Mixed trading seen ahead of next week’s potential event risks

Asia Market Update: Mixed trading seen ahead of next week’s potential event risks, including tech earnings [BABA, BIDU, Tencent, NVDA] and APEC; Asian gov’ts were impacted by MSFT’s outage; US PPI and JP megabank earnings in focus for Fri.

General trends and developments

-Equities have again traded mixed and cautiously ahead of the weekend; Uncertainties include Iran/US relations and NVDA developments.

-Chinese chipmakers have extended recent gains. Transshipping and supply-chain concerns have remained focal points in Asia ahead of next week’s APEC meetings, as the events related to Nvidia continue to develop. China’s SMIC noted its Q3 gross margin rose due to 'urgent' customer orders, according to post earnings comments. On the regulatory front, Malaysia’s government plans to assess if AI chips brought into the country have been re-exported. Meanwhile, Japan’s Trade Min Akazawa stated Nvidia is very important for Japan's AI chip industry and the situation will continue to be monitored.

-KOSDAQ outperforms in South Korea as President Lee commented on market reform and support measures. South Korea needs to expand the stability of the KOSDAQ’s investment base and the government is determined to normalize the domestic asset and capital markets, according to Lee.

-The probability of a 50bps Dec Fed rate hike eased after comments from NY Fed President Williams. There is a need to take action but not do harm to the labor market, said Williams.

-Government bond yields have risen in Asia after soften demand was seen at the earlier 30-year UST auction [(US) TREASURY $25B 30-YEAR BOND AUCTION DRAWS 5.441% V 5.618% PRIOR; BID TO COVER 2.36 V 2.54 PRIOR AND 2.45 OVER LAST 8 REOPENINGS]. Longer-dated Aussie yields, also, advanced as AOFM is planning to sell a new 30-year bond next week via syndication.

-Japan’s PM remains reluctant to approve large increases in defense spending: Takaichi is reluctant to implement a large tax increase to fund defense spending, according to recent reporting. Hence, Japan’s Finance Ministry is said to have proposed a five-year defense spending plan of ¥50-60T, below the ¥80T sought previously.

-Microsoft continues to address outage: During the U.S. market open, Microsoft stated that outages regarding its Office 365: Outlook, Teams, and other services were impacted due to a large number of servers being unexpectedly unavailable, monitoring the status of changes and confirmed that it is not taking as expected. Japan Deputy Chief Cabinet Secretary Ozaki mentioned that the Microsoft outage also disrupted Japanese Government systems.

-Looking ahead - next-week edition (APEC): Looking ahead next week (Asian-weighted focus, EST/EDT), the 33rd Asia-Pacific Economic Cooperation (APEC) is scheduled to take place on Wednesday-Thursday November 18-19th in Shenzhen, China. The China Ministry of Foreign Affairs confirmed President Xi’s attendance, stating that he is to hold a banquet for foreign leaders.

-US equity FUTs -0.4% to -0.1% during Asia trading.

Looking ahead (Asian-weighted focus, using EST/EDT time-zone)

-Sun November 8th: (Sun night, JP Oct FX Reserves - USD, AU Sept Building Approvals, CN Oct CPI & PPI, PH Q3 GDP, ID Oct Consumer Confidence, JP Sept Prelim Leading Index, TW Oct Trade Balance).

-Mon November 9th: DE Sept Trade Balance, EU ECOFIN & Eurogroup Meetings, MX Oct CPI & PPI, PH Oct FX Reserves - USD, CO Oct CPI, (Mon night, AU Nov Westpac Consumer Sentiment, JP Sept Household Spending, JP Oct Current Account & Adj Current Account, JP BoJ Oct 29-30th Summary of Opinions, AU Oct NAB Business Confidence, ID Sept Retail Sales, JP 30-Year JGB Auction, MY Sept Industrial Production).

-Tue November 10th: NL Oct CPI & Sept Manufacturing Production, FR Q3 Unemployment Rate, BR BCB Nov 3-4th Copom Meeting Minutes, US Oct CPI & Core CPI, CN Oct Trade Balance & Trade Balance - USD, US WASDE Report, US EIA Short-Term Energy Outlook, US 10-Year Note Auction, CA BOC Oct 28th Summary of Deliberations, NZ RBNZ Financial Stability Report, (Tue night, KR Oct Unemployment Rate, AU Q3 Home Loans, MY Sept Unemployment Rate).

-Wed November 11th: NL Sept Trade Balance, DE Oct CPI, US OPEC Monthly Report, MX Sept Industrial Production, RU Sept Trade Balance, (Wed night, JP Oct PPI, AU Nov MI Inflation Expectations, JP 5-Year JGB Auction, TH Oct Consumer Confidence).

