Quiet US trading bleeds through to most of Asia amid KR/CN holidays

Asia Market Update: Quiet US trading bleeds through to most of Asia amid KR/CN holidays; JP exception as tech stocks power higher; Likely No US Nonfarm Payrolls on Fri.

General trend and developments

- US government shutdown heading into Day 3 thus far seems to have toned down the volume of US news flow. China and South Korea holidays contributed to a quiet day for most of Asia with Japan the exception as the Nikkei rose 1.7%, led by Hitachi +8.8% (signed infrastructure pact with OpenAI), Softbank +5%, chip-related Tokyo Electron as much as +5%.

- US equity FUTs ticked up throughout Asian trading to test all-time-highs set during the US regular session -Hang Seng underperformed -0.9% with EV makers BYD, Xpeng, Li Auto all falling 4-5%.

- Bank of Japan Gov Ueda comments today more dovish than former dove-turned-hawk Noguchi (board member), who earlier in the week signaled the need to raise rates is increasing more than ever). Ueda on the other hand reiterated that the BOJ must maintain accommodative monetary environment to support the economy. JPY/USD lost ground (-0.3%) as the markets digested Ueda’s comments.

- Front-end of the Japanese yield curve little changed as Ueda spoke, while long-end 30-40 year JGBs yields stayed around the ~2bps dip experienced prior to Ueda’s speech.

- Tomorrow (Sat, Oct 4th) is Japan ruling LDP’s party leadership voting day. Koizumi said to hold a slight lead in recent press polling, but over the past few weeks has been a seesaw contest with fellow-frontrunner Takaichi.

- Conflicting reports that Pres Trump’s planned trip to Japan may take place on Oct 27th, or not at all.

- Singapore Sept PMI up five Big Handles to a one-year high, while Japan's Sept Final PMI Services confirmed its 11th month of expansion.

- Gold continued softer tone during the Asia session after non-stop fresh highs set over the past few weeks.

- In trade news, reports that the much-trumpeted Trump/US-UAE deal (announced back in May for Nvidia to send AI chips to the UAE in return for UAE investment in US chip facilities) said to be stalled, with the White House and Nvidia CEO Huang reportedly frustrated by the delay.

- Amid the US government shutdown the White House said to announce agencies to be targeted as soon as Friday, with firings "likely in the thousands". Pres Trump adding we could permanently cut things that shouldn't have been approved. Trump also floated taxpayer rebates of $1-2K using tariff revenues.

** Reminder unlikely to see US Nonfarm payrolls on Friday due to the govt shutdown.

- Troll of the day: The White House put out on their official website a dynamic Shutdown clock counter labeled “Democrats have shut down the government” for… 1d, 23h, 42m, 34s… https://www.whitehouse.gov/government-shutdown-clock/

- US equity FUTs XXXX during Asia trading.

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

- Fri Oct 3rd (Fri night US Sept Nonfarm Payrolls**, US ISM Sept Services PMI).

[** Note: Friday’s US Sept Nonfarm Payrolls likely not released if the US govt is still shut down].

Holidays in Asia this week

- Wed Oct 1st China, Hong Kong.

- Thu Oct 2nd China, India.

- Fri Oct 3rd China. South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 8,936.

- Australia Sept Final PMI Services: 52.4 v 52.0 prelim (confirms 20th month of expansion, business activity index weakest since Jun).

- Australia sells A$1.0B v A$1.0B indicated in 1.25% May 2032 bonds; Avg Yield: 3.9431% v 3.9240% prior; bid-to-cover: 3.38x v 2.93x prior.

China/Hong Kong

- Hang Seng opens -0.2% at 27,221; Shanghai Composite closed for holiday (reopens Oct 9th).

- (HK) Hong Kong Aug Retail Sales Value Y/Y: 3.8% v 2.0%e; Retail Sales Volume Y/Y: 3.2% v 1.9%e.

Japan

- Nikkei 225 opens +0.2% at 45,050.

- Japan Sept Final PMI Services: 53.3 v 53.0 prelim (confirms 11th month of expansion).

