Markets cautious ahead of US, CA, JP, UK rate decisions and statement wordsmithing

Asia Market Update: Markets cautious ahead of US, CA, JP, UK rate decisions and statement wordsmithing; US-CN trade talks uncertain; Poor CN data continues; US jobless claims Not 4-year high after all.

General trend and developments

- With the Nikkei closed for a holiday, Kospi again outperformed to fresh record highs (hit 3,500, now +53% since April lows), ASX lagged again and HK/CN stocks modestly higher. Hang Seng Mainland properties fell >-2% following August New Home Prices out of China falling -2.5% on a YoY basis.

- China "Aug data dump" again saw very poor figures, with the slowest Industrial Production in a year, the slowest Retail Sales since Nov 2024 and Fixed Urban Assets at just 0.5% slowest since at least 2020. Likely puts more pressure on the CCP for yet more policy support.

- China’s NBS (stats agency) now sees the external environment as 'very severe' but also sees positive price changes after addressing competition with so-called “Anti-involution” measures [**Note: AKA “excess capacity”]

- Over the weekend, China’s M2 Money Supply increased in August, yet New Yuan Loans less than expected, indicating a lack of demand for new loans by borrowers or else hesitancy in making new loans by financial institutions.

- Further indications Pres Trump may be satisfied with the current ~55% level tariffs on China, for now. Trump said in comments to the media that “China is 'paying a lot' in tariffs”, while also saying “Talks with China are going well” and “We may let TikTok die, it is up to China”. [**Reminder that Wed Sept 17th is the deadline imposed by Pres Trump to enforce or delay the law requiring TikTok to separated from ByteDance or be banned in the US]. Later US reporting said that Trump is now considering a fourth extension to the TikTok deadline.

- Trump’s comments came after US-China sides completed their first day of ongoing trade talks in Madrid, Spain on Sunday (led by Treas Sec Bessent for US and He Lifeng for China); to be continued Monday.

- Further financial press reports over the weekend of a reduced chance of a US-China Summit any time soon due to lack of progress on fentanyl and tariffs. May instead be a Trump-Xi meeting on the sidelines of the APEC forum in South Korea (Oct 31st – Nov 1st)

- It turns out that the supposed four-year high in weekly nation-wide jobless claims last Thursday that led to the market being jolted by a “weak jobs market” was Not a four-year high after all, with the Texas Workforce Commission stating that since Labor Day (Sept 1st) there was an increase in fraudulent claim attempts for the week ending Sept 6th. This led to Texas’ registered claims of 32K, accounting for a full 15% of national jobless claims. This was an extra increase of 15K from Texas in that week. National claims were thus more likely running in the in the 240K range last week (was originally reported as a four-year high of 263K), still slightly elevated but much more inline with numbers in previous years for the same week.

- Japan Chief Cabinet Sec Hayashi's LDP leadership bid said to receive the support of former PM Kishida’s faction and will formally join the race tomorrow. Comes as latest polling shows Takaichi leading the LDP leadership race at 29%, with Koizumi at 25%.

- WTI Oil prices during the Asian session moved higher, closer toward its Friday highs which came amid increased expectations G7 may follow Trump’s lead and pressure Russia with further sanctions. Trump on Saturday added he is ready to do “major sanctions” on Russia once all NATO nations have agreed.

- Hyundai Motors -3.8% despite fresh records for the Kospi, as >300 of its engineers returned from its Georgia plant home to Korea following the recent US ICE raid, with uncertainty as to whether when, or even if, they would come back to the US and how that will impact factory output in the US going forward.

- North Rhine-Westphalia local elections in Germany show Chancellor Merz's CDU party set to win, but AfD making strong gains (tripling their vote from last time).

- After the NY close on Friday Fitch cut France's sovereign rating by a notch down to A+ (prior AA-), but did raise France’s Outlook to Stable (prior Negative).

- US equity FUTs +0.2% during Asian trading.

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

- Tue Sept 16th (Tue eve UK July jobs, DE ZEW Econ Sentiment, US Aug Retail Sales).

- Wed Sept 17th NZ Q2 Current Account, JP Aug Trade Balance (Tue eve UK Aug CPI, ID BI Rate Decision, Wed night US Aug prelim Building Permits, CA BOC Rate Decision, US FOMC Rate Decision).

- Thu Sept 18th NZ Q2 GDP, AU Aug jobs, (Thu eve BOE Rate Decision, FR protests / strikes against fiscal plans).

