Risk appetite supported by hopes CBs will have less work to do, Hammack dovish

Asia Market Update: Risk appetite supported by hopes CBs will have less work to do; Hammack dovish; BRL-assets rise on early Bolsonaro surprise; Ueda to speak on Tues; TSMC and Foxconn upcoming sales figures in focus for this week.

General trend and developments

-Nasdaq FUTs have added onto Friday’s gains, while TECH and lower short-term rates helped the Nikkei225 surge by >2% during morning trading. Equity market participation and volatility might be, however, limited by today’s South Korea and Mainland China holidays. Gains were later pared after midday on EUR-related volatility.

-Oil FUTs erase gains amid Saudi price cut: Oil markets opened higher following the weekend close, with WTI crude FUTs rising by +0.5% at $91.75 per barrel and Brent rising by +0.4% to $103.09, amid mixed signals emerging on supply over the weekend. Oil prices later erased gains. Saudi Aramco cut Nov prices for Asian clients to a 6-year low. On Fri, G7 leaders had confirmed plans to release 100M barrels of diesel and crude stockpiles. After last week’s market close, U.S. President Trump stated that the Strategic Petroleum Reserve—currently near multi-decade lows at around 284M barrels—would soon be refilled, helping support the higher oil futures open. Separately, G7 leaders announced an immediate coordinated release of 100 million barrels of “front-loaded substantial diesel” over a four month period. Meanwhile, OPEC+ reaffirmed its plan to maintain output targets after completing the phased rollback of the 1.65 million bpd voluntary cuts starting in November, with the next meeting set for November 1st, 2026.

-The EUR has resumed declines, as the currency has traded broadly weaker on Mon. During the prior week, drivers included French yields and fiscal concerns, along with the impact of higher diesel prices on the euro-zone economy, as Ukraine has pledged to ‘double down’ on attacking oil refineries in Russia. Tues (Oct 6th) is the formal deadline in France for the filing of the 2027 draft budget. France’s National Assembly is expected to begin reviewing the budget on October 13.

-Fiscal and energy supply concerns have also been prevalent for the UK. In recent news, strikes by North Sea oil workers could 'severely' disrupt UK fuel supplies amid the breakdown in labor negotiations between Apache and its UK labor union [UK press]
-Oct BOJ and Fed rate hike probabilities declined further after the Sept US jobs data which was released on Friday. The unemployment rate and nonfarm payrolls disappointed, while the labor force participation rate was better. Market expectations regarding rate increases had already eased after recent Fed comments [Williams, Jefferson]. As of the end of trading on Fri, the probability of a BOJ rate hike was only 15% v ~18% on Thurs.

-The JGB yield curve, meanwhile, has continued to steepen ahead of Tuesday’s 10-year auction, with the 30-yr yield up about 2bps ahead the extraordinary Diet session which begins later today. Focal points for the 69-day session include the widely reported cut in the tax on food products from next spring. PM Takaichi’s policy speech might also be of interest. With the market’s focus on Japan’s fiscal policies and the BOJ’s independence, cabinet officials have in recent weeks continued to deny that the government’s policies are still reflationary.

-Trump confirmed AI-Czar selection. Jay Clayton’s prior experience at the SEC could suggest a laid-back regulatory approach, consistent with the desires previously indicated by Trump.

-Looking ahead this week (Asian-weighted focus, EST/EDT), key data releases include the JP 10-Year JGB Auction on Monday October 5th, US 10-Year Note Auction followed by the US September 15th-16th FOMC Meeting Minutes on Wednesday October 7th, and the EU September 9th-10th ECB Meeting Minutes on Thursday October 8th. Additionally, the Asian markets will observe holidays in China & South Korea on Monday, China on Tuesday/Wednesday, and South Korea & Taiwan on Friday.

