Japan markets' nervous ahead of Sunday election – Tesla up +22% in 24 hours

General trend

- BOJ Gov Ueda overnight from the US said that the BOJ ‘still has time’ to scrutinize risks. However, after hearing about FX concerns from various Japanese officials today JPY clawed back more of its losses from earlier in the week, perhaps also mindful of the Japanese General Elections on Sunday, which may see PM Ishiba's new government lose outright control of parliament.

- Nikkei under-performed -1.0%, dragged down by financials, electronics (incl Canon's cut to FY24 guidance), and also possibly Sunday's election (see above).

- Earlier in the day Tokyo CPI figures for October all came in below BOJ target of 2.0%, but a tick higher than expected for core and core/core; JPY/USD and JP yields barely moved at the time.

- RBA Gov Bullock said it will take "another year or two" before inflation back to target.

- New Zealand consumer confidence fell in October after three months of gains.

- Hynix +3.2% after deal with Tesla to supply KRW1.0T ($725M) in eSSD data storage devices for AI servers.

- China PBOC kept MLF rates unchanged at 2.00%, following a raft of rate cuts in recent weeks.

- Tesla up a further 10% during US trading, on top of yesterday’s +12% gains in after-hours trading following Q3 earnings showing increased margins, capex and production guidance.

- US equity FUTs slightly below even during the Asia session.

Looking ahead (Asian time zone)

- Fri Oct 25th (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.

- RBA Gov Bullock: Concerns about excess demand in economy remain; Will take "another year or two" before inflation back to target - financial press.

- Australia sells A$300M vs. A$300M indicated in new 4.25% Jun 2034 bonds; Avg Yield: 4.3965%; bid-to-cover: 4.53x.

- Australia Treasurer Chalmers said economy is on track for a soft landing - US financial press [update].

- New Zealand Oct ANZ Consumer Confidence: 91.2 v 95.1 prior.

China/Hong Kong

- Hang Seng opens +0.2% at 20,521; Shanghai Composite opens flat at 3,280.

- China PBOC conducts CNY700B VS. CNY789B maturing in one-year medium term lending.

- China sells special 30 Year Bonds; Avg Yield: 2.3824% v 2.2987% prior.

- China 1-year negotiable certificate of deposit (NCD) yield hit the highest since Jun – US financial press.

- China Vice Agriculture Min: Achieved bumper grains harvest in 2023; pork prices seen stable in Q4, hog margins expected to remain at 'normal' level.

- China Iron and Steel Association (CISA): China Jan-Sept Apparent Steel Consumption: 688Mts, -6.2% y/y.

- China Q3 smartphone market shipments 68.8M units, +3.2% y/y - IDC Research.

- HUAWEI.CN Q3 China smartphone sales +42%, ranking it 3rd with 15.3% market share - IDC research.

- Garrett Motion (Zero emission technologies): TTN Summary Q3 Earnings Call: Encouraging early signs of recovery in the China commercial vehicle industry. [overnight update].

- China reportedly asks automakers to stop EU expansion due to EV tariffs dispute; China said to be telling manufacturers to put on hold active searches for production sites – press [overnight update].

- China MOFCOM: Reiterates opposition to US sanctions on Chinese drone firms [overnight update].

- China PBOC sets Yuan reference rate: 7.1090 v 7.1286 prior.

- China PBOC Open Market Operation (OMO): Injects CNY293B in 7-day reverse repos; Net injects CNY184B v net injects CNY666B prior.

Japan

- Nikkei 225 opens -0.5% at 37,954.

- Japan Oct Tokyo CPI Y/Y: 1.8% V 1.8%E ; CPI (ex-fresh food) Y/Y: 1.8% V 1.7%E.

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

- Japan Aug Final Leading Index CI: 106.9 v 106.7 prelim; Coincident Index: 114.0 v 113.5 prelim.

- Japan Economy Min Akazawa: Reiterates closely watching FX moves.

- Japan MOF Top FX diplomat Mimura: Fin Min Kato met US Treasury Sec Yellen this afternoon (in Washington) and discussed recent FX moves - financial press.

