JP Takaichi cabinet and econ plans the focus in Asia on softer day for Asia stocks

Asia Market Update: JP Takaichi cabinet and econ plans the focus in Asia on softer day for Asia stocks; Resources weaker following GLD and SLV lower.

General trend and developments

- Asian stocks gave back some of yesterday’s gains, as Gold and Silver initially gave back yet another -2% in Asia trading on top of >-5% and >-7% losses respectively during the US session, well off of their recent outsized gains. Gold and Silver later came off lows.

- Australia Resources Index -3.3%, with miners BHP -2%, Sandfire Resources -4%, Regis Resources -10%, Resolute Mining -8% weighing on the ASX overall -1%.

- US equities traded slightly soft but within their daily range. Texas Instruments and Netflix down heavily after-hours on soft guidance. US equity FUTs pared losses later in Asia session to trade near top of day's range.

- Softbank -8% in Japan after strong gains in recent weeks.

- However, Japanese stocks rebounded during the session as PM Takaichi’s new cabinet began giving their first press conferences, capped by reporting that Takaichi will propose a stimulus package larger than the past year’s. Nikkei moved back into positive territory.

- Prior to this, overnight Japan PM Takaichi laid out key planks of her governing intent. For economic policy confirmed no need to review BOJ-govt accord for now but ultimately govt holds responsibility economically and the BoJ's 2% inflation target should not be met just through cost-push factors, but price increases accompanied by wage gains. Determined to defend Japan's national interests through diplomacy, defense and security, including elevating Japan-US relationships to new heights and trilateral ties with Korea and the US.

- Japan also confirmed US President Trump will visit Japan Oct 27-29th.

- Japan unexpectedly produced a trade deficit in September when a small surplus was expected. US exports again -13% y/y (same as prior month). The Adjusted trade deficit was also worse than expected.

- Overnight the market now seeing chances of an October BOJ rate hike rapidly disappearing, 10.5% vs 23.5% Monday while a Dec 25bps hike now at 61.5% vs 63.5% Monday.

- India Rupee continued to recover off recent all-time lows, perhaps helped by optimistic reports that 50% tariffs on India may come down to 15-16% in the near future.

- China MOFCOM said it will issue questionnaires on analogue chip anti-dumping case (follows the earlier threat in September).

- TV sales in China said to slump as trade-in subsidies fade, showcasing the lack of consumption power in China and inline with consistent deflation.

- US equity FUTs +0.1% to +0.2% during Asia trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Wed Oct 22nd ID rate decision.

- Thu Oct 23rd Korea rate decision.

- Fri Oct 24th JP Sept CPI, Global Flash PMIs, US Sept PMI (delayed release).

Holidays in Asia this week

- Mon Oct 20th Singapore.

- Tue Oct 21st India.

- Wed Oct 22nd India.

- Thu Oct 23rd Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.7% at 9,035.

- China Defense Ministry: Organized troops to resolutely block and drive away military aircraft from Australia that 'invaded' China's airspace.

- New Zealand PM Luxon to visit Malaysia and South Korea during East Asia Summit, APEC.

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +21.9% v -0.8% prior.

China/Hong Kong

- Hang Seng opens -0.5% at 25,897; Shanghai Composite opens -0.5% at 3,896.

- *Follow up: China MOFCOM will issue questionnaires on analogue chip anti-dumping case.

- (AR) US said to be pushing Argentina to "limit China influence" – WSJ.

- TV sales in China said to slump as trade-in subsidies fade - Digitimes.

- USTR Greer: Meetings with China are cordial.

- China PBOC likely to lower RRR for banks and policy interest rates in Q4 - brokerage note.

- (US) Pres Trump: Will see China Pres Xi in two weeks in South Korea; Reiterates that the meeting with Xi maybe won't happen.

- China said to consider 3-way currency swap with Japan and South Korea to offset US tariffs – press.

- EU Trade Commissioner Sefcovic: The scale of China's export control, scaled up since April, is unjustified and harmful; A prompt resolution of rare earth restrictions is essential.

- (NL) China Commerce Min (MOFCOM) Wang Wentao: Regarding Nexperia, China firmly opposes generalization of National Security concept; China will be holding an export control dialogue with Europe in Brussels; Urges Netherlands to offer a proper solution as soon as possible.

- China PBOC sets Yuan reference rate: 7.0954 v 7.0930 prior.

- China PBOC Open Market Operation (OMO): Injects CNY138B in 7-day reverse repos; Net injects CNY95B v injects CNY68.5B prior.

Japan

- Nikkei 225 opens flat at 49,337.

- JAPAN SEPT TRADE BALANCE: -¥234.6B V +¥22.5BE.

- Speculation that PM Takaichi is preparing economic stimulus to exceed last year's ¥13.9T - financial press, citing sources.

- Japan Chief Cabinet Sec Kihara: Confirms US President Trump will visit Japan Oct 27-29th.