-Thu November 12th: UK Q3 Preliminary GDP & Sept Industrial Production & Trade Balance, EU ECB Economic Bulletin & Economic Forecasts, IN Oct CPI, DE Sept Current Account, BR Oct CPI, RU Central Bank Reserves - USD, US Initial Jobless Claims, US 30-Year Bond Auction, (Thu night, KR Oct Export & Import Price Index, NZ Oct Business PMI, KR Sept M2 & M3 Money Supply, TH Oct Consumer Confidence)

-Fri November 13th: FR Oct CPI, ES Oct CPI, HK Q3 GDP, PL Q3 Preliminary GDP & Oct CPI, US IEA Monthly Report, CN Oct New Yuan Loans & Total Social Financing & M2 Money Stock, EU Q3 Prelim GDP & Employment Change & Sept Trade Balance, EU Leaders Summit, US Oct PPI & Core PPI, CA Sept Capacity Utilization Rate & Manufacturing Sales & Wholesale Sales, CO Sept Industrial Production & Retail Sales, RU Q3 Prelim GDP & Oct CPI.

-Sat November 14th: (Sat night, KR Oct Trade Balance).

Holidays in Asia this week

-Mon November 9th: Malaysia.

-Tue November 10th: India.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens -0.5% at 9,101.

-(AU) Australia sells A$1.0B v A$1.0B indicated in 1.00% Nov 2031 bonds; Avg Yield: 4.8193% v 4.8708% prior; bid-to-cover: 4.03x v 4.32x prior.

-(AU) Australia Office of Financial Management (AOFM) to issue new June 2057 bond via syndication next week - Statement.

-(AU) Australia Oct Port Hedland Iron Ore Exports: 48.17Mt v 46.0Mt m/m; Iron ore exports to China: 40.49Mt v 38.0Mt m/m.

-(NZ) New Zealand Oct Manufacturing PMI: 54.9 v 56.3 prior (13th month of expansion).

China/Hong Kong

-(CN) Shanghai Composite Index opens +0.1% at 3,659.

-(HK) Hang Seng Index opens -0.6% at 23,872.

-CXMT [688825.CN]: US Senator Cotton (R) has urged the US Commerce Dept to ban CXMT from the US market - financial press.

-(CN) Chinese chip-related company Sigmaster reportedly said to plan $300M Hong Kong listing - US financial press.

-(US) Treasury Sec Bessent: Chinese AI models are dangerous, have no guardrails; Chinese models were involved in the commercial refrigerator hacker attacks in Europe.

-(CN) US AG Blanche: DOJ has not yet reached a conclusion on whether Alice Huang was a spy for China; There's not been enough success in working with China on opioid crisis; China continues to work with the US.

-(US) USTR Greer: Getting some rare earths that we need from China but we want higher volume and quicker pace. Will discuss next week.

-(CN) Preview: Potential China Oct New Yuan Loan, Financing and M2 data expected in upcoming sessions (no set time).

-(CN) China PBOC sets the yuan mid-point at 6.7152 v 6.7174 prior (strongest level since November 3rd).

-(CN) China PBOC Open Market Operation (OMO): Sells CNY664B in 1-day Overnight Reverse Repo & 7-day Reverse Repos; Net injects CNY280B v injects CNY197B prior.

-(CN) China sells 3-year and 10-year New Bonds.

-(CN) China PBOC: Sells CNY100B in 1-month MOF deposits at 1.30% v 1.42% prior.

-(CN) Goldman Sachs: Sees China 2027 GDP growth at 4.5%.

-(CN) China PBOC Dep Gov Zou Lan: China promotes market-based credit reporting firms - Caixin Summit.

-(CN) President Xi to attend the 33rd APEC economic leaders' meeting - MOFA.

-(CN) President Xi urges stronger party leadership at state-owned enterprises (SOEs).

-(CN) China reportedly in talks for $15B in funds to finance a maritime-insurance system hub as an alternative to Lloyd’s of London as well as other Western insurance pillars; Development expected by 2029 - WSJ.

-(CN) China Premier Li holds State Council Meeting on social security.

Japan

-(JP) Nikkei 225 Index opens +1.1% at 61,260.

-SMFG [8316.JP] Reports FY26 Net ¥1.58T v ¥1.18T y/y, Op ¥2.30T v ¥1.72T y/y, Rev ¥10.79T v ¥10.17T y/y; Announces 85M share buybacks worth ¥220.00B (1.1% of total shares); New Japanese firms are vulnerable to a slowdown in AI data center investments; This year we have adopted stricter standards on extending credit for data centre financing, such as restricting to just hyperscalers with high credit standing; SMFG being very selective on data center lending this year.

