TECH resumes declines as investors assess Tesla’s Capex guidance and SpaceX merger plans

Asia market update: TECH resumes declines as investors assess Tesla’s Capex guidance and SpaceX merger plans; BOK talked about chip spillovers; Multiple sell-side analysts increased their RBNZ rate hike ests amid sticky underlying CPI.

General trends and developments

- Nasdaq FUTs moved lower following Tesla’s earnings call. The co’s shares dropped by >3% in afterhours trading, while SpaceX lost ~1.5%. Interestingly, Elon Musk was said to have been vague about the planned SpaceX merger on the Tesla conference call. On the cost front, Musk stated the Terafab project would require ‘tens of billions’ in spending, while Tesla overall cut its FY26 Capex by 20% to $20B.

- Chip and chip-equipment firms have moved lower following the Tesla results. Further, Bank of Korea (BOK) Gov Shin commented on possible uncertainties related to spillovers from the chip industry. Recall, former BOK Gov Rhee recently said South Korea’s chip industry cycle may end ‘earlier’ due to developments related to Chinese tech [South Korea press from Oct 11th].

- 5G Communications companies have also declined in China as investors assess the implications of any SpaceX/Tesla merger. In Hong Kong, regulatory concerns have weighed on e-commerce firms as China’s market regulator urged e-commerce platforms to tighten product quality controls and strengthen consumer protection due to persistent problems with counterfeit goods. Alibaba has declined by >5% amid the regulatory concern and as investors assess the Q3 results from competitor Meta. AI-modeling firm MiniMax has dropped by >6% in HK after DeepSeek upsized its fundraising to $15B [>$12.0B had been speculated].

- AI-related credit concerns keep core government bonds bid: The US Treasury’s $13 billion 20-year bond reopening drew a yield of 5.469%, significantly above the previous auction’s 4.883%. However, the bid-to-cover ratio improved to 2.73x from 2.68x previously, remaining above the 2.71x average for the last eight reopenings. Meanwhile, following the US market close, CME FedWatch data indicated a 16.1% probability (vs. 15.1% previously) of a 25bp Fed rate hike to 4.00–4.25% at next Wednesday 28th FOMC interest rate decision.

- Weekly data shows foreigners continue to net buy JGBs (Japan released weekly flows data [period ended Oct 16th]: Foreign buying of Japan bonds [long-term debt securities]: ¥1.45T v ¥1.08T prior).

- Even still, softer auction demand has been seen in Australia after yesterday’s hawkish comments from RBA Dep Gov Hauser and ahead of next week’s CPI report [Oct 28th]. Demand, also, weakened at today’s NZ auction, as the RBNZ may hike rates by as early as next week.

- New Zealand’s Q3 CPI recorded an increase to +0.7% q/q (vs. +0.8% estimate), while annual inflation recorded an increase to +3.7% (vs. +3.8% estimate), but remained above the RBNZ’s 1–3% target for the fourth consecutive quarter. Markets are currently pricing in a 98% chance of a +25bps rate hike at the October 28th interest rate decision meeting next week and +50bps of cumulative rate hikes by February, 2027. For the upcoming October 2026 decision, NZIER has scheduled the Shadow Board release for Tuesday, 27th October, ahead of the RBNZ’s Monetary Policy Review.

- Bank Indonesia (BI) unexpectedly kept its benchmark BI Rate unchanged at 5.75% for the fourth consecutive meeting, despite market expectations for a +25bps hike to 6.00%, as policymakers prioritized rupiah stability amid external pressures and elevated global interest rates. BI adjusted other policy instruments, including cutting reserve requirements by a combined -200bps to 7.00% in November and December and raising its Deposit Facility rate by +25bps to 5.00%, while maintaining its 2026 GDP growth forecast at 4.9–5.7% and inflation forecast at 1.5–3.5%. However, the central bank widened its current account deficit forecast, reflecting external vulnerabilities and the potential need for stronger capital inflows to support rupiah stability.

- Aussie iron-ore miner Fortescue has declined by >3% on continued caution regarding China. The firm’s quarterly iron ore sales of 42.9Mt were below shipments, reflecting impacts from ongoing negotiations with state ore buyer China Mineral Resources Group (CMRG). If negotiations with CMRG are not concluded by calendar year-end, operations may be affected, according to Fortescue.