- Japan METI Min Akazawa: Aim at growth with responsible expansionary spending; To cooperate with Foreign Min Motegi on trade talks- Japanese press.

- Japan Economic Revitalization Min Kiuchi: Need to watch economic risks including tariffs and inflation

- Japan new Economic Security Minister Onoda; Aware of concerns over problems caused by foreigners - Japanese press

- Reportedly Japan's Financial Services Agency considers allowing members of banking groups to launch cryptocurrency asset trading services - Nikkei.

- Japan PM Takaichi: Don’t see need to review BOJ-govt accord now; Determined to defend Japan's national interests through diplomacy and security; Now is not time to dissolve Parliament; No need to review BoJ-govt agreement now; BoJ's monetary policy is part of broader economic policy, for which the govt holds responsibility [overnight update].

Korea

- Kospi opens flat at 3,827.

- South Korea Sept PPI Y/Y: 1.2% v 0.6% prior.

- South Korea Kim: Plans to visit the US to discuss 1-2 outstanding issues; US stand apart on a couple of matters in the tariff talks; not mulling signing MOU with partial agreement – press.

- South Korea Presidential Policy Chief Kim: Plans to visit the US to discuss 1-2 outstanding issues; US stand apart on a couple of matters in the tariff talks; not mulling signing MOU with partial agreement - press.

- South Korea National Pension Service to hire new CEO.

- South Korea Trade Min Yeo expresses concern over China's shipbuilding curbs to China trade rep Li Chengang - South Korea Ministry statement.

Other Asia

- Malaysia Sept CPI Y/Y: 1.5% v 1.4%e.

- Thailand Central Bank (BOT) releases minutes from Oct policy meeting where the central bank unexpectedly left rates unchanged at 1.50%]: Reiterates to preserve policy space to cushion against risks.

- Indonesia to offer 'inaugural' Dim Sum (CNH) bond.

- India, US trade deal likely 'soon', with cuts in tariffs to 15-16% (from current 50%) - US financial press.

- (IN) US Pres Trump: Spoke with India PM Modi on trade [overnight update].

- TAIWAN SEPT EXPORT ORDERS Y/Y: 30.5% V 18.7%E [overnight update].

North America

- US pharma price probe said to raise threat of new drug tariffs - FT.

- US Pres Trump said planning to release $3B in farm aid that was frozen by govt shutdown - WSJ.

- (MX) Mexico Econ Min Ebrard: All signs indicate that USMCA will remain trilateral; Discussions prior to USMCA review are 90% complete.

- US Agriculture Sec Rollins: Must continue striking trade deals around the world so farmers are not reliant on one or two concentrated buyers - CNBC.

- (CA) CANADA SEPT CPI M/M: +0.1% V -0.1%E Y/Y: 2.4% V 2.2%E.

- (US) Oct Philadelphia Fed Non-Manufacturing Activity: -22.2 v -12.3 prior.

- (CA) Canada International Trade Min Leblanc: Over-optimistic to expect a trade deal in a few days; Progress is being made, but there is more work to be done.

- (RU) White House Official: There are no plans for a Trump and Putin meeting in the near future.

- OpenAI Introduces ChatGPT Atlas browser which understands the information it's displaying, integrates sidechat for searching and aggregating information.

- (BR) Brazil Fin Min Haddad: Will introduce bill to raise taxes on betting and fintechs; Want to meet next year's fiscal target; Monetary policy is too tight; Brazil's central bank is the most hawkish in the world.

Europe

- (HU) Hungary Oct Business Confidence: -9.3 v -10.5 prior.

- (UR) Reportedly Europe and Ukraine are preparing a 12-point plan to end the war in Russia - press.

- (RU) Russia Foreign Min Lavrov: Talked in great details with US Sec of State Rubio yesterday; Confirmed our aim to move in line with agreements; Work ahead on Ukraine peace is not easy.

- (IL) Israel Oct 12-month CPI Forecast: 2.0% v 2.2% prior.

- (HU) HUNGARY CENTRAL BANK (MNB) LEAVES BASE RATE UNCHANGED AT 6.50%; AS EXPECTED.

- (ZA) South Africa Central Bank (SARB) Gov Kganyago: SARB opted to opportunistically disinflate; Will drive inflation expectations lower.

- (UK) Chancellor Reeves said to take steps in upcoming budget to cut household bills; Wants to see interest rates come down further - FT.

Levels as of 01:20 ET

- Nikkei 225 -0.1%, ASX 200 -0.7%, Hang Seng -0.9%; Shanghai Composite -0.1%; Kospi +0.7%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.1%; DAX -0.1%; FTSE100 +0.1%.

- EUR 1.1599-1.1614; JPY 151.49-151.96; AUD 0.6483-0.6505; NZD 0.5733-0.57536.

- Gold +1.2% at $4,347/oz; BTC +0.6% at $108,470; Crude Oil +1.8% at $58.29/bbl; Copper +0.5% at 4.9748/lb.