China stimulus effects flow through for a second day in otherwise quiet day in Asia

General trend

- Yesterday’s broadest stimulus package for years by Chinese authorities spurred not only the best session for the Shanghai Composite (+4.1%) since July 2020, but also helped buoy global stocks. ETFs FXI +9.8% and EWH +5% during NY trading. The positivity flowed through again today with the Shanghai soon up +2.5% and the Hang Seng opening +3.1%. Large numbers of China stocks saw trading volumes surge with China property stocks up 21% from their September lows. However, both Shanghai and HK pared gains as the day went on to the 2% level.

- However, more sobering Chinese news that the underlying economy is not doing well, with China's auto price war said to have cost dealers a total ~$20B (CNY138B) of losses over the past year.

- Commodity currencies continued to outperform with the Aussie hitting the 69c handle for the first time since Feb 2023 while the Kiwi hit a nine-month high. The Aussie subsequently saw a little softness post-CPI.

- USD/CNH briefly moved below 7.0 level for the first time since May, 2023. Overall CNH is about flat after earlier volume; On the lookout for CN state-banks.

- Australia’s Aug CPI fell below the 3% level to its lowest level in three years, as expected; Note that as indicated in advance yesterday by Gov Bullock in the RBA’s eyes a fall to the 2 handle will not reflect underlying inflation trends.

- Japan 10-year JGBs continued lower to their levels on the Aug 5th extreme volatility.

- Overnight Nvidia traded up nearly 4%; Asia chipmakers Advantest +4%, Hynix +3%.

- As expected China PBOC cut the MLF rate by 30bps and net drained the most liquidity in MLF ops since Dec 2021.

- Gold traded at fresh record highs while copper back over $4.50/lb.

- Concerns out of both Thailand Central Bank (BOT) and the Thai MOF that the baht has appreciated too much, especially post-Fed rate cut, and needs to be managed.

- A reminder that Japan investors are required to buy stocks by Sept 26th [Thurs] in order to have dividend rights. [Note that on Sept 28th 2023 Japan 'high-dividend' stocks declined on ex-dividends (>1,400 companies traded ex-dividend in one day)].

- US equity FUTs slightly down during the Asia session.

Looking ahead (Asian time zone)

- Thu Sept 26th JP BOJ Minutes (2 mtgs prior), AU RBA Financial Stability Review; (Thu eve US Final Q2 GDP, US Fed Powell).

- Fri Sept 27th JP LDP leadership race, KR Biz Conf; (Fri night US Aug Core PCE).

Holidays in Asia this week

- Monday Sept 23rd Japan.

- Upcoming Chinese market holidays: Sept 29th (Sun); Tue Oct 1st to Mon Oct 7th; Sat Oct 12th.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,156.

- Australia  Aug CPI Y/Y: 2.7% V 2.7%E (lowest reading since August 2021).

- S&P affirms Australia AAA sovereign rating, Outlook stable.

- Australia Treasurer Chalmers: Decline in headline inflation shows policies are working.

- Australia sells A$1.0B v A$1.0B indicated in 3.75% May 2034 bonds; Avg Yield: 3.9095% v 4.0002% prior; bid-to-cover 2.46x v 2.53x prior.

- UAE Trade Minister sisits New Zealand for FTA talks - financial press.

China/Hong Kong

- Hang Seng opens +3.1% at 19,592; Shanghai Composite opens +1.3% at 2,901.

- China PBOC conducts CNY300B VS. CNY591B maturing in 1-year medium term lending facility (MLF): Cuts rate by 30BPS to 2.00%, as expected (largest net drain since Dec 2021).

- China PBOC paper reiterates MLF acts as a longer-term liquidity supply tool.

- China said to be considering $2.0B Euro bond issuance - terms sheet.

- Hong Kong said to regain lead in a survey of financial centers - financial press, citing unsourced survey.

- Hong Kong said to cut tax on spirits in attempt to revive nightlife - financial press.

- (CN) China's auto price war said to have cost dealers ~$20B (CNY138B) in total losses for the past year through August - Nikkei (update).

- China Fin Reg: Financial institutions should optimize loan services for SMEs, reasonably set loan terms, diversify repayment, expand coverage of credit funds.

- Canada Fin Min: Canada is 'absolutely' considering banning Chinese-made software in vehicles [overnight update].

- China CSRC: Issues guidelines on deepening M&A reforms; To simplify review procedures of restructuring.
[overnight update]

- China PBOC sets Yuan reference rate: 7.0202 v 7.0510 (strongest since May 22, 2023).

