Trump flies to KR, leaving behind fresh record highs for JP stocks

Asia Market Update: Trump flies to KR, leaving behind fresh record highs for JP stocks; CN to buy US soybeans; Hynix profits +62% on demand outstripping supply for HBM; AU hot CPI craters bets on RBA rate cut; Focus on US FOMC decision + GOOG + META + MSFT earnings.

General trend and developments

- The Trump Show moved onto South Korea today for the APEC Summit and the much-anticipated meeting with China’s Pres Xi where the market is expecting Scott Bessent’s weekend announcements of a ‘framework deal’ to be rubber-stamped.

- The WSJ broke news prior to APEC that the US’ fentanyl-related 20% tariff on China would be cut in half in exchange for a crackdown on fentanyl distribution.

** Breaking news prior to this publication; reports that giant China food distributor COFCO to purchase 3 cargoes of US Soybeans (~180Kt), comes ahead of Trump-Xi meeting

- Aussie dollar spiked back over 66c and 3-year yields shot up +9bps with the curve flattening overall as AU Q3 and Sept CPI came in hotter than expected. [First time Trimmed mean annual inflation has increased since Dec 2022]. Housing +5.6% was the largest contributor. ASX index down -0.6%. Chances of a RBA rate cut next crashed from 40% pre-data to just 8% after.

- Chip-maker SK Hynix reported 62% increase in Q3 Net profits, however Revenues slightly missed estimates. Company did guide 2026 Capex to rise “considerably” amid demand outstripping supply for HBM, seen growing at 30% pa for the next five years.

- Fresh record high for the Nikkei, up another 2.4% hitting 51K, (Kospi not far behind +1.8% also at another fresh record), with significant advances in many of the Japanese corporates mentioned below…

- A who’s who of Japanese industrial companies partnering with a swath of US companies comprised last night’s Joint Fact Sheet for an initial $490B of Japan-to-US Investment, which if implemented would cover the bulk of the promised $550B total package in return for Japan’s reduced 15% tariff rate. Mitsubishi Heavy +1.1%, Toshiba +4.5%, IHI +0.3%, Hitachi Construction +3.5%, Softbank +2.3%, Mitsubishi Electric +2.5%, Murata Manufacturing 2.1%, Fujikura +5.3%, TDK +0.6%, Panasonic +1.9% plus consideration of more Japanese suppliers and component makers to invest and collaborate with US companies across sectors in the US economy such as energy storage, power stations, power transmission, grid electrification, gas and steam turbines, generators, shipbuilding, auto-related, supply chains, rare earths, copper smelting, ammonia, crude oil exports, lithium-iron, electronic components, industrial infrastructure, nuclear reactors and SMRs.

- US and Japan also followed up last night with a “technology prosperity deal”. No binding funding but aims to counter China-dependent supply chains in AI, semiconductors, quantum computing, fusion energy, space, and biotech. Comes amid US Sec of War Hegseth meeting Japan Defense Min Koizumi to boost defense collaboration further.

- JPY/USD up further on a post on X by US Treasury Sec Bessent: (following talks with Japan Finance Min Katayama), noting Japan's willingness to “allow the BOJ policy space” is key. (USD later pared losses v JPY).

- As the offshore Yuan hit 7.09 and approaches the year’s high of 7.08, China PBOC has net injected ~CNY700B in funds via daily open market operations in just the past two days.

- Continued weakness in GBP/USD as Goldman Sachs now sees BOE cutting 25bps in Nov, (vs no cut prior).

** Japan-US Commentary: Looking at Trump’s meetings with Takaichi, measured both in substance and style, one cannot help but think back to the close relationship that Reagan formed with Thatcher in the 1980’s. If Takaichi can consolidate power and pass her legislative agenda in what is currently a minority LDP government, the Japan-US relationship may in time be seen as when the Japan-US relationship superseded the traditional UK-US “special relationship” in an increasingly multi-polar world.

Note: Prior to Trump’s Tokyo visit, Takaichi’s cabinet received a 75% approval rating in Japan, the highest since the popular PM Junichiro Koizumi’s cabinet first took office in 2001 (87%).