- US equity FUTs -1.4% to -0.7% during Asia trading.

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

-Sun Oct 18th: NZ Sept Trade Balance, (Sun night, CN Q3 GDP, CN Sept Industrial Production & Retail Sales & Unemployment Rate, CN NBS Press Conference).

-Mon Oct 19th: CN Sept FDI, CA Sept CPI & Core CPI, (Mon night, CN PBoC 1-Year & 5-Year Loan Prime Rate Settings, DE Sept PPI).

-Tue Oct 20th: US Sept Prelim Building Permits & Pending Home Sales, KR Sept PPI, (JP Sept Trade Balance, UK CPI & Core CPI, ID BI Interest Rate Decision).

-Wed Oct 21st: IN RBI Oct 5-7th Meeting Minutes, RU Sept PPI, US 20-Year Bond Auction, NZ Q3 CPI, (Wed night, KR BoK Interest Rate Decision, PH BSP Interest Rate Decision, HK Sept CPI, HK Sept Unemployment Rate).

-Thu Oct 22nd: EU Oct Preliminary Consumer Confidence, (Thu night, AU/JP/IN Oct Preliminary S&P/HCOB Mnfg/Svcs PMI, JP Sept National CPI & Core CPI, ID Sept M2 Money Supply, SG Sept CPI & Core CPI, TW Sept Industrial Production & Unemployment Rate, TW M2 & M3 Money Supply, EU Sept Car Registrations).

-Fri Oct 23rd: EU Preliminary Oct HCOB Mnfg/Svcs/Composite PMI, RU CBR Interest Rate Decision, US Preliminary Oct S&P Mnfg/Svcs/Composite PMI.

Holidays in Asia this week

-Mon Oct 19th: Hong Kong.

-Tue Oct 20th: India.

-Fri Oct 23rd: Thailand.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens -0.3% at 8,802.

-(NZ) New Zealand Q3 CPI Q/Q: 0.7% V 0.8%E; Y/Y: 3.7% V 3.8%E.

-(AU) Australia sells A$150M vs. A$150M indicated in 2.00% Aug 2035 inflation-indexed bonds; Avg Yield: 2.8373% v 2.759% prior; bid to cover 3.47x v 4.89x prior.

-(AU) BHP.AU AGM: Current plans expected to support compound annual production growth +3-4% through to 2035 company-wide. BHP Chairman Mcewan: There will be a time to look at uranium, but market is still too small.

-(AU) FMG.AU CEO: Affirms mining will be 'hit' if China CMRG deal is not reached 'soon'; mulling Capex and OPEX cuts if no deal is reached with China - post production update comments.

-(NZ) Westpac: Now expects RBNZ to raise cash rate to 3% on October 28th.

-(NZ) Reserve Bank of New Zealand (RBNZ) Q3 Sectoral Factor Model Inflation Index Y/Y: 2.8% v 2.7% prior.

-(NZ) New Zealand sells total NZ$450M vs. NZ$450M indicated in 2031 and 2036 bonds.

China/Hong Kong

-(CN) Shanghai Composite Index opens flat at 3,714; (HK) Hang Seng Index opens -0.6% at 23,514.

-(CN) China Sept Swift Global Payments (CNY): 3.3% v 3.2% prior.

-(CN) China reports 9M direct economic losses from natural disasters: CNY199.36B.

-(CN) China purchases 1M tons of Australian canola at $695-705/ton including C&F for early-2027.

-(CN) Shanxi province is ‘slowly’ increasing coal production before Winter - Xinhua.

-(CN) China has approved the first theatrical release of AI-made film - Chinese press.

-(CN) China PBOC sets the yuan mid-point at 6.7195 v 6.7192 prior.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY173B in 1-day Overnight Reverse Repo and 7-day Reverse Repos; Net injects CNY48B v injects CNY24B prior.

-(CN) DEEPSEEK.IPO Raises $15B v >$12.0B speculated; Tencent and CATL were confirmed as participants in the capital raise - US financial press.

Japan

-(JP) Nikkei 225 Index opens -0.1% at 64,566.