- Fri Sept 19th NZ Aug Trade Balance, JP Aug CPI, JP BOJ Rate Decision, (UK Aug Retail Sales).

Holidays in Asia this week

- Mon Sept 15th Japan.

- Tue Sept 16th Malaysia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.7% at 8,804.

- Australia Foreign Min Wong: Australia and China to hold high level talks in Beijing this week.

- New Zealand Aug Performance of Services Index: 47.5 v 48.9 prior.

- New Zealand Treasury: Sees uncertainty over pace of H2 economic recovery - fortnightly economic update.

- NZIER: NZ Quarterly Survey of New Zealand economists: Cuts 2025- 26 GDP growth forecast to 1.5% (prior survey in Jun saw 1.9%).

China/Hong Kong

- Hang Seng opens -0.3% at 26,308; Shanghai Composite opens +0.1% at 3,876.

- CHINA AUG INDUSTRIAL PRODUCTION Y/Y: 5.2% V 5.6%E [slowest growth in 1-year].

- CHINA AUG RETAIL SALES Y/Y: 3.4% V 3.8%E [slowest since Nov 2024 of 3.0%].

- CHINA AUG YTD FIXED URBAN ASSETS Y/Y: 0.5% V 1.5%E [slowest growth since at least late 2020].

- China Aug YTD Property Investment Y/Y: -12.9% v -12.5%e;

- China Aug Surveyed Jobless Rate: 5.3% v 5.2%e.

- NBS official [China stats agency]: Economic operation is generally steady in Aug, facing 'many' uncertainties - comments on Aug data.

- China Aug New Home Prices M/M: -0.3% v -0.3% prior; Used Home Prices M/M: -0.6% v -0.6% prior.

- China reported to issue national cybersecurity reporting rules which cover network operators; notes these companies would be punished for 'lying' about cybersecurity issues - press.

- During Aug, brokerage firms in China raise >CNY293.0B selling corporate bonds, selling 141 notes in Aug; Both figures the most for any month this year - China Securities Times.

- Whirlpool Corporation said to have told US authorities that its competitors could be evading US tariffs, citing federal customs data - WSJ.

- China has tightened oversight of companies planning to delist; the article specifically mentions Beijing Tongtech Co.- China Securities Journal.

- China Commerce Ministry: To immediately open an antidumping investigation into certain US analogue chips [weekend update].

- China Foreign Ministry: China does not participate in or plot wars [responding to US urging allies to impose tariffs on buyers of Russian oil such as China] [weekend update].

- (US) Pres Trump: China is 'paying a lot' in tariffs - comments to press.

- US Pres Trump said to be again considering to extend TikTok deadline - US financial press.

- Lack of progress in US talks with China on tariffs and fentanyl has reduced chances of a Beijing summit; More likely that Trump and Xi meeting will be lower profile event at the Asia-Pacific Economic Cooperation forum in South Korea during October – FT [weekend update].

- China Fin Min Lan Fo'an: China allocates CNY420B for consumer goods trade-in program; Aims to boost fiscal macro control over next five years by improving efficacy; See ample room for fiscal policy to be implemented [weekend update].

- China Premier Li Qiang chairs State Council meeting: Will expand space for private investment [late Friday update].

- CHINA AUG YTD NEW YUAN LOANS (CNY): 13.46T V 13.571TE [late Friday update].

- CHINA AUG YTD AGGREGATE FINANCING (CNY): 26.56T V 26.487TE [late Friday update].

- CHINA AUG M2 MONEY SUPPLY Y/Y: 8.8% V 8.6%E [late Friday update].

- China PBOC sets Yuan reference rate: 7.1056 v 7.1019 prior.

- China PBOC Open Market Operation (OMO): Injects CNY280B in 7-day reverse repos; Net injects CNY89B v injects CNY42B prior.

Japan

- Nikkei 225 closed for holiday.

- Japan Chief Cabinet Sec Hayashi's LDP leadership bid said to receive the support of former Kishida faction; To formally join party race on Tue 16th Sept - Japanese press.

- Japan Former Top FX Diplomat Gyoten: BOJ should take into consideration concerns that weak JPY (yen) could accelerate inflation [late Friday update].

- Japan Economic Revitalization Min Akazawa: 15% US tariffs to cut Japan corporate earnings by up to 3% [late Friday update].

Korea

- Kospi opens +0.4% at 3,407.

- South Korea Trade Min Yeo to visit US Monday, (ept 15th) for further tariff talks - US financial press.