-US equity FUTs -0.1% to flat during Asia trading

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

-Sun Oct 4th: OPEC Meeting, (Sun night, JP/AU Sept S&P Mnfg/Svcs PMI, JP Sept Household Confidence, SG Aug Retail Sales)

-Mon Oct 5th: Global European Sept S&P/HCOB Svcs/Composite PMI, EU Aug PPI, US Sept S&P/ISM Svcs/Composite PMI, NZ Q3 NZIER Business Confidence, (Mon night, HK Sept S&P Mnfg PMI, PH Sept CPI & Core CPI, TH Sept CPI & Core CPI, JP 10-Year JGB Auction, IN Sept HSBC Svcs PMI)

-Tue Oct 6th: EU Aug Retail Sales, US Aug Trade Balance, CA Aug Trade Balance, US EIA Short-Term Energy Outlook, (Tue night, JP Aug Labor Cash Earnings, JP/ID/MY/CN/HK/SG/PH Sept Foreign Reserves - USD, AU Aug Building Approvals, PH Aug Industrial Production, IN RBI Interest Rate Decision, JP Aug Preliminary Leading Index & Coincident Indicator, DE Aug Industrial Production, TW Sept CPI)

-Wed Oct 7th: UK Sept Mortgage Rate - GBP, US 10-Year Note Auction, US Sept 15-16 FOMC Meeting Minutes, AR Aug Industrial Production, (KR Aug Current Account, JP Aug Current Account, AU Oct MI Inflation Expectations, ID/TH Sept Consumer Confidence, JP 30-Year JGB Auction, DE Aug Trade Balance, TW Sept Trade Balance)

-Thu Oct 8th: EU Sept 9-10 ECB Meeting Minutes, MX Sept CPI & Core CPI & Sept 24 BANXICO Meeting Minutes, US 30-Year Bond Auction, (Thu night, JP Aug Household Spending, ID Aug Retail Sales, MY Aug Industrial Production & Unemployment Rate, JP Sept Machine Tool Orders)

-Fri Oct 9th: US WASDE Report, RU Sept CPI

Holidays in Asia this week

-Mon Oct 5th: China, South Korea

-Tue Oct 6th: China

-Wed Oct 7th: China

-Fri Oct 9th: South Korea, Taiwan

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens +0.3% at 8,708

-(AU) Australia Sept Final Services PMI: 51.9 v 51.4 prelim (confirms 4th month of expansion)

-(AU) Australia Sept Melbourne Institute Inflation M/M: 0.3% v 0.5% prior; Y/Y: 4.8% v 4.8% prior (3rd consecutive month of increases)

-(AU) [Australian co.] Firmus tells funds interest exceeds IPO target - AFR

-(NZ) New Zealand Sept ANZ Commodity Price M/M: 0.6% v -0.4% prior

China/Hong Kong

-(CN) Shanghai Composite Index closed for the National Day of the People's Republic of China holiday; (HK) Hang Seng Index opens flat at 23,963

-(CN) China Commerce Ministry opens anti-dumping investigation into chemical component p-nitrotoluene from the EU [Weekend Update]

-(CN) Reportedly China officials made usual demands to accommodate Pres Xi's need for rest during the US summit; White House provided Xi with a private break room that only he and his wife were allowed to use - WSJ [Weekend Update]

Japan

-(JP) Nikkei 225 Index opens +1.2% at 69,116

-(JP) Japan Sept Final Services PMI: 51.3 v 51.6 prelim (confirms 23rd month of expansion)

-(JP) Japan PM Takaichi: Realizing strong, lasting growth is my starting point; Will achieve virtuous cycle through GDP growth; Will seek to draw in domestic investment with massive, long-term fiscal expenditure deployed in well-planned, predictable manner - Policy Speech to the Diet [221st Session], Tokyo, Japan

-(JP) Japan Sept Consumer Confidence Index: 35.4 v 35.3e

-(JP) Japan Fin Min Katayama: FX trend has changed somewhat since the joint FX intervention was announced: Treasury Sec Bessent has questioned whether Japan govt has been sending a unified message to the markets [Weekend Update]