-(JP) Japan benchmark 10-year JGB FUTs opened down -0.66pts in early trade.

-*(JP) Japan MOF: It can't receive emails due to Microsoft outage.

-(JP) Japan Dep Chief Cab Sec Ozaki: Microsoft outage also disrupted Japan government systems.

-(JP) Reportedly Japan PM Takaichi is reluctant to implement a large tax increase to fund defense spending; cites comments from several Japan officials from Nov 12th; notes a new proposal to target ¥50-60T in 5-year defense spending v ¥80T prior- press.

-The Japanese Finance Ministry had proposed a five-year defense spending plan ranging from ¥50-60T, below the ¥80T spending plan previously sought. Noting that Japan could cut planned missile and aircraft purchases, including F-35s family of single-seat stealth fighter jets manufactured by LMT. This defense spending plan will be below the current 2% GDP target of ~¥70T over five-years.

-(JP) Japan Fin Min Katayama: Seeing one-sided, rapid FX moves recently.

-(JP) Japan Trade Min Akazawa: Nvidia is very important for Japan's AI chip industry, will continue to monitor situation.

-(JP) Japan PM Takaichi: Consumption tax cut to be reflected in product prices; Won't use retail JGBs to fund consumption tax cut; Important for diverse domestic investors to hold JGBs - Parliament.

-(JP) BOJ Deputy Gov Himino: Hard to predict BoJ's profits in general - Parliament.

-(US) NY Fed: The Federal Reserve Did Not Intervene in FX Markets During the Third Quarter; confirms the U.S. Treasury Purchased Japanese Yen in FX Markets During the Same Period.

-(JP) Japan approves ¥652B ($4.08B) reserve fund use for winter subsidies - US financial press.

-Japanese winter subsidies: In the Japan DIET session which runs for 69 days from October 5th-December 12th, Japan had announced that it had approved the ¥652B (=$4.08B) reserve fund use for winter subsidies. Previously, the Japanese Government in Parliament considered winter electricity, gas subsidies, with measures to be effective for January-March [which is peak season], to minimize the effect of rising heating costs to households. Japanese Finance Minister Katayama confirmed this approval.

-(JP) Japan sells ¥3.10T vs. ¥3.10T indicated in 3-Month Bills; Avg Yield: 1.2713% v 1.2410% prior; bid-to-cover: 3.90x v 4.34x prior.

-(US) US and Japan issue joint statement on seabed mineral resources; US and Japan to engage with the trusted commercial partners on seabed minerals - press.

-(JP) Japan reportedly considering a system to nationalize aging critical plants - Nikkei.

-(JP) JBIC increases the financing cap for US investment vehicle to $283M – Press.

Korea

-(KR) Kospi Index opens +2.1% at 5,452.

-(KR) South Korea President Lee: South Korean stock market underwent significant correction - Meeting.

-(KR) South Korea Oct Export Price Index M/M: +0.7% v -0.5% prior; Y/Y: 36.7% v 41.3% prior.

-(KR) South Korea Sept M2 Money Supply M/M: 0.4% v 0.9% prior.

-(KR) South Korea President Lee approval rating decline to 39% (v 41% prior) - Gallup.

-(KR) GOOG South Korea Government: Google to delete "Street View" in Google Maps inside and around all military, security facilities.

Other Asia

-Taiwan Semi [2330.TW]: Says no sign its systems were 'compromised' after employee data leak - US financial press.

North America

-Anthropic [ANT]: iPO said to be 6x oversubscribed - press.

-Cisco [CSCO]: Reports Q1 $1.40 v $1.33e, Rev $18.52B v $18.1Be; Raises FY27 guidance.

-*(US) Pres. Trump: Tariffs on Mexico will be IMMEDIATELY DOUBLED; Mexico must stop the caravans - Truth Social [US market close].

-(US) President Trump: Maybe Iran war was unpopular because of gas prices. Gas prices seemed to have biggest impact on Midterms; Qatar, UAE, Bahrain prefer a waiting period [on Iran]; These nations asked me to wait, not sure I agree - Interview with Stephen A. Smith on the Straight Shooter podcast.

-(US) Follow-up: Commerce Secretary Lutnick agreed to testify before congress - NBC News.

-(US) TREASURY $25B 30-YEAR BOND AUCTION DRAWS 5.441% V 5.618% PRIOR; BID TO COVER 2.36 V 2.54 PRIOR AND 2.45 OVER LAST 8 REOPENINGS [US market close].

-(US) OCT EXISTING HOME SALES: 3.75M V 3.85ME [US market close].

