Risk appetite supported by 'positive' US/CN talks and the continued decline in Oil prices

Asia market update: Risk appetite supported by ‘positive’ US/CN talks and the continued decline in oil prices; US and China working groups are expected to continue talks on Mon.

General trend and developments

- US Treasury Sec Bessent made seemingly positive remarks after the talks with Chinese officials. He characterized the talks as ‘very successful’ as certain issues are now proceeding to the ‘operational’ phase [including the previously floated ‘Board of Trade’].
-In May, Bessent stated the US and China would initially identify $30B of non-critical goods subject for reduced or no tariffs under the established Board of Trade protocol.

- USTR Greer said he expects to see energy products, agricultural goods and possibly medical devices on the list [in terms of the US side]. Consumer goods and low tech items are expected to be included in the Board of Trade from the Chinese side.

- Greer, also, confirmed export controls were not on the agenda. [China’s Aug shipments of magnets to the US -21% m/m to 512 tons; cites China customs.] A key focal point has been the fragile trade truce between the US and China. Recall, Chinese executives are expected to join Chinese President Xi's US trip, according to the SCMP [Aug 28th]. This comes as the two sides prepare to extend a one-year trade agreement reached in Busan [South Korea] last October 2025, said the newspaper. The US and China working groups are expected to continue talks on Monday.

- Bessent added he is likely to meet with a Chinese delegation in Nov as no agreement was reached on the prior trade truce [FT].

- Hang Seng Biotech index rallies by 5% on upbeat trade news. The US is reportedly working on rules for pharmaceutical companies investing in China that would likely preserve their ability to strike most licensing deals for Chinese drugs [press]. On Friday, Chinese pharma names were supported by the publication of the 5-year plan for the industry [China released the 15th 5-year plan related to the development of the pharmaceutical industry which targets CNY3.5T in pharma industry revenue by 2030].

- Overall, amid the extended Japan holiday [Sept 21-23rd], equity markets have gradually improved in Asia. Drivers include the US/China trade talks and lower oil prices.

- De-escalation talk continues to help drive oil prices lower. On Fri, Trump reiterated the Iran war is going to end very soon. He, further, confirmed the US is talking to the Houthis. Trump is reportedly scheduled to hold talks at the UN General Assembly in NY with Gulf leaders on Tuesday [September 22nd, 2026]. The meeting is expected to include leaders from Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Oman [Axios from Sept 16th].

- Trading in USD/JPY has been quiet with the extended Japanese holidays. After Friday’s rate hike announcement from the BOJ, the central bank is also said to have conducted FX rate checks [press report from Friday’s NY morning] (https://asia.nikkei.com/business/markets/currencies/boj-conducts-rate-check-lifting-yen-to-upper-156-range-against-dollar).

- More analysts forecast additional tightening by the RBA in Sept [Sept 29th].The probability of a Sept RBA rate hike is now about 85%, according to OIS. Upcoming key data releases for Australia include Aug jobs data which is due on Sept 24th [Thurs]. CPI is due on Sept 30th (Wed).

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

- Mon Sep 21st: DE Buba Monthly Report (Mon night, TW Aug Unemployment Rate).

- Tue Sep 22nd: EU Prelim Sept Consumer Confidence, (Mon night, AU Prelim Sept S&P Mnfg/Svcs PMI, IN Prelim Sept HSBC Mnfg/Svcs PMI, SG Aug CPI & Core CPI, ID Interest Rate Decision, TW Aug Industrial Production).

- Wed Sep 23rd: EU Prelim Sept HCOB Mnfg/Svcs/Composite PMI, US Prelim Sept S&P Mnfg/Svcs/Composite PMI, (Wed night, JP Prelim Sept S&P Mnfg/Svcs PMI, AU Aug Unemployment Rate).

- Thu Sep 24th: CH SNB Interest Rate Decision, EU ECB Economic Bulletin, HK Aug Trade Balance, US Aug Building Permits & New Home Sales, (Thu night, SG Aug Industrial Production).

- Fri Sep 25th: US Aug Durable Goods Orders.

Holidays in Asia this week

- Mon Sep 21st: Japan.

- Tue Sep 22nd: Japan.

- Wed Sep 23rd: Japan.

- Thu Sep 24th: South Korea.

- Fri Sep 25th: China, South Korea, Taiwan.

Headlines/economic data

Australia/New Zealand

- ASX 200 Index opens -0.5% at 8,691.

- CBA brings forward RBA rate hike call to Sept from Nov.

- ANZ now expects the RBA to raise rates by 25bps in Sept and Nov.

- ANZ: Now expects the RBNZ to raise the cash rate to 3.50% by Mar; expects the central bank to raise rates 2 more times in Q1 2027.

- (NZ) New Zealand Defense Forces: 2 New Zealand naval ships 'transited' Taiwan Straits [refers to events from Sept 18th].

