Most Asian markets rise by less than 1% after US gains, Shanghai lags

Asia Market Update: Most Asian markets rise by less than 1% after US gains, Shanghai lags; US stimulus talks continue, 30-yr US Treasury FUTs extend declines.

General Trend

- Japanese equities trade broadly higher

- HK-listed telecoms rise following results from China Mobile; Vaccine makers also rise

- China Unicom may report earnings later today

- Shanghai Composite declined by ~0.4% during morning session; IT, Industrial and Property firms moved lower

- Energy, Financial and Resources firms rise in Australia; Decliners include Consumer names

- RBA Deputy Gov Debelle is due to speak on Oct 22nd (Thursday)

- Companies expected to report earnings during the NY morning include Abbott Labs, AutoNation , Biogen, NASDAQ, Thermo Fisher Scientific, Verizon

Headlines/Economic Data

Australia/New Zealand

- ASX 200 opened +0.1%

- (AU) Former Reserve Bank of Australia (RBA) official Edwards urged the RBA to increase QE, central bank should increase purchases of longer-dated bonds; Edwards suggested that further cuts to the RBA cash rate would be less productive than additional bond purchases - US financial press

- (AU) Australia Sept Preliminary Retail sales M/M: -1.5% v -4.2% prior; The preliminary estimate shows the September quarter (Q3) rose 6.8% [This follows a fall of 2.3% in the June quarter]

- (AU) Australia Sept Westpac Leading Index M/M: 0.2% v 0.5% prior

- (AU) Australia sells A$2.0B v A$2.0B indicated in 1.00% Dec 2030 bonds, avg yield 0.7672% v 0.85% prior, bid to cover 6.4x v 4.2x prior

- (NZ) Reserve Bank of New Zealand (RBNZ) buys NZ$330M v NZ$330M prior in government bonds as part of QE v NZ$330M sought

- (NZ) New Zealand reports 25 additional coronavirus cases, 23 at border

- (NZ) New Zealand Oct Credit Card Spending M/M: +1.0% v -5.6% prior; Y/Y: -9.9% v -11.8% prior

China/Hong Kong

- Hang Seng opened +0.5%, Shanghai Composite +0.1%

- (CN) China PBOC sets Yuan reference rate: 6.6781 v 6.6930 prior (Strongest since July 16th 2018)

- (CN) Hu Angang (Adviser to China President Xi) said China will maintain 5% GDP growth through 2035, said it is still too early to set a growth target for the next 5-years; The adviser suggested that China could still set a growth target at the next National People's Congress (NPC) [March 2021] - Japanese press

- (CN) Former NDRC official Peng Sen: China can maintain GDP growth of 5-6% in 2021-2025 - Chinese press

- Cathay Pacific [293.HK]: Updates on restructuring: To cut 8.5K jobs (Speculated 6.0K jobs)

- (CN) Strength in HK pharmaceutical firms has been attributed to a report that China’s drug regulator said it would expedite the review of applications related to the clinical use of COVID-19 vaccines

- (CN) China firms including Huawei are said to seek limitations imposed on NVidia acquisition of ARM

- (CN) China PBoC Open Market Operation (OMO): Injects CNY80B in 7-day reverse repos v Injects CNY70B in 7-day reverse repos prior; Net inject CNY80B v Net inject CNY70B prior

- (CN) China NDRC Official: Possible for 2020 Domestic auto production and sales to return to 2019 levels if they keep growing in Q4

- (CN) China Commerce Min (MOFCOM) Official: Expects China total vehicle ownership to be ~280M units by end of 2020

- (CN) China Finance Ministry: Jan-Sept revenues -6.4% y/y; Spending -1.9% y/y

Japan

- Nikkei225 opened +0.2%

- Shimachu [8184.JP]: Nitori [9843.JP] confirms has been considering acquiring Shimachu

- (JP) Bank of Japan (BOJ) Official Sakurai: Expects inflation to remain weak for now; Will strive to aid corporate funding and maintain market stability

- (JP) Japan PM Suga: Any liquidation of Japan assets by South Korea would be 'serious'

Korea

- Kospi opened +0.1%

- (KR) South Korea 1-20th Exports Y/Y -5.8 v +3.6% prior; Imports Y/Y: -2.8 v -6.8% prior; Chip exports 12.1% y/y

Other Asia

- Mediatek [2454.TW]: Said to supply high performance computing chips (SerDes chips) to AMD - Press

- UMC [2303.TW]: Said to be raising wafer foundry manufacturing prices in Q1 by up to 10% - Taiwan press

North America

- (US) Sen Majority Leader McConnell (R-KY): Republicans will consider a larger aid bill if a deal is reached between Speaker Pelosi and the White House; would bring it to a vote if the White House supports it; not expecting any Democratic support for Senate GOP's $500B proposal; GOP proposal does not include stimulus checks

- (US) Speaker of the House Pelosi: Talks with Treasury Sec Mnuchin have provided more clarity on stimulus

- (US) White House Chief of Staff Meadows: Mnuchin and Pelosi made good progress in stimulus talks this afternoon; They were productive enough to talk again tomorrow afternoon; We still have a ways to go on a stimulus deal; Pelosi's offer remains in the $2.2-2.4T range

- (US) NY Fed Head of Markets Group Singh: In scenario of significant market stress, Fed could buy both bonds and ETFs; If market stress returns Fed would initially focus support on direct purchase of corporate bonds; Corporate bond purchases intended to avoid bankruptcies and layoffs

- PNM Resources [PNM]: Avangrid (Iberdrola unit) said to be in talks to acquire PNM - financial press

Europe

- (UK) House of Lords condemns Govt Internal Market Bill

- (UK) Chancellor of the Exchequer Sunak (Fin Min) said to have told PM Johnson to ditch his comprehensive review due to corona virus-ravaged public finances - financial press

Levels as of 1:20 ET

- Nikkei 225, +0.4%, ASX 200 +0.1% , Hang Seng +0.6%; Shanghai Composite -0.5% ; Kospi +0.2%

- Equity S&P500 Futures: +0.6%; Nasdaq100 +0.5%, Dax +0.5%; FTSE100 +0.1%

- EUR 1.1848-1.1821 ; JPY 105.52-105.28 ; AUD 0.7083-0.7046 ;NZD 0.6613-0.6573

- Gold +0.4% at $1,922/oz; Crude Oil -0.4% at $41.52/brl; Copper +0.8% at $3.1667/lb