- US equity FUTs +0.2% to 0.3% during Asian trading.

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

** Mon 26th through Fri Oct 30th; Trump to visit ASEAN in Malaysia (26th), PM Takaichi in Japan (27-29th), then meet Xi at APEC in South Korea (Oct 30th, Nov 1st).

- Tue Oct 28th KR Oct Consumer Confidence, KR Q3 Adv GDP, DE Nov Consumer Confidence.

- Wed Oct 29th KR Oct Business Confidence, AU Q3 CPI, JP Oct Consumer Confidence (Wed night BOC rate decision, US FOMC rate decision, GOOG + META + MSFT earnings).

- Thu Oct 30th JP BOJ rate decision, BOJ Quarterly Outlook; KR Trump-Xi meeting at APEC, (Thu eve various EU GDP releases, DE Oct CPI, EU ECB rate decision, AAPL + AMZN earnings).

- Fri Oct 31st JP Sept Industrial Prod + Retails Sales, CN Oct Manufacturing PMI (Fri eve EU CPI).

- Sat Nov 1st KR Oct Exports, New US tariffs to take effect on CN if no Trump/Xi agreement reached (additional 100% on various imports.

Holidays in Asia this week

- Mon Oct 27th New Zealand.

- Wed Oct 29th Hong Kong.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 9,015.

- AUSTRALIA SEPT CPI Y/Y: 3.5% V 3.1%E.

- AUSTRALIA Q3 CPI Q/Q: 1.3% V 1.1%E; Y/Y: 3.2% V 3.0%E (highest quarterly rise since 2023).

- The probability of a RBA rate cut in Nov has declined to <10% vs ~40% before the Q3 and Sept CPI data.

- RBNZ Financial Markets Dir Richardson: Transmission of recent OCR cuts to domestic financial conditions are playing out largely as expected.

- RBNZ says has completed organization restructuring, reducing headcount by 134 since March 31st.

- New Zealand Revenue Minister: Confirms plan to review the FIF regime.

China/Hong Kong

- Hang Seng closed for holiday; Shanghai Composite opens +0.1 at 3,990.

- China's COFCO foods: *TO PURCHASE 3 US SOYBEAN CARGOES OF TOTAL 180KT; Comes ahead of Trump-Xi meeting.

- Tech-focused STAR Market lists first three "unprofitable" firms (yesterday) - China Securities Journal.

- (US) Agriculture Sec Rollins: Think we are close to a deal with China on soybeans [overnight update].

- (SA) Saudi Arabia AI Chief Tareq Amin has vowed not to use Huawei tech in order to gain access to US chips – press [overnight update].

- Reportedly Trump and Xi discussing lowering the fentanyl-related 20% tariff on China in exchange for a crackdown on fentanyl distribution; US could cut the tariff in half to 10% - WSJ.

- China Pres Xi: To use domestic circulation to offset external uncertainties; To modernize defense and armed forces; Balancing development and security to become more difficult [overnight update].

- China releases details of recent 4th Plenum decisions: To keep economic growth within reasonable balance; vigorously increase consumption; To promote embodied intelligence as new economic driver [overnight update].

- China PBOC sets Yuan reference rate: 7.0843 v 7.0856 prior [strongest since Oct 15, 2024].

- China PBOC Open Market Operation (OMO): Injects CNY558B in 7-day reverse repos; Net CNY420B v injects CN316B prior.

Japan

- Nikkei 225 opens +0.5% at 50,453.

- (US) Sec of War Hegseth: Great meeting with Japan Defense Min Koizumi; I welcome Japan's recent commitment to increase its defense spending - financial press.

- US Treasury Sec Bessent: (following talks with Japan Finance Min Katayama) Notes Japan's willingness to allow BOJ policy space is key - post on X.

- US Agriculture Sec Rollins: Japan commits to buy $8B of US soybeans and corn, rice, ethanol among other good - X post[overnight update].

- Japan Chief Cabinet Sec Kihara: Reiterates monetary policy falls under the jurisdiction of the BOJ; Declines comment on remarks from US Treasury Sec Bessent [comments ahead of Thurs. BOJ decision].