- Bank of Japan (BOJ) Gov Ueda: Must maintain accommodative monetary environment, support economy - briefing and news conference in Osaka.

- Japan Fin Min Kato: Watching carefully impacts from US govt shutdown.

- Japan and US reportedly arranging Pres Trump visit to Japan on Oct 27th - Japanese press.

- Japan Chief Cabinet Sec Hayashi: US Pres Trump's visit to Japan has not yet been decided.

Korea

- Kospi closed for holiday

Other Asia

- (IN) Trump and India's Modi may meet on the sidelines during the ASEAN Summit (in Malaysia prior to APEC) - press.

- Singapore Sept PMI (whole economy): 56.4 v 51.2 prior (one-year high).

- Singapore Sept Purchasing Managers Index: 50.1 v 50.0 prior.

- Vietnam Deputy Central Bank Gov Ha: Businesses are facing difficulties due to global uncertainties; Will continues to pursue flexible monetary policies for the rest of the year to prioritize economic growth while maintaining macro-stability.

North America

- Nvidia deal to send AI chips to the UAE said to be stalled; CEO Huang and Trump Admin official said to be frustrated with delay - WSJ.

- (US) Reportedly the White House will announce agencies targeted during the shutdown as soon as Friday; Firings will "likely be in the thousands" - CNN.

- US Pres Trump: During the shutdown, we could cut things that shouldn't have been approved; Projects would be permanently cut.

- US Pres Trump considering taxpayer rebates of $1-2K using tariff funds - press.

- Applied Materials: US Commerce Dept expands export restrictions; Expects BIS affiliates rule to further export restrictions to China; Expects impact will reduce revenue in Q4 by ~$110M, and ~$600M in FY26 - filing.

- (US) Reportedly Trump seeks deals in 20-30 critical industries before 2026 midterms; In some cases, Trump administration is offering tariff relief in exchange for concessions, revenue guarantees, or taking equity stakes in troubled companies, among other types of help - press.

- (US) Aug Challenger Job Cuts said to be 54.1K v 86.0K prior.

- (US) Initial Jobless Claims and Continuing Claims delayed due to US govt shutdown (as expected).

- (US) Colonial pipeline said to be facing outage on all three main lines - press cites traders.

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +53 BCF VS. 64BCF TO 72BCF INDICATED RANGE.

- (US) Fed's Logan (non-voter in 2025; voter in 2026): Inflation is running above target and trending higher; Acknowledges risks on both sides of the mandate.

- (US) Sept preliminary NA Class 8 Net Orders 20.5K units, +60% m/m, -41% y/y - FTRintel.com.

- (US) Fed's Goolsbee (voter for 2025): We fly blind without economic data during a shutdown; Real-time indicators suggest some steadiness in labor market - Fox News.

- (MX) Mexico starts investigation into import of steel screws and bolts from China –press.

- Brazil and China reportedly to create $1B investment fund - financial press.

Europe

- (IE) Ireland Sept PMI Services: 53.5 v 50.6 prior.

- (RU) Russia Kremlin: If tomahawks are supplied by US to Ukraine, then it will mean a new serious round of tensions.

- (EU) ECB's Villeroy (France): Seeks bold steps to strengthen the euro's global role - speech text.

- (UR) Russia Pres Putin: We are closely watching the statement about strong Germany's army; The European ruling elites are whipping up hysteria, saying war with Russia is near; It's impossible to believe that Russia will attack NATO.

Levels as of 01:20 ET

- Nikkei 225 +17%, ASX 200 +0.5%, Hang Seng -0.9%; Shanghai Composite closed; Kospi closed.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; DAX +0.3%; FTSE100 +0.2%.

- EUR 1.1710-1.1730; JPY 147.10-147.77; AUD 0.6595-0.6602; NZD 0.5815-5826.

- Gold flat at $3,867/oz; BTC +1.5% at $120,110; Crude Oil +0.6% at $60.84bbl; Copper +0.1% at $4.9578/lb.