- Fonterra [FCG.NZ] Revised its forecast Farmgate Milk Price midpoint for the 2026/27 season and narrowed its forecast range, reflecting recent improvements in global dairy commodity prices while retaining a prudent approach to the season ahead.

China/Hong Kong

- Hang Seng Index opens flat at 24,748.

- Shanghai Composite Index opens +0.2% at 3,920.

- (US) Treasury Sec Bessent comments after talks with China officials: The talks were 'very successful'; Notes the 'operationalization' of certain issues, completing where we left off in Beijing.

- USTR Greer: Confirms US export controls were not on the agenda in the talks with China; confirms trying to find a list of goods; 'Operationalized' Board of Trade, notions on Board of Trade and AI is now a 'reality'.

- China Chief Trade Negotiator: Trade talks 'not bad', talks today [had a] 'good' atmosphere; talks will be continued on Mon among working group.

- Chinese provinces urges firms to 'seize the day' as Xi-Trump meeting provides trade stability - SCMP.

- China Central Bank (PBOC) 1-year and 5-year Loan Prime Rate Setting: Leaves both LPR rates unchanged (as expected); rates left on hold for the 16th straight month.

- (CN) China PBOC sets the yuan mid-point at 6.7487 v 6.7521 prior.

- China PBOC Open Market Operation (OMO): Sells CNY165B in 7-day Reverse Repos; Net injects CNY165B v drains CNY40.7B prior.

- China MOF sells 3-year and 10-year bonds.

- China Aug shipments of magnets to the US -21% m/m to 512 tons; cites China customs.

- HKMA: PBOC to issue CNY60B in 6-month bills in Hong Kong.

- CATL [3750.HK] Sees limited impact from China's new battery tax on orders - US financial press.

- Z.AI [2513.HK] The co's share price weakness has been attributed to reports related to 'unauthorized' data upload - US financial press; Notes a media report said the co's coding tool was 'silently' uploading local workspace data to external users without consent.

- New World Development [17.HK]: Shanghai Stock Exchange has accepted application for the proposed spin-off of REIT; the REIT offering is expected to be CNY3.82B.

Japan

- Japan markets are closed for holiday Sept 21-23rd [Mon-Wed].

- (JP) BOJ said to have conducted rate checks in FX markets - Nikkei [from NY morning on Sept 18th].

- BoJ GOV UEDA: We believe phase of policy has changed; short-term objective has changed significantly; getting more important to achieve 2% target stably [comments from Sept 18th].

- Japan Fin Min Katayama: Won't hesitate to conduct further coordinated FX intervention; Will work to maintain orderly FX market [comments from Sept 18th].

- SoftBank Group [9984.JP]: To offer $10B in USD-denominated bonds and €1.0B in Euro-denominated notes [5 tranche offering] - Press.

- Japan PM Takaichi cabinet approval rating unchanged at 62% - Nikkei poll [follows cabinet reshuffle announcement on Sept 17th].

- SEAJ: Japan Aug Chipmaking Equipment Billings Y/Y: +47.4% v +35.4% prior.

Korea

- Kospi Index opens +0.8% at 6,938.

- KEPCO [015760.KR] To leave Q4 electricity rates unchanged.

- South Korea Sept Exports 1-20 Days Y/Y: 78.3% v 56.0% prior; Imports Y/Y: 26.7% v 19.0% prior; Chip exports: +259.4 y/y (v 'nearly tripled' m/m) [Computer peripherals +187.6% y/y].

- South Korea Blue House: President Lee is expected to visit the US and Mexico Sept 21-27th.

- (KR) South Korea Blue House: Presidential Chief of Staff Kang Hoon-Sik has resigned.

- South Korea Military: Notes 3 South Korea soldiers were injured; cites 'explosion' south of the military demarcation line.

Other Asia

- AUO [AUO] Strength has been attributed to rumor regarding a possible collaboration agreement with Intel - Taiwan press; The collaboration could focus on the development of advanced packaging layouts and high-density computing chip integration solutions.

North America

-Anthropic: Reportedly IPO may be postponed until after the midterm elections; Plans to launch a new AI model ahead of IPO - press; Reportedly plans to stage its IPO in November [from Sept 18th].

- (US) Federal court files suit alleging that Anthropic, OpenAI, SpaceXAI and Google made an illegal deal to slow the pace of AI development - press; on the basis that it would reduce the value consumers get for paid AI subscriptions [weekend update].

- Accenture [ACN]: Accenture partners with Anthropic on AI safety; Each to invest at least $1B over 5 years.

- Google [GOOGL]: First known breakout by Google's AI reported as Gemini model hacked three companies - press.

- OpenAI: OpenAI expects roughly $278B of negative free cash flow from 2026 through 2030 despite forecasting nearly tenfold revenue growth to $350B in 2030 - press.

