Asian equities mostly lower amid uncertainty for bonds and US Fed direction, US election

Asia market update: Asian equities mostly lower amid uncertainty for bonds & US Fed direction, US election, Mid-East tensions persist; Global PMIs; JPY stronger amid officials’ warnings.

General trend

- Australia Oct prelim PMI manufacturing contracted for a 9th month while Japan suffered a 4th straight contraction. Officials in Japan noted that new orders from abroad fell at quickest pace since Feb 2023, while Services fell at the fastest rate since Feb 2022.

- JPY continued to claw back losses against USD, back to the mid-152 level (after hitting 152.20 overnight), aided by comments out of Japan Fin Min Kato, using the phrase "one-sided" as per Top FX diplomat Mimura last week and before that the term had not been used since back in July (by former top FX diplomat Kanda).

- Chip-maker Hynix reported record quarterly profits, but Revenues slightly lower than expected (although double last year’s numbers). Guides strong demand for AI servers in 2025 on global big tech investments. Stock initially down, but later +2%.

- In Japan chip-makers Tokyo Electron +1.9%, Advantest +1.9%.

- Hyundai Motors falls -4% after Q3 Op missed estimates.

- South Korea Q3 advance GDP came in weaker than expected, with officials pointing to slowing IT exports.

- China PBOC injected a near-record 666B in today’s 7-day reverse repos [largest net OMO injection on record was one year ago on Oct 20th, 2023).

- Fortescue -3.4% as it affirmed FY25 shipments, C1 cost and Capex.

- In the US, the IAM machinist's union rejected the tentative deal both sides had agreed to last week.

- Meanwhile Tesla +12% A/H, with significantly better than expected gross and op margins. Overall profitability handily beat estimates and the Co also raised production guidance.

- US equity FUTs +0.2% to 0.5% during the Asia session, as NASDAQ Futs regained half of last night's losses.

Looking ahead (Asian time zone)

- Thu Oct 24th (Thu eve EU Oct prelim PMIs, US Oct prelim PMIs).

- Fri Oct 25th JP Oct Tokyo CPI, (Fri eve DE Oct Biz Climate, Fri night US Sept prelim Durable Goods, Univ of Michigan Confidence).

Holidays in Asia this week

- Wed Oct 23rd Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,206.

- Australia Oct preliminary PMI Manufacturing: 46.6 V 46.7 prior [9th month of contraction).

- RBNZ: Sept Total monthly new mortgage commitments were NZ$6.5B, up 5.7 per cent from NZ$6.2B in Aug.

- BNZ Gov Orr: Must be cognizant of unanticipated risks ahead; Low and stable inflation is again in sight [overnight update].

China/Hong Kong

- Hang Seng opens -0.9% at 20,576; Shanghai Composite opens -0.5% at 3,287.

- Yuan (CNY) said to have been supported by major state-owned banks’ selling of US dollars – financial press.

- S&P: China's new swap program [SFISF] to 'squeeze brokerages' capital ratios'.

- China Pres Xi: Want to strengthen cooperation with India - comments from BRICS Summit [overnight update].

- China MIIT [industry ministry] chief engineer: China to provide support for auto firms to go overseas [overnight update].

- China PBOC sets Yuan reference rate: 7.1286 v 7.1245 prior.

- China PBOC Open Market Operation (OMO): Injects CNY799B in 7-day reverse repos; Net injects CNY666B v net injects CNY150B prior.

Japan

- Nikkei 225 opens -0.8% at 37,804.

- Japan Oct preliminary Manufacturing PMI: 49.0 V 49.7 prior (4th straight contraction).

- Japan releases weekly flows data [period ended Oct 18th]: Foreign buying of Japan equities: ¥580.4B v ¥972.6B prior; Japan buying of foreign bonds: -¥613.0B v -¥358.6B prior- Japan sells ¥1.0T vs. ¥1.0T indicated in 20-year JGB Bonds; Avg Yield: 1.800% v 1.6900% prior; Bid-to-cover: 3.04x v 3.47x prior.

