Big Aussie banks now all expect RBA to ease in Oct

Asia Market Update: Indices open mostly higher ahead of expected conclusion of low-level US/China trade talks; PBOC as expected cut 1-yr LPR, but left 5-yr rate unchanged; Big Aussie banks now all expect RBA to ease in Oct

General Trend:

- Aussie consumer stocks outperform amid near-term rate cut expectations

- Japanese banks rise as BoJ cut longer-term bond purchases at daily operation, trade-sensitive Marine/Transportation index also rises

- There has been renewed speculation about possible interim trade deal between the US and China, low-level trade talks due to conclude later today

- Offshore yuan (CNH) rises, PBoC to sell bills in Hong Kong on Sept 26th

- China sells 50-year bonds at higher than expected yield

- Kiwi declines ahead of next week’s RBNZ official cash rate (OCR) decision (Wed Sept 25th)

- Australia PM Morrison expected to meet with US President Trump in Washington D.C on Friday

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened +0.5%

-(AU) NAB: Now expects RBA to cut rates in Oct and Dec 2019 [vs rate cuts in Nov 2019 and Feb 2020 prior]; Big Aussie banks are now all calling for Oct 2019 rate cut

-(AU) Citi sees RBA cutting rates in Oct (prior Nov)

-(US) US senior administration official: Australia and US to announce a plan to boost supply of rare earth metals tomorrow - press

China/Hong Kong

-Shanghai Composite opened +0.2%, Hang Seng +0.2%

-(CN) Some analysts see risk that Q3 GDP growth in China could decline below 6% amid trade war [China’s official government GDP growth forecast for 2019 is 6.0-6.5%] - US financial press

-(CN) China PBoC sets 1-year loan prime rate (LPR) at 4.20% v 4.25% prior (4.20%e); sets 5-year LPR at 4.85% v 4.85% prior (4.80%e)

-(US) White House advisor Kudlow: See softening in the mood as US and China officials meet this week

-(CN) China Centre for International Economic Exchanges' Chief Economist Wenling: China, US could be close to agreeing interim trade war deal – SCMP

-(CN) Chinese trade negotiators reportedly intend to visit US farm country after talks wrap up in Washington this week - CNBC

-(CN) US Ag Sec Perdue: doesn't know about China plans to buy crops next week – press

-(CN) China Pres Xi urges nations to cooperate in the manufacturing sector

-(CN) China PBOC sets Yuan Reference Rate: 7.0730 v 7.0732 prior

-(CN) China PBoC Open Market Operation (OMO): Injects CNY120B in 7-day and 14-day reverse repos v CNY170B prior in 7-day and 14-day; Net injection CNY120B v drain CNY170B prior

-(CN) China Environment Min: Cities that met last year's targets will be exempt from this year's targets; will set higher targets for cities that had higher air quality concentrations higher than PM2.5 last Fall and Winter

Japan

- Nikkei 225 opened +0.4%

- (JP) JAPAN AUG NATIONAL CPI Y/Y: 0.3% V 0.3%E; CPI EX-FRESH FOOD (CORE) Y/Y: 0.5% V 0.5%E (slowest rise since July 2017)

- (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: Cuts 5-10, 10-25, >25 year JGB purchases

- (JP) Bank of Japan (BOJ) to hold meeting regarding market operations on Oct 18

Korea

- Kospi opened flat

-(KR) South Korea Pres Moon approval rating at lowest since the start of his term - US Financial Press

-(KR) South Korea Fin Min: To pursue FTA agreements with Indonesia, Malaysia, and Philippines by end of 2019

-(KR) North Korea may be preparing a submarine capable of launching ballistic missiles - Japan Press

Other Asia

-(IN) India Fin Min is said likely to announce new efforts to boost the economy on Friday; may also review import tariffs on some items – press

- (IN) India Fin Min Sitharaman: proposes to cut corporate tax rates for domestic manufacturing companies

-(IN) India Central Bank (RBI) Gov Das: negative rates posing threat to financial stability; inflation below target and price stability give us room to cut

-(PH) Philippines Central Bank Chief Diokno: Sept CPI estimate at 1.4%; CPI to be within target even if oil is $90/barrel; Reiterates looking at 100bps RRR to come soon; very comfortable with PHP level; Central Bank has not intervened in FX market for a 'long, long time'

North America

-(US) New York Fed to conduct a fourth day of repo operations tomorrow morning (Friday)

-(US) SEMI: Aug North America Manufacture Billings: $2B, -1.4% m/m, -10.5% y/y

-SMTC Corp [SMTX]: Plans to exit China market on tariff and macroeconomic uncertainty; cuts FY19 guidance

Europe

-(EU) Incoming ECB President Lagarde: Central Bankers must be 'predictable' and focus on stability; global growth fragile and under threat

-(SA) Saudi-led coalition launches military operation north of Hodeidah in Yemen against 'military targets' - Local media

-(DE) German Fin Min Monthly Report: Global slowdown is weighing on Germany; started Q3 on weaker footing; sees continued contraction in industrial production

Levels as of 1:20 ET

- Nikkei 225, +0.2%, ASX 200 +0.4%, Hang Seng +0.1%; Shanghai Composite +0.2%; Kospi +0.4%

- Equity Futures: S&P500 +0.1%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 -1.1%

- EUR 1.1061-1.1039 ; JPY 108.08-107.89 ; AUD 0.6809-0.6778 ;NZD 0.6311-0.6284

- Gold +0.3% at $1,511/oz; Crude Oil +0.9% at $58.70/brl; Copper +0.4% at $2.618/lb