-(US) OCT FEDERAL BUDGET BALANCE: -$404.0B V -$317.5BE [US market close].

-(US) INITIAL JOBLESS CLAIMS: 200K V 194KE; CONTINUING CLAIMS: 1.697M V 1.710ME [US market close].

-(US) DOE CRUDE: +4.7M V -1ME; GASOLINE: +1.8M V 0ME; DISTILLATE: +4.1M V -1ME [US market close].

-(US) Fed's Daly (non-voter, dove): Compatible with September's rate hike, further tightening is warranted; Exactly how much tightening and when is a decision we don't need to make now [US market close].

-(US) Fed's Goolsbee (non-voter in 2026; voter in 2027): Inflation has been well above target [US market close].

-(US) Fed's Schmid (hawk; non-voter in 2026): Materials and labor costs may worsen housing affordability; Doesn't comment directly on monetary policy or the economy [US market close].

-(US) Fed's Hammack (voter, hawk): Real price pressures coming from AI build-out; Need to move to a restrictive policy stance; Prefer smaller rate moves, but if we get behind the curve, a larger move could be needed [US market close].

-(US) USTR Greer: Remain concerned about Nvidia; We want the crown jewels to remain in US, ally hands; Structurally important company [US market close].

-(US) White House official: Pres Trump still has confidence in Commerce Sec Lutnick - CNN [US market close].

-(BR) Brazil end-Oct IBGE Inflation IPCA M/M: 0.1% v 0.3%e; Y/Y: 4.6% v 4.7%e [US market close].

-Modine Manufacturing [MOD]: Reportedly Samsung Electronics is said to be in talk to acquire data center cooling firm Modine - US financial press.

Nvidia news recap:

-Nvidia [NVDA]: *JENSEN HUANG RESIGNS AS CEO AND BOARD MEMBER; COLETTE KRESS APPOINTED INTERIM CEO, HARVEY C. JONES NAMED FIRST BOARD CHAIR, EFFECTIVE IMMEDIATELY [from the NY morning].

-Nvidia: Reportedly will face multiple antitrust probes by the DOJ; Supermicro and Megaspeed are also said to face DOJ scrutiny, with focus on Megaspeed's Alice Huang, the alleged Chinese spy - Semafor.

-Nvidia [NVDA]: (US) Senate Finance and House Tax Committees plan to open investigations of Trump Admin's approval of Nvidia chip exports to China - press.

-Nvidia [NVDA]: Singapore charges 5th person linked to Nvidia smuggling chip case - ST.

-Nvidia [NVDA]: Alice Wang may have benefited Huawei through ownership stakes in associated Chinese businesses - CNBC.

-Nvidia [NVDA] Reportedly former Nvidia CEO Huang had a relationship with a second employee at the company - press.

-Nvidia: Reportedly alleged Chinese spy Alice Huang's companies invested in China's Deepseek and promised to deliver Nvidia chips - TheInformation.

Europe

-(FR) French Pres Macron and German Chancellor Merz agreed that De Cos should succeed Lagarde at the ECB - French press [EU market close]

-(EU) ECB's Kazaks (Latvia): Dec rate hike likely as some further tightening seen as necessary - financial press [EU market close].

-(EU) ECB’s Vujcic (Croatia): May see further price pressures with a lag [EU market close].

Middle East

-(US) Pres. Trump: We don’t need a deal with Iran; Our Budget could be quickly BALANCED with the correction of the Massive Corruption and Crime taking place in Democrat run Cities and States.

-(IR) Iran govt said to note exit from Nuclear Non-Proliferation Treaty (NPT) has become a 'national demand' - FARS [EU market close].

-(IR) Follow-up: IRGC: Targeted 'US early-warning radar' in Bahrain, in response to attack on telecommunications tower in Iran's Sirik.

-(IR) Explosion heard in Iran's Sirik, said to be the result of 'enemy fire' in a fresh military attack - Iranian press [NY afternoon].

-(IL) Israel Oct Trade Balance: -$5.2B v -$4.5B prior [EU market close].

Levels as of 01:20am EDT

Nikkei 225 +0.6%; ASX 200 -0.7%; Hang Seng -1.5%; Shanghai Composite -0.5%; Kospi -0.9%.

Equity S&P500 Futures -0.1%; Nasdaq100 -0.4%; DAX -0.4%; FTSE100 -0.3%.

EUR 1.1064-1.1048; JPY 160.19-159.76; AUD 0.6815-0.6791; NZD 0.5556-0.5538.

Gold +0.4% at $3,895/oz; BTC -6.4% at $68,764; WTI Crude Oil -0.2% at $88.63/bbl; Copper -0.4% at $6.1720/lbs.