).

- China's Yuan exchange rate v USD will show 'positive changes' after 'bottoming out' - China PBOC publication (overnight update).

- China PBOC sets Yuan reference rate: 7.1733 v 7.1736 prior.

- China PBOC Open Market Operation (OMO): Sells CNY208B in 7-day reverse repos v CNY184B prior; Sells CNY60B in 14-day reverse repos v CNY60B prior; Net injects CNY59B v Net injects CNY29B prior.

Japan

- Nikkei opens -0.7% at 33,296.

- Japan METI Minister Nishimura: Key for firms to be able to respond to higher yields.

- SMBC (8316.JP) said to raise US dollar term deposit interest rate to 5.3% [first increase in 5 years].

- Japan PM Kishida to announce domestic asset management industry reforms on Thursday in NYC.

- Japan Chief Cabinet Sec Matsuno: Gathering information about fresh US sanctions related to Russia's Arctic LNG 2 gas project and its impact to Japan.

- Japan Fin Min Suzuki: Started on-site probe for Sompo Japan today.

- Japan Foreign Ministry: US, Japan, South Korea shared concerns that Russia-North Korea coooperation may have negative impact on peace and stability of Indo-Pacific.

- Japan PM Kishida: To hold bilateral Summit with Iran in New York; Expects to talk with Ukraine's Pres Zelenskiy at UN Assembly.

- Japan said to discuss removing the health insurance barriers that pressure many women to limit their working hours (overnight update).

- Japan sells ¥3.5T in 12-Month Bills; Avg Yield: -0.0378% v -0.0679% prior; bid-to-cover: 3.27x v 2.87x prior.

- Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 100bps; Opens window to buy unlimited amount of 10-year JGBs at 1.00%.

South Korea

- Kospi opens +0.2% at at 2,579.

Other Asia

- Taiwan Semi (TSM) Co. and Arizona Governor Hobbs discuss advanced packaging investment - financial press.

- Malaysia Aug Trade Balance (MYR): 17.3B v 17.8Be.

- Philippines Finance Chief Diokno: Halting fuel taxes to seriously impact government finances.

- Vietnam Parliament Chairman: Vietnam will struggle to hit 2023 growth target as exports slow.

- (SG) SPOST.SG Announces postage rates to increase; Regular mail to +S$0.20c to S$0.51c; Effective 9th Oct.

North America

- UAW President says Union will announce new plants to strike on Friday at Noon EDT if no serious progress reached - financial press.

- Ford (F) UNIFOR [Canada union] President: Union does not yet have new labor deal with Ford; Will strike tonight if no deal tonight.

- (Follow up): Ford (F) UNIFOR [Canada union]: Late-night negotiations are continuing with a late caucus meeting.

- (US) Sept NAHB housing market index: 45 V 49E.

- (US) Treasury Sec Yellen: Labor market cooling, doesn't involve significant layoffs.

- (US) House Speaker McCarthy (R-CA) says he will bring GOP stopgap govt spending measure to house floor on Thursday to avert a shutdown.

Europe

- EU Commission Vice President: Reiterates the EU does not seek to decouple from China.

- (G7) Foreign Minister's Chair Japan: Russia must withdraw its troops and military equipment from the internationally recognized territory of Ukraine immediately, completely and unconditionally.

- German Bundesbank Monthly Report: Sees contraction in Q3; domestic economy needs an overhaul.

- (CH) Bank for International Settlements (BIS): Current build-up of leveraged short positions in US Treasury futures is a financial vulnerability worth monitoring - FT.

- (EU) Bank of France Gov Villeroy: ECB will maintain rates at 4% as needed.

Levels as of 01:20 ET

- Nikkei 225, -1.0%, ASX 200 -0.4% , Hang Seng -0.1%; Shanghai Composite -0.1% ; Kospi -0.5%.

- Equity S&P500 Futures: 10.1%; Nasdaq100 10.1%, Dax -0.1%; FTSE100 -0.8%.

- EUR 1.0678-1.0697 ; JPY 147.50-147.82 ; AUD 0.6429-0.6449 ; NZD 0.5904-0.5928.

- Gold flat at $1,952/oz; Crude Oil +0.7% at $91.23/brl; Copper -0.6% at $3.7572/lb.