-(JP) BoJ Deputy Gov Shinichi Uchida: Adoption of AI might have both positive and negative implications for productivity and labor markets - BoJ Released Text of Speech

-(JP) Japan Chief Cabinet Sec Kihara: US serviceman arrest in Okinawa case is regrettable; Japan seeking discipline, prevention by US forces - Tokyo, Japan

-(JP) Former BOJ policymaker Noguchi has become the latest to call the end to low rates and big spending in Japan - financial press

Korea

-(KR) Kospi Index closed for the National Foundation Day holiday

-(KR) North Korea launched another ballistic missile test; landed in the sea, outsize of Japan's EEZ [Weekend Update]

-(KR) South Korea Blue House: President Lee orders probe and response measures over recent personal data leaks at financial, public institutions - Yonhap [update]

Other Asia

-(SG) Singapore Aug Retail Sales M/M: -1.0% v 0.6% prior; Y/Y: 0.7% v 2.0%e

-(SG) Singapore Sept PMI (whole economy): 58.1 v 59.4 prior (20th month of expansion)

-(VN) Vietnam Q3 GDP Y/Y: 10.0% v 8.7%e [Weekend Update]

-(VN) Vietnam Sept CPI Y/Y: 5.1% v 5.1%e [Weekend Update]

-(VN) Vietnam Sept Trade Balance: +$1.3B v -$1.5Be [Weekend Update]

-(MY) Malaysia Central Bank (BNM) comments on financial stability: Financial stability risks remain manageable, but vigilance is warranted amid continued uncertainty

-(MY) Malaysia Digital Min Gobind: The AI Act will be tabled in early 2027 - Parliament

-(MY) Malaysia Transport Minister Loke: Zetrix AI failed to remit MYR314M ($76.8M) to Road Transport Department

-(IN) India Finance Minister: About the US trade deal, it's been a hard and rigorously negotiated agreement

-(IN) India officials to discuss redevelopment of Mumbai Airport - Mint

-(IN) US President Trump: 125 Million People voted today in the first round of India’s Presidential Election. The results came out shortly after the vote closed, on the SAME DAY! In Detroit, Philadelphia, California, and numerous other U.S. Cities and States, the results, with much smaller numbers, will often take weeks to Rig, I mean, calculate. Voting in America is CORRUPT!!! President DJT - post on Truth Social

-(SL) IMF: Reaches staff-level agreement on the seventh review under the extended fund facility with Sri Lanka

-(TW) Taiwan sells NT$110B vs. NT$110B indicated in 1-year NCDs: Avg Yield: 1.602% v 1.643% prior; bid-to-cover: 2.18x v 1.58x prior

-(TH) Thailand Finance Ministry comments on Q4 bond issuance: targets government bond issuance at up to THB361.2B

-(TH) Thailand sells THB20B vs. THB20B indicated in 6-month bills; Avg Yield: 0.98913% v 1.01384% prior; bid-to-cover: 1.68x v 1.67x prior

North America

-(US) Trump: We will soon be filling up our strategic petroleum reserve (SPR) [Weekend Update]

-(BR) National Election 1st Round Polls: Senator Flávio Bolsonaro & [Current] President Lula headed to runoff in Brazil Presidential Election on October 25th, 2026

-(US) Pres. Trump: Attorney General Blanche clearly stated that the Justice Department will investigate any and all evidence of wrongdoing at the Fed - Truth Social [Weekend Update]

-(US) New White House AI task force will be led by DNI Jay Clayton; Expected to issue report on AI risks within 120 days - press [Weekend Update]

-(US) Community bank trade group has sued the OCC alleging that its decision to give limited bank charters to cryptocurrency firms exceeds its regulatory authority - press [Weekend Update]

-(US) Trump urges passage of the “The Sunshine Protection Act” to end clock changes for daylight savings [Weekend Update]

-(US) PSKYCEO David Ellison plans to assign Paramount Pictures execs to oversee Warner Bros studio - press (update) [Weekend Update]