- China PBOC Open Market Operation (OMO): Sells CNY197B in 14-day Reverse Repos: Net drains CNY372B v net injects CNY460B prior.

Japan

- Nikkei 225 opens flat at 37,947.

- Japan Aug PPI Services Y/Y: 2.7% v 2.6%e.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years; 3-5 Years; 5-10 Years and 10-25 Years (Inline with prior purchases).

- Japan said to be in talks with Italy to secure LNG supplies 'in case of emergency' - press.

- BOJ Gov Ueda: Unwinding of speculative JPY (yen) positions has likely run its course; Want to closely study Oct service price data; Oct is particular month when service prices are revised in Japan [overnight update].

Korea

- Kospi opens +0.8% at 2,652.

- South Korea Sept Consumer Confidence: 100.0 v 100.8 prior.

- South Korea Sept Consumer 12-month median inflation expectation 2.8% v 2.9% m/m - South Korea Central Bank (BOK).

- South Korea Fin Min Choi: Expects GDP growth of mid-2% in 2024 - comments on panel discussion.

Other Asia

- Thailand Central Bank (BOT): Thai baht has been rallying on dollar depreciation after US Fed cut, rallying on foreign fund inflows into Thai assets.

- Thailand Fin Min Pichai: Baht is stronger than others, must be examined because it impacts competitiveness and is affecting exporters - financial press.

- TAIWAN AUG EXPORT ORDERS Y/Y: 9.1% V 8.2%E; Sees Sept orders +4.7-8.6% y/y [overnight update].

North America

- US said to be probing Co, software reseller Carahsoft and other companies for potential price fixing against US govt agencies over a period of a decade - financial press.

- Boeing: IAM 751 union: Survey shows members are Not interested in new Boeing contract.

- (US) Sept Philadelphia Fed Non-Manufacturing Activity: -6.1 v -9.3e.

- (US) July S&P corelogic house price index (20-CITY) M/M: 0.27% V 0.40%E prior; Y/Y: 5.92% V 5.90%E.

- (US) US Fed's Bowman (voter, dissenter): Core inflation remains 'uncomfortably above' 2% target, with upside risks given ongoing growth in spending and wages; Can't rule out that progress on inflation could stall - speech text.

- (US) Sept Richmond Fed Manufacturing index: -21 V -12E (lowest since May 2020, 5th month in a row below forecast); Volume of new orders: -23 v -26 prior; Business conditions: -3 v -13 prior.

- (US) Sept consumer confidence: 98.7 V 104.0E.

- (US) Treasury $69B 2-yearnote auction draws  3.520% V 3.874% prior; bid-to-cover ratio: 2.59 V 2.68 prior and 2.63 over the last 12.

Europe

- (IR) China Foreign Min Wang Yi: China to continue supporting Iran in maintaining sovereignty - comments as Wang meets with Iranian President.

- (TR) Turkey Fin Min Simsek: Fiscal policy to be key in disinflation - meeting with investors in NYC.

- (IR) Reportedly Iran in secret discussions to send Russian anti-ship missiles to the Yemeni Houthis - press.

- (DE) German Economic Institutes: Cuts 2024 GDP growth forecast from +0.1% to -0.1% (contraction).

- (IL) Israel Aug Leading ‘S’ Indicator M/M: 0.2% v 0.1% prior.

- (HU) Hungary central bank (MNB) cuts base rate by 25BPS to 6.50%; as expected.

- (EU) European Commission says banking market integration should always be combined with appropriate safeguards to protect financial stability in EU.

- (BE) Belgium Sept Business Confidence: -13.3 v -12.4e.

- (IT) Italy unions call for an 8-hour strike of automotive workers on Oct 18 to protest against falling auto production in Italy - press.

- (EU) ECB’s Nagel (Germany): Assumes Germany economy's momentum will slowly 'pick up'.

Levels as of 01:20 ET

- Nikkei 225 +0.2%; ASX 200 -0.1%; Hang Seng +1.6%; Shanghai Composite +1.6%; Kospi -0.4%.

- Equity S&P500 FUTs -0.1%; Nasdaq100 FUTs -0.2%, Dax -0.5%; FTSE100 -0.3%.

- EUR 1.1178-1.1199: JPY 142.91-143.50; AUD 0.6881-0.6909; NZD 0.6331-0.6356.

- Gold +0.2% at $2,683/oz; Crude Oil -0.3% at $71.33/brl; Copper -0.3% at $4.5145/lb.