- Japan METI Min Akazawa: Possible car projects to be in $550B fund projects.

- US and Japan reportedly sign technology prosperity deal [overnight update].

- Japan issues Joint Fact Sheet for Japan-U.S. Investment; Japan and US sign MoU on shipbuilding [overnight update].

Korea

- South Korea Oct Business Manufacturing Survey: 92.4 v 93.4 prior.

- South Korea Sept Retail Sales Y/Y: 7.7% v 3.7% prior.

- US Pres Trump: Great honor to be in South Korea; Confirms to meet South Korea Pres Lee 'this afternoon' - financial press.

- South Korea President Lee Office: Lee and US President Trump will discuss trade, investment and 'Korea peace'; hopes Trump visit will lead to tangible outcome of cooperation.

- Hynix: *Reports Q3 (KRW) Net 12.60T v 8.60Te, Op 11.38T v 11.23Te, Rev 24.4T v 24.51Te; *2026 CAPEX TO RISE "CONSIDERABLY".

- Amazon Subsidiary AWS to invest $5.0B in South Korea by 2031; AWS unveiled the investment plan back in Jun - financial press.

- Bank of Korea (BOK) Gov Rhee: 2025 GDP growth might be >1.0% v 0.9% projection [follows higher than expected Q3 GDP data].

- South Korea and US Announce MoU on technology "prosperity", including speeding up AI innovation.

- Reportedly South Korea and US are anticipated to sign deal boosting AI and quantum cooperation [overnight update].

- South Korea and US may announce joint factsheet on security - South Korea press.

Other Asia

- Thailand Central Bank (BOT) releases joint statement with US Treasury; Intervention in foreign exchange markets should be for combatting excess volatility, disorderly movements.

- Taiwan Sept Monitoring Leading Indicator: 35 v 31 prior [overnight update].

North America

- (US) President Trump: 'Reiterates' Toyota investment; Think 'we're going to have a great meeting with Xi', relations with China 'very good'.

- MSFT Signs new agreement with OpenAI, supports moving forward with formation of public benefit corp and recapitalization; OpenAI contracts to buy incremental $250B of Azure services.

- (MX) Mexico Sept Unemployment Rate: 3.0% v 2.9%e.

- (US) ADP PRELIMINARY EMPLOYMENT CHANGE FOR 4-WEEKS ENDING OCT 11TH: +14.3K [*Note: new weekly U.S. private sector employment report, to be published every Tuesday].

- (US) Transportation Sec Duffy: We will slow down air traffic [**TTN Note: 13,000 air traffic controllers and 40,000 TSA workers are also expected to miss paychecks on Oct 28].

- Rev $800-850M, adj EBITDA $42-46M.

- (US) AUG S&P COTALITY HOUSE PRICE INDEX (20-CITY) M/M: +0.2% V -0.10%E; Y/Y: 1.6% V 1.30%.

- (US) AUG FHFA HOUSE PRICE INDEX M/M: +0.4% V -0.1%E.

- (US) OCT RICHMOND FED MANUFACTURING INDEX: -4 V -12E; Volume of new orders: -6 v -15 prior.

- (US) OCT CONSUMER CONFIDENCE: 94.6 V 93.4E.

Europe

- (UK) Goldman Sachs now sees BOE cutting 25bps in Nov, vs no cut prior - financial press.

- (ES) PM Sanchez's government has been weakened after Catalan separatists voted to cut ties with the Socialist.

- (IE) Ireland Q3 Preliminary GDP Q/Q: -0.1% v +0.2% prior; Y/Y: 10.5% v 17.1% prior.

Levels as of 01:20 ET

- Nikkei 225 +2.4%, ASX 200 -1.0% Hang Seng closed; Shanghai Composite +0.4%; Kospi +1.4%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; DAX -0.2%; FTSE100 +0.1%.

- EUR 1.1628-1.1661; JPY 151.54-152.36; AUD 0.6577-0.6607; NZD 0.5772-0.5789.

- Gold -0.3% at $3,972/oz; BTC -0.5% at $113,150; Crude Oil -0.1% at $61.09/bbl; Copper +0.1% at 5.1762/lb.