- Paramount [PSKY] Follow-up: The co's antitrust settlement talks could include a penalty, if the co. fails to release 30 movies per year; WSJ says the talks include a $1.5B investment in California - US financial press.

- (US) Trump Admin has asked budget director Vought to draft an order that would bring health research funding under President Trump's direct control - Politico [weekend update].

-(US) Trump: I am forming AI Force, much like Space Force; Will appoint an AI czar in the near future [weekend update].

-(US) FFAI Launches nine EAI robot configurations and four industry productivity solutions; Sales and delivery begin.

-(US) PFE Has agreed to share revenue with HHS when its able to increase prices for ex-US drug sales - press.

-*(US) Aug industrial production M/M: 0.0% V 0.3%E [from Sept 18th].

- (US) Fed's Schmid (hawk; non-voter in 2026): Price growth is not just about energy; Prices have been hot across a broad set of goods and serves [from Sept 18th].

- (US) President Trump: Reiterates gas prices were much higher under Biden than under “TRUMP.” So were almost all other prices. [**Note: Diesel prices in the US have exceeded $6.50/gallon].

-(US) White House issues President Trump meeting schedule for Mon: To meet with NYC Mayor Mamdani at 4:10 PM ET, to meet with France President Macron at 5:35 PM ET.

- US Fed and BOE to increase scrutiny of bank exposures to trading firms after loss by Jane Street - FT.

Europe

- (DK) US President Trump: announces security deal with Greenland and Denmark "completely addressing ALL of our many U.S. concerns"; Will immediately begin developing a large Military presence and will work with Greenland in its development and construction [from Sept 18th].

- Germany Chancellor Merz characterized the Mecklenburg-Western Pomerania regional election result as a ‘disaster’; The far-right AfD again made significant gains – financial press; According to exit polls, Merz's center-right CDU had only 5% in the regional election, which was the lowest result 'ever' since World War II.; Merz vowed to proceed with reforms; In Berlin, the CDU was projected to come in second with 20%, behind Die Linke at 24.5%. (Reminder from Sept 6th: Germany's AfD party scored a historic victory in the eastern state of Saxony-Anhalt].

- (TR) Turkey regulator extends fund liquidation period to 6 months - US financial press.

- (RU) IAEA: Informed that a cooling tower of nuclear reactor unit in Kursk, Russia was hit by a drone; The reactor unit's operation was not affected [from Sept 18th].

- (DE) Reportedly Bundesbank chief Joachim Nagel is largely considered to be out of the running to succeed ECB Pres Lagarde - press.

- (FR) Scope Ratings cuts France credit rating one notch to A+ from AA-.

- (UK) Sept Rightmove House Prices M/M: +0.7% v -2.0% prior; Y/Y: -0.8% v -1.0% prior.

- (TR) Turkish Foreign Minister Fidan: Current Middle East crisis is no longer tolerable economically; Its unacceptable that Saudi Arabia has been made a part of the US-Iran war when they have no desire to join the conflict.

- (FR) TTE.FR Venezuela Interim Pres Rodriguez signs MOU with Total Energies; No detail given.

- Volkswagen [VOW3.DE]: Cuts FY26 operating return on sales to "up to 1%" (prior: 4%-5.5%); Guides FY26 Rev to midpoint of -0.3% to 0.0% range [from Sept 18th].

- Porsche [P911.DE] Reportedly VW considering another 4,100 job cuts at Porsche AG - German press.

Middle East

-(IR) 12 vessels crossed the Strait of Hormuz over the weekend v 35 during the prior week; cites shipping data – financial press.

-(IR) Iran officials Iran have conveyed their conditions to mediators for re-engaging in negotiations for ending the war with the US - Al Jazeera [weekend update].

-(SA) Houthis claim to have attacked a 'sensitive' Saudi Aramco facility in Yanbu with drones and ballistic missiles; Saudi's say they repelled the attack - press [weekend update].

-(US) President Trump: Repeats Iran war is going to end very soon; Its a great honor to have China's Xi visit next week - press Q&A [comments from Fri post NY close].

- (US) Trump: Confirms US is talking to the Houthis, and they want a deal - press interview [from Sept 18th].

- (US) Reportedly at least 4 more US troops have died during the Iran war than the Pentagon has disclosed publicly - Washington Post [from Sept 18th].

Levels as of 01:20 ET

Nikkei 225 closed; ASX 200 flat; Hang Seng +0.4%; Shanghai Composite +0.5; Kospi +1.5%.

Equity S&P500 Futures +0.4%; Nasdaq100 +0.6%; DAX +0.5%; FTSE100 +0.3%.

EUR 1.1487-1.1474; JPY 157.11-156.58; AUD 0.7131-0.7112; NZD0.5728-0.5715.

Gold -0.7% at $4,396/oz; BTC +0.5% at $81,575 ; WTI Crude Oil -1.9% at $94.29/bbl; Copper +0.1% at $6.7263/lb.