-(US) US Energy Sec Wright: No guarantees in conflict, but US trying to grow diesel; Europe's diesel release to drive price down through winter [update]

-(US) US Treasury Sec Bessent said to 'downplay' worries related to higher bond yields or AI bubble - US financial press [update]

-(US) Fed's Hammack (voter, hawk) said there is still time to weigh the next monetary policy move - PBS [update from Oct 2nd]

-(US) STARLINK.IPO Ukraine President Zelenskvy asked US President Trump to block Russia and China's Starlink rival - FT [update]

-(BR) Follow up: Senator Flávio Bolsonaro: Very happy with results, Brazil wants change; The result shows that Brazil wants change

Europe

-(EU) EUR/USD Euro against the dollar falls by -0.35% to $1.1213, lowest level since May 2025

-(UR) Ukraine Pres Zelenskiy: Ukraine will double down on attacking Russian oil refineries in response to Russian airstrikes on civilian infrastructure in Kyiv [Weekend Update]

-(UR) Trump administration talks with Russia on ending Ukraine war now include a potential multibillion-dollar oil deal benefitting Middle Eastern business execs with ties to US negotiators Witkoff and Kushner - NYT [Weekend Update]

-(RU) Russia Defense Ministry: Russia will intensify strikes on Kyiv and other regions of Ukraine following latest Zelenskiy remarks - Tass [update].

-(EU) EU to limit Ukraine's access to farming subsidies if it joins the Bloc - FT.

-(RU) Follow up: Russia Dep PM Novak: JMMC noted high volatility in global oil markets, with a supply shortfall - IFX.

-(RU) US White House 'monitors' suspected plague outbreak in Russia - Axios.

-(RU) Follow up: Russia hospitalizes almost 200 people after researcher's death from plague - Reports.

-(UK) UK said to plan tariffs on China EVs under pressure from EU - London Times [update].

-(UK) UK urged to embrace cheaper AI models - FT.

-(UK) US 'rushes' to withdraw bombers from UK air base targeted by the previously reported terror attack - NYT.

-(IE) Ireland Sept Services PMI: 54.1 v 55.4 prior (5th month of expansion).

-(SE) Sweden Oct SEB Housing-Price Indicator: 43 v 41 prior.

Middle East

-OPEC+ reaffirms to maintain output targets following the completion of the phased rollback of the 1.65M bpd voluntary cuts from 2023, as expected, commencing in November, 2026.

-(SA) ARAMCO.SA *Saudi Arabia set the Nov Arab Light Crude Oil official selling price to Asia at -$5 versus the Oman/Dubai avg; the price reduction is being characterized as not expected - update.

-(IR) On Friday, Trump cabinet members and [US] top security officials met secretly at Camp David to discuss next steps for conflicts in Iran and Yemen - Axios [Weekend Update].

-(IR) Iranian Parliament Speaker Qalibaf: Strait of Hormuz won't reopen until Iran's conditions are met, US can no longer 'stall for time' - Nournews [update].

-(IR) UKMTO: Received a report of an incident within the Strait of Hormuz [update].

-(SA) Fire reported in the vicinity of an Aramco facility in Riyadh - press [Weekend Update].

-(SA) ARAMCO.SA Follow Up: Yemen government launches offensive as Houthis hit Aramco site - Press [update].

-(YE) UKMTO: Received a report of an incident 60NM South of Al Mukha, Yemen [update].

-(PK) Pakistan: Mecca Pact members to meet on October 5th [2026] in Riyadh, Saudi Arabia.

Levels as of 01:20 ET

Nikkei 225 +2.1%; ASX 200 +0.1%; Hang Seng -0.1%; Shanghai Composite +0.3%; Kospi +0.5%.

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

EUR 1.1262-1.1161; JPY 158.17-157.44; AUD 0.6961-0.6932; NZD 0.5621-0.5584.

Gold -0.1% at $4,138/oz; BTC +0.6% at $85,443; WTI Crude Oil -1.3% at $89.94/bbl; Copper -0.1% at $6.5715/lbs.