- Further Japanese media polling indicates 'unclear' if ruling coalition LDP party can retain majority on Oct 27th General Election - Nikkei poll.

- Japan FSA considering new rules for buy-now-pay later - Nikkei.

- BOJ Gov Ueda: BOJ still can afford to spend time scrutinizing risks; Needs to watch the economy broadly [overnight update].

- Japan Fin Min Kato: Volatility is high in markets including FX [overnight update].

- Senior IMF Official: We expect BOJ's policy rate to reach 1.5% in 2027 [overnight update].

- Bank of Japan's Financial System Report: Banks' resilience to rising yen interest rates is increasing on average; The default rate of firms that are financially vulnerable has been rising most recently [overnight update].

- Japan sells ¥4.3% vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.0011% v 0.0026% prior; bid- to-cover: 3.19x v 3.14x prior.

Korea

- Kospi opens +0.6% at 2,597.

- South Korea Fin Min Choi: Alert to FX volatility and of FX market concerns on Korean Won.

- Bank of Korea (BOK) Gov Rhee: Will likely revisit growth forecast in Nov, see downside risks [overnight update].

Other Asia

- Singapore Q3 Final URA Private Home Prices Q/Q: -0.7% v -1.1% prelim.

- Thailand Central Bank (BOT) Dep Gov: Aim to have a neutral policy stance; recent rate cut not the start of an easing cycle [overnight update].

- Taiwan Sept M2 Money Supply Y/Y: 5.6% v 5.8% prior; M1 Money Supply Y/Y: % v 4.1% prior [overnight update].

North America

- US) Initial jobless claims: 227k v 242ke; continuing claims: 1.897M V 1.88ME (highest since Feb).

- (US) Sept Chicago Fed National Activity Index: -0.28 v +0.50e.

- (US) Oct preliminary S&P manufacturing PMI: 47.8 V 47.5E (4th month of contraction); Employment fell for a third straight month in October, though the decline was again only very modest and less than reported in August and September.

- (US) Sept New Home sales: 738K V 720KE.

- (US) Weekly EIA Natural Gas inventories: +80BCF VS. +58 BCF TO +60 BCF indicated range.

- G-20 Communique: There are good prospects for a soft landing in the global economy; Sees risk of economic divergence as downside risks have increased amid elevated uncertainty.

Europe

- (IE) Ireland Oct Consumer Confidence: 74.1 v 71.9 prior.

- (UK) Oct GfK Consumer Confidence: -21% v -20%e (lowest since Mar).

- (UK) Oct CBI industrial trends total orders: -27 V -28E.

- (EU) ECB's Kazaks (Latvia, voter, hawk): We will see what happens at Dec meeting; everything should be on the table with decision to be data-dependent.

- (EU) ECB’s Nagel (Germany): Should not be too hasty in cutting rates; Don't want to speculate on Dec meeting; We'll have all optionality to decide with data.

- (UK) Chancellor of the Exchequer (Fin Min) Reeves: My fiscal rules will provide stability on which growth depends; Stability rule will also cover the interest of national debt - FT OpEd.

- (UK) Bank of England's (BOE) Mann: UK economic prospects pretty modest, won't grow by much more than 1%; Deceleration in prices might not quite get us to 2% inflation target over medium term.

- (DE) Germany Econ Min Habeck: Further powerful efforts needed to increase investment momentum.

- (EU) ECB’s Wunsch (Belgium): Pushes back against 50bps cut, doesn't see why the cut was discussed today; Europe is weaker than we thought.

Levels as of 01:20 ET

- Nikkei 225 -1.0%, ASX 200 +0.1%, Hang Seng +1.3%; Shanghai Composite +0.9%; Kospi +0.1%.

- Equity S&P500 Futures -0.1%; Nasdaq100 flat; Dax -0.4; FTSE100 -0.2%.

- EUR 1.0819-1.0821; JPY 151.48-152.11; AUD 0.6618-0.6744; NZD 0.5998-0.6019.

- Gold -0.3% at $2,740/oz; Crude Oil +0.2% at $70.34/brl; Copper -0.5% at $4.3472/lb.