- Japan Fin Min Kato: Sees one-sided and rapid moves in FX market; watching FX moves with 'stronger' sense of urgency.

- Japan Aug Revised Cash Earnings: Y/Y: 2.8% v 3.0% prior.

- Japan to ease syndicated loan rules for foreign banks - Nikkei.

- BOJ Gov Ueda: BOJ is still maintaining fairly easy monetary stance; Wants to lift inflation expectations to a new level.

- Japan Fin Min Kato: G-20 to likely discuss global financial condition; Declines to comment on the Yen [overnight update].

Korea

- Kospi opens -0.3% at 2,591.

- South korea Q3 adnvance GDP Q/Q: 0.1% V 0.4%E; Y/Y: 1.5% V 2.0%E.

- South Korea Fin Min Choi: South Korea Q3 growth fell short of expectations.

- Bank of Korea (BOK) Official: Growth in IT exports slowing; Lower Q3 GDP stems from slowing real exports - financial press.

- South Korea Nov Business Manufacturing Survey: 71 v 73 prior.

- SK Hynix Reports Q3 (KRW) Net 5.75T v -2.18T y/y, Op 7.0T v 6.91Te (v -1.79T y/y), Rev 17.6T v 18.2Te (v 9.07T y/y).

Other Asia

- Taiwan Sept Industrial Production Y/Y: 11.2% v 11.4%e [overnight update].

- India Central Bank (RBI) Oct Minutes: Cannot risk another bout of inflation; best approach is to be flexible [overnight update].

North America

- BA Unoin: Striking workers reject tentative deal.

- (US) Trump leads Harris by 2ppt, but within margin of error - WSJ.

- (US) MBA Mortgage Applications w/e Oct 18th: -6.7% v -17.0% prior (4th straight weekly decline).

- (US) Fed's Bowman (voter, dissenter): New technology gives rise to opportunities and risks in banking; Does not comment on economic or monetary policy - Fintech Conf comments.

- (CA) Bank of Canada (BoC) cuts interest rates by 50BPS to 3.75%; as expected.

- (US) Sept existing Home Sales: 3.84M V 3.88ME (lowest level since Oct 2010); Months supply: 4.3 v 4.2 prior; First-time buyers were 26% of sales v 26% m/m (remains at all-time low).

- (US) DOE CRUDE: +5.5M V +1ME; GASOLINE: +0.9M V -1.5ME; DISTILLATE: -1.1M V -1.5ME.

- (US) Fed beige book: On balance economic activity was little changed in nearly all districts since early September; two districts reported modest growth.

Europe

- (EU) ECB’s Holzmann (Austria, hawk): Unlikely to have 50bps cut at the Dec policy meeting but such a move is possible.

- (SE) Sweden Central Bank (Riksbank) Jansson: Can proceed more decisively with easing; There's risk that inflation could be too low if we don't get economy moving - speech text.

- (EU) ECB’s Centeno (Portugal, dove): Reiterates 50bps cut on the table but move to be data-dependent; Downside risk to growth accumulating - CNBC.

- (IL) Israel Def Min Gallant: After we attack Iran, everyone will understand our strength.

- (DE) Germany Fin Min Lindner: Germany will continue to meet defense spending pledges.

- (EU) Eurozone Oct advance Consumer Confidence: -12.5 V -12.5E.

- (EU) ECB chief Lagarde: Satisfied with the progress of inflation; There's reason to believe inflation will move above 2% in next few months.

Levels as of 01:20 ET

- Nikkei 225 +0.2%, ASX 200 -0.1%, Hang Seng -1.3%; Shanghai Composite -0.9%; Kospi -0.7%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.5%; Dax flat; FTSE100 +0.1%.

- EUR 1.0779-1.0794; JPY 152.12-152.83; AUD 0.6629-0.6751; NZD 0.5998-0.6017.

- Gold +0.4% at $2,740/oz; Crude Oil +1.3% at $71.68/brl; Copper +0.7% at $4.3603/lb.