Equity weakness and jobs data weigh on Aussie, Gov’t bond yields extend gains

Asia Market Update: Equity weakness and jobs data weigh on Aussie; Gov’t bond yields extend gains; Taiwan Semi to report results.

General trend

- Australia commented on the employment data: It is important to remember that a fall in unemployment does not always mean much higher employment.

- Japan 10-year Swap Rate rises to the highest since 2011.

- USD/JPY is still below ¥150.

- Japan’s trade data was supported by US auto strike?

- MYR declines to the lowest level since 1998 [Asian Financial Crisis].

- Asian equity indices decline by >1%, track losses on Wall St.

- Nasdaq FUTs trade slightly lower; Tesla declined after reporting results, Netflix rose.

- Chip-related firms drop after results from ASML.

- PBOC increased liquidity injection; Loan prime rate decision due on China.

- US Fed speak will continue.

- Japan National CPI figures due on Fri [Reminder: JAPAN SEPT TOKYO CPI Y/Y: 2.8% V 2.7%E; CPI (EX-FRESH FOOD) Y/Y: 2.5% V 2.6%E (lowest core since July 2022)].

Headlines/economic data

Australia/New Zealand

-ASX 200 opens -0.6% at 7,034.

-AUSTRALIA SEPT EMPLOYMENT CHANGE: +6.7K V +20.0KE; UNEMPLOYMENT RATE: 3.6% V 3.7%E.

-Australia Q3 NAB Business Confidence: -1 v -3 prior.

- Reserve Bank of Australia (RBA) releases FY23 annual report: recorded an accounting loss of A$6B.

-Origin Energy: There is speculation that Brookfield might increase offer - Australia press.

-New Zealand Debt Management Office: Today's bond auction postponed; cites technical difficulties related to Yieldbroker; to now hold the bond auction on Oct 20th (Fri).

-NZD/USD NZD declines to the lowest level since early Nov 2022.

China/Hong Kong

-Hang Seng opens -1.1% at 17,540.

- Shanghai Composite opens -0.5% at 3,043.

-Country Garden: Founder and board director said to be currently at work as usual; cites company statement.

- Hong Kong might announce 'slight' cut in the home purchase tax [property stamp duty]; the announcement might come in next week's policy address - HK press.

-Sino-Ocean: To hold online meeting with bondholders on Oct 20th.

-China Sept New Home Prices M/M: -0.3% v -0.3% prior.

-China PBOC Open Market Operation (OMO): Sells CNY344B in 7-day reverse repos; Net injects CNY182B v injects CNY3.0B prior.

-China PBOC sets Yuan reference rate: 7.1795 v 7.1795 prior.

-China Sept Swift Global Payments (CNY): 3.7% v 3.5% prior.

-Tencent: Reportedly China takes control of domestic unit - Information.

-Vinda International [3331.HK]: RGE said to consider bidding for the co. - US financial press.

-WH Group: Said to prepare for US IPO of Smithfield Foods; the IPO could be conducted by as early as 2024 - US financial press.

-NDRC signs MOU with HKMA related to corporate financing and bond market.

Japan

-Nikkei 225 opens -1.4% at 31,579.

-JAPAN SEPT TRADE BALANCE: +¥62.4B V -¥450.0BE; Overall car export growth hit record amount [US UAW strike started on Sept 15th].

-Japan releases weekly flows data [period ended Oct 13th]: Foreign buying of Japan equities +¥1.3T; Japan buying of foreign bonds: +¥794.0B; Foreign buying of Japan bonds: +¥947.8B.

-Former BOJ Board member Sakurai: BOJ may scrap negative rates by end-2023 before tweaking Yield Curve Control (YCC) [from Oct 18th].

- Bank of Japan (BOJ) quarterly Regional Economic Report (Sakura): Upgrades assessment of 6 of 9 regions.

- Japan Top FX Diplomat Kanda: US economy is stronger than expected, but beige book out today suggests signs of softening.

-Mitsubishi Motors: Board expected to decide on exit from China next week - Japanese press.

-Maiji Yasuda Life Insurance: To raise wages by 7% on avg from next Spring - Japan media.

Korea

-Kospi opens -1.2% at 2,431.

-Bank of Korea (BOK) Gov Rhee: Decision to keep policy steady was unanimous; 1 member sees the need to either lower or raise rate - Post rate decision comments.

-BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 3.50%; AS EXPECTED; Expects delay in South Korea inflation reaching the target.

-Kakao Corp: Kakao CIO said to have been arrested, relates to SM stock manipulation - South Korea press.

Other Asia

-Malaysia Trade Min; No plan to abolish import permits for EVs.

North America

-(US) Fed's Williams (voter): Inflation has come down quite a bit, but still a ways to go get it back to target.

-(US) Fed's Waller (voter, hawk): Too soon to tell if economy cooling, prices heating up.

-(US) Fed's Cook (voter) does not comment on monetary policy.

-(US) TREASURY $13B 20-YEAR BOND REOPENING DRAWS 5.245% v 4.592% prior, BID-TO-COVER 2.59 v 2.74 PRIOR AND 2.68 OVER LAST 8 REOPENINGS.

-Netflix [NFLX]: Reports Q3 $3.73 v $3.46e, Rev $8.54B v $8.53Be; Adds highest amount of subscribers since Q1 2020; Confirms to raise prices for some customers in the US, UK and France from today; Talks with SAG-AFTRA ongoing; Guides Q4 $2.15 v $2.21e, total Rev $8.69B v $8.77Be; Guides Q4 Net adds similar to Q3 +/- a few million (implies +8.76M +/- a few million) v 7.7Me.

- Tesla [TSLA]: Reports Q3 $0.66 v $0.73e, Rev $23.4B v $24.4Be; Cybertruck deliveries begin in Nov 2024; Affirms FY23 vehicle production at 1.8M and to remain ahead of long-term 50% CAGR (prior: 1.8M and to remain ahead of long-term 50% CAGR).

- Ford [F] To lay off 150 additional workers in Michigan, brings the total to 2,730 workers; cites the UAW strike - press.

Europe

-Iran Foreign Min Amirabdollahian: Request for oil embargo against Israel.

-OPEC+ said not planning any extraordinary meeting following Iran Foreign Min called for an oil embargo against Israel - press.

-(IL) Israeli air strike targets Kafr Shuba in Southern Lebanon.

-(IL) US Pres Biden: Did not offer US troops if Lebanon's Hezbollah starts war on Israel.

-SAP [SAP.DE]: Reports Q3 €1.45 v €1.33e, Rev €7.74B v €7.78Be; Guides Q4 Rev -5% to -3% y/y, Op profit -4% to -2% v -0.5%e.

Levels as of 01:20 ET

- Nikkei 225, -1.7%, ASX 200 -1.4% , Hang Seng -1.9%; Shanghai Composite -1.2% ; Kospi -1.8%.

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

- EUR 1.0541-1.0530 ; JPY 149.93-149.66 ; AUD 0.6341-0.6296 ;NZD 0.5863-0.5824.

- Gold -0.4% at $1,959/oz; Crude Oil -0.2% at $87.10/brl; Copper -0.3% at $3.5713/lb.