China’s trade surplus with the US widens to a fresh record high in Sept

Asia Market Update: China’s trade surplus with the US widens to a fresh record high in Sept; Shanghai Composite extends declines, then rebounds; US bank earnings in focus

General Trend:

- Equity markets in Asia rise after Thursday’s sell-off

- China Customs official said Q4 trade growth may slow

- PBoC set yuan at weakest level since March 2017

- China sold US dollar denominated bonds at tighter spreads

- Singapore Central Bank tightens policy again, local currency rises

- US corporate earnings are expected from companies including JPMorgan and PNC

 

Headlines/Economic Data

Australia/New Zealand

-ASX 200 opened -0.5%

-(AU) RESERVE BANK OF AUSTRALIA (RBA) FINANCIAL STABILITY REVIEW: TRADE TENSIONS, SLOWDOWN IN CHINA COULD TRIGGER GLOBAL ECONOMIC DOWNTURN

-(AU) AUSTRALIA AUG HOME LOANS M/M: -2.1% V -1.0%E; INVESTMENT LENDING: -1.1% V -1.3% PRIOR

-(AU) Australia Labor Party said to support fast-tracking of corporate tax cuts - US financial press

-(NZ) New Zealand Sept Business Manufacturing PMI: 51.7 v 52.0 prior

China/Hong Kong

-Shanghai Composite opened -0.4%, Hang Seng +0.5%

-(CN) CHINA SEPT TRADE BALANCE: $31.7B V $19.2BE

-(CN) China Customs: Impact from US trade friction 'controllable', Q4 trade growth may slow down; Sept exports to the US +16.6% y/y, imports from the US+1.6% y/y

-(CN) US Treasury staff finds China is not manipulating currency – press

-(CN) Pres Trump reportedly will hold a meeting with China Pres Xi at G20 Summit in Nov – press

-(US) Pres Trump: tariffs on China are having a big impact; my policies have hurt China and I have "a lot more to do" - Fox interview

-(CN) China Finance Ministry (MOF): Sold total of $3.0B in US dollar denominated 5,10 and 30 year bonds (as indicated) at yields of 3.25-4.00%; Total orders ~$13.2B vs >$15B speculated

-(CN) China govt reportedly is mulling joining the Comprehensive and Progressive TPP (CPTPP) trade pact - China press

-(CN) China PBoC set yuan reference rate: 6.9120 v 6.9098 prior (weakest CNY fix since March 10 2017)

-(CN) China PBoC Open Market Operation (OMO): Skips OMO v skipped prior: Net: nil v nil prior

Japan

-Nikkei 225 opened -1.2%

-(JP) Nikkei 225 options said to settle at ~22,313

-(JP) BoJ announcement related to daily bond buying operation: unchanged

-(JP) Japan Fin Min Aso: Japan govt is carefully watching financial market moves, including the FX market

-(JP) IMF Official: Too early to discuss normalization of monetary policy in Japan

Korea

-Kospi opened +0.1%

-(KR) South Korea Sept Unemployment Rate: 4.0% v 4.1%e

-(KR) South Korea Financial Regulator: 'Sharp' foreign capital outflow unlikely from domestic bond market

Other

-(ID) Indonesia President Widodo calls on finance ministers and central bank governors to cushion blows from trade wars, tech disruption and market turmoil; warns risk of 'winter is coming' for global economy

-(SG) SINGAPORE MONETARY AUTHORITY (MAS): SEMIANNUAL MONETARY POLICY STATEMENT: TO INCREASE SLIGHTLY THE SLOPE OF S$NEER POLICY BAND, maintains the width and center of currency band (2nd straight tightening move)

-(SG) SINGAPORE Q3 ADVANCE GDP Q/Q: 4.7% V 5.0%E; Y/Y: 2.6% V 2.4%E

- (TW) Taiwan sells TWD25B vs. TWD25B indicated in 10-Year Bonds; Yield: 0.925% v 0.830% prior; bid-to cover 1.6x

North America

-US equity markets ended lower: Dow -2.1%, S&P500 -2.1%, Nasdaq -1.3%, Russell 2000 -1.9%

-(US) DOE CRUDE: +6.0M V +1.5ME

-Ecuador Oil Min: Expects crude output of 540K bpd by the end of 2018, sees increase to 590K bpd in 2019; Supports crude output increase by OPEC at Dec meeting, sees reasonable crude price of $70-80/bbl

Europe

- (UK) Prime Min May reportedly told cabinet during meeting today that Brexit deal is close

- (IT) Reportedly ECB indicating it will not rescue Italy government or banks unless a bailout program is in place, OMT is conditional on a program - press

- (DE) Germany Finance Min Scholz: Italy should be 'careful' given its refinancing needs; US-EU talks suggest trade-war escalation won't happen

- (G20) Finance leaders Meeting Chairman: Agreed that trade is important engine of growth

- (EU) ECB Weidmann (Germany): Slower euro-area growth not consequence of trade war, but normalization of expansion; Correction in US market not sign of insecure times

- (DE) Germany Bundesbank Wuermeling: Market volatility is a result of monetary normalization

- (TR) US State Dept spokesperson: not aware of any deal to secure release of Pastor Brunson from Turkey

 

Levels as of 01:30ET

- Nikkei 225, +0.4%, ASX 200 +0.2%, Hang Seng +1.5%; Shanghai Composite +0.9%; Kospi +1.8%

- Equity Futures: S&P500 +1%; Nasdaq100 +1.3%, Dax +0.9%; FTSE100 +0.5%

- EUR 1.1610-1.1584 ; JPY 112.42-112.00 ; AUD 0.7132-0.7115 ;NZD 0.6534-0.6516

- Dec Gold -0.3% at $1,223/oz; Oct Crude Oil +1% at $71.70/brl; Dec Copper +0.9% at $2.800/lb

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