- South Korea reportedly drops plan to lower capital gains tax threshold - Yonhap.

- South Korea Finance Ministry: In talks with US to minimize any impact on FX market from US trade deal investment package ($350B) – statement.

- South Korea Foreign Min Cho to visit China Sept 17-18th - Ministry statement.

- South Korea sells KRW2.0T in 10-year bonds: Avg Yield: 2.835% v 2.820% prior; bid-to-cover: x v 2.78x prior.

Other Asia

- Philippines Jul Overseas Cash Remittances: $3.2B, +3.0% y/y.

- Indonesia Pres Prabowo said to order new stimulus for welfare and jobs [late Friday update].

North America

- UBS Executives from the firm said to have recently meet with Trump administration officials to prepare for strategy shift that could include the purchase of a US bank or a merger - NY Post Gasparino [update].

- (US) Pres Trump's SEC appointee Paul Atkins said to 'scrap' aggressive enforcement agenda - FT.

- New York City Mayor Eric Adams said to be "likely" to drop out of NYC Mayoral race by end of this week - US press.

- (US) Pres Trump: China is 'paying a lot' in tariffs; The current Fed Chair is incompetent and is hurting the housing market - comments to press.

- (US) Pres. Trump: When Foreign Companies who are building extremely complex products, machines, and various other “things,” come into the US with massive Investments, I want them to bring their people of expertise for a period of time - post on Truth Social (update).

- (US) US-China complete first day of ongoing trade talks in Madrid on Sunday, to be continued Monday (update).

- (US) Reportedly in a May 2021 loan estimate, Fed Gov Lisa Cook declared her Atlanta property a 'vacation home', indicating it would not be her primary residence, appearing to undercut fraud claims by critics – press [weekend update].
- OpenAI: Reportedly plans to share 8% of its Rev with Microsoft; OpenAI to gain $50B from cutting Rev share with Microsoft and other partners – press [late Friday update].

- (US) SEPT PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE: 55.4 V 58.0E [late Friday update].

- (US) CONGRESS'S CONGRESSIONAL BUDGET OFFICE (CBO) LOWERS 2025 GDP FORECAST BY 0.5PPTS FROM 1.9% to 1.4% DUE TO TARIFFS AND LOWER NET IMMIGRATION [late Friday update].

- (US) Treasury Sec Bessent said to have interviewed BlackRock CIO Rick Rieder for Fed Chairman job today; Rieder said to be rising in the list of contenders – press [late Friday update].

- (US) Fraudulent Texas unemployment filings drove the spike Thursday's weekly jobless claims, which hit a 4-year high – Axios [late Friday update].

- *MID-SEPT TTN INNOVATION & CORPORATE CONFIDENCE INDEX (ICCI): 113.5 V 113.4 PRIOR (ANOTHER VERY MINOR UPTICK; AI-CLOUD & CONSUMER RESILIENCE LIFT; HOUSING SLUMP & TARIFF/FX STILL CAP UPSIDE) [late Friday update].

Europe

- (IL) Hamas: Prisoner swap negotiations suspended following Israel's attack on Hamas leadership in Doha, Qatar.

- (DE) North Rhine-Westphalia local elections in Germany show Chancellor Merz's CDU party set to win, but AfD making strong gains - local correspondents on exit polls (update).

- UK govt announces >£1.1B in joint govt and industry investment for the maritime sector in coastal communities - statement.

- (UK) Sept Rightmove House Prices M/M: +0.4% v -1.3% prior; Y/Y: -0.1% v 0.3% prior.

- (RU) Trump: I am ready to do major Sanctions on Russia when all NATO Nations have agreed [late Friday update].

- (UR) G7 Ministers statement: Discussed a variety of economic measures to increase pressure on Russia, which could include more trade measures and sanctions on nations that are enabling Russia's war effort [late Friday update].

- (FR) Fitch cuts France sovereign rating one notch to A+ from AA-; Outlook revised to Stable from Negative [late Friday update].

Levels as of 01:20 ET

- Nikkei 225 closed, ASX 200 -0.2%, Hang Seng +0.2%; Shanghai Composite -0.1%; Kospi +0.5%.

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

- EUR 1.1722-1.1740; JPY 147.34-147.82; AUD 0.6639-0.6666; NZD 0.5949-5967.

- Gold -0.1% at $3,682/oz; BTC +0.6% at $116,540; Crude Oil +0.2% at $62.80/bbl; Copper +0.2% at $4.6625/lb.