-(JP) Japan releases weekly flows data [period ended Oct 16th]: Foreign buying of Japan equities: -¥66.5 v ¥3.55T prior; Japan buying of foreign bonds: -¥161.6B v -¥339.9B prior.

-(JP) Japan Chief Cabinet Sec Kihara: Recommend websites using PHP to apply fixes promptly. Not received reports of PHP-related damages-(JP) Japan Ministry of Finance

(MOF): Temporarily suspending some website content and services while security measures are implemented.

-(JP) Japan sells ¥500B vs ¥500B indicated in Liquidity Enhancement Auction [remaining maturities of 5-11 years].

Korea

-(KR) Kospi Index opens -1.1% at 5,67019.

-(KR) Bank of Korea (BOK) leaves repo rate unchanged at 3.00%; as expected.

-(KR) Bank of Korea (BOK) Gov Shin: Will maintain tight policy stance until inflation converges toward target. Timing of further rate increases will depend on assessment of incoming data - Post-Rate Decision Press Conference.

-(KR) South Korea cyber agency urges security updates for PHP.

-(KR) South Korea law makers push EV production tax credit - Maeil.

-(KR) South Korea Defense Ministry: Calls on North Korea to come to the table to fend off accidental military clash.

-(KR) North Korea's Kim Yo Jong (sister of Kim Jong Un): Anti-South Korea loudspeakers will be on standby along entire border within days.

Other Asia

-(ID) Indonesia central bank (BI) leaves bi rate unchanged at 5.75%; not expected; Tweaks other rates [EU market close].

-(ID) Indonesia Central Bank (BI) Gov Damayanti: Global interest seen staying higher for longer - pre-rate decision press conference [EU market close]-(ID) Indonesia .

Exchange (IDX) issuing guidelines on removing HSC firms from benchmark index - Press.

-(ID) Indonesia Wealth Fund Danantara CIO: We have begun buying shares that we thought are attractive.

-(ID) MSCI was pressed by investors to justify recent warning on Indonesia; cites an investor call that occurred on Tues – US financial press [update].

-(TW) Taiwan to issue land warning on Thursday related to Typhoon Champi - Press.

-(TW) MU Taiwan's Taoyuan union: Will proceed with planned strike on Oct 22nd, after company reached agreement with separate Taichung union [US market close].

North America

-(US) DOE CRUDE: -3.1M V -1ME; GASOLINE: -3.0M V -0.5ME; DISTILLATE: +1.7M V -1ME [US market close].

-(US) PHP creators disclose critical security bug that could affect up to 70% of global websites; Patch was pushed out a day early after details were leaked; The critical bug was found using AI tools - WSJ.

-(US) MBA Mortgage Applications w/e Oct 16th: -5.3% v -2.7% prior (7th week of decline) [US market close].

-(US) Trump Administration said to offer loans from Northeast heating oil reserve - press [US market close].

-(US) Reportedly State Department preparing to issue ordered departure for some personnel and family members from US embassies across the Gulf region - press [US market close].

-(US) US, Israel develops plan for Iran strikes after election - NYT.

-(US) President Trump: Putin didn't ask for anything in return for release over Hubbard. We're doing very well against Iran - Reporters.

-(US) President Trump: On data centers, Trump tells voters to "ask for money" - The President holds a political rally in Pendleton [Pre-Credentialed Media], T. Ed Garrison Arena, Pendleton, SC.

-(US) USDA confirms first detection of New World Screwworm in US wildlife - Statement.

-(US) Politico receives retraction demand from White House counsel - Axios.

-(US) US, Guyana sign enhanced defense partnership - post on X.

-(US) ANTHROPIC.IPO Anthropic releases proactive agent, Claude Duet, available as a standalone app on IOS, Android and Claude.AI [US market close].

-(US) META Reports Q3 adj $7.40* v $6.54e, Rev $64.6B v $63.2Be; Raises Capex outlook [US market close].

-(US) META To establish new non-voting Class C common stock, effective in Jan 2027 [US market close].

-(US) TSLA Reports Q3 $0.48 v $0.45e, Rev $28.0B v $27.8Be [US market close].

-(US) TSLA CEO Musk: Terafab will require tens of billions in spending - comments from the Tesla earnings call.

-(US) TSLA TTN Summary earnings call: CEO: demand is growing rapidly for our vehicles; Biggest driver is FSD; Things have been flat for a while but now headed toward significant growth; Cuts FY26 Capex $20B (prior: $25B).

-(US) SPCX SpaceX-Tesla deal intended to close before end of Trump's term; To push for merger deal by H1 2027.

-(US) OPENAI.IPO Said to make its frontier AI models and Codex coding agent available through Google Cloud in the coming weeks - CNBC [US market close].

-(US) NVDA Plans to double semiconductor testing capacity from calendar 2026 to 2027, with high-volume production at new US testing facilities targeted for Apr 2027; Expands manufacturing capacity with six supply chain partners; Substrate capacity to rise 2.5x over three years [US market close].

-(US) NVDA Beijing 51WORLD Digital Twin Technology Co., Ltd [6651.HK] the Company’s subsidiary, Beijing 51Sim Technology Co., Ltd. (“51Sim”), has been included in the NVIDIA Halos SAFE ecosystem announced by NVIDIA at GTC on October 21, 2026, and is the only Chinese company in the ecosystem.

-(US) AMZN Statement: Amazon threat intelligence identifies PHP2Shell exploitation prior to public disclosure in Madpot.

-(VE) Venezuela President Rodriguez: Venezuela October tax revenue exceeds government target.

-(CO) Colombia President names new Interior Minister Alejandro Ordóñez.

Europe

-(RU) Kremlin spokesperson: Putin told Witkoff that he is prepared "in principle" to resume 3-way talks on Ukraine in mid-Nov; Believe Trump will be very satisfied to hear that [EU market close].

-(RU) Russia Moscow Mayor: 630 drones were heading towards Moscow overnight, most were downed.

-(DE) German Bundesbank Monthly Report: Inflation to remain elevated for some time [EU market close].

-(UR) Ukraine President Zelenskyy: Any peace deal would require a referendum [EU market close].

-(UR) Russian missiles struck Ukraine's Kyiv, citing witness.

-(UR) Russia Pres Putin's Aide: The war in Ukraine is 'moving toward an end' - press [US market close].

-(UR) Ukraine to purchase military supplies via Nato agency - FT.

-(EU) Euro Zone Sept EU27 New Car Registrations: 9.3% v 4.5% prior.

-(NL) Netherlands Sept House Price Index M/M: -0.4% v -0.1% prior; Y/Y: 2.9% v 3.3% prior.

-(NL) Netherlands Oct Consumer Confidence: -34 v -33 prior.

-(ES) PUIG.ES Q3 Net Rev €1.39B v €1.30B y/y; Affirms outlook [EU market close].

Middle East

-(IL) Israel central bank (BOI) leaves base rate unchanged at 3.25%; as expected [EU market close].

-(IR) Iran Foreign Min Araqchi: Given that US has shown no willingness to reach an understanding, there is little reason to expect progress now; Offering seven-day plan to end war and reopen Strait of Hormuz - FT [EU market close].

-(IR) IRGC Navy: Four vessels were hit and caught fire in Northern Gulf. Three other vessels struck mines west of Strait of Hormuz overnight and caught fire.

-(IR) US Treasury issues additional Iran-related sanctions targeting Iran's shadow fleet network; US authorizes offloading cargo from some sanctioned vessels.

-(SA) Saudi-led Coalition: Intercepted and destroyed four drones in Eastern province.

Levels as of 01:20 ET

Nikkei 225 -2.3%; ASX 200 -0.4%; Hang Seng -3.1%; Shanghai Composite -1.4%; Kospi -3.8%.

Equity S&P500 Futures -0.7%; Nasdaq100 -1.4%; DAX -0.6%; FTSE100 -0.4%.

EUR 1.1256-1.1227; JPY 158.25-157.60; AUD 0.7037-0.7007; NZD 0.5711-0.5680.

Gold -1.3% at $4,086/oz; BTC +0.3% at $82,891; WTI Crude Oil +1.9% at $99.02/bbl; Copper -1.6% at $6.4773/lbs.