US/Iran talks unsurprisingly said to have yielded little progress

Asia market update: US/Iran talks unsurprisingly said to have yielded little progress [Axios]; Macro data picks up into month/quarter-end; CN PMIs expand ahead of extended mainland holidays; AU yields declined on CPI data; Fed rate hike probs collapse pre-ADP data.

General trend and developments

- Nasdaq FUTs re-opened +0.1% at 29,303 (v 29,272 at the close) and S&P 500 FUTs re-opened +0.1% at 7,637 (v 7,623 at the close), while WTI Crude FUTs re-opened +0.1% at $89.04/bbl (v $88.94/bbl at the close) and Brent Crude Oil FUTs re-opened flat at $95.73/bbl (v $95.69/bbl at the close).

- Asian equity markets trade mixed ahead of month and quarter-end. Japanese stocks rebound from yesterday’s ex-dividend driven losses. Dovish RBA Bullock comments and Aug CPI data have supported the S&P ASX 200. Chinese markets are directionless ahead of the upcoming holidays, with little impact seen from the PBOC’s targeted easing measures.

- Oil FUTs have remained tame in Asia, while bond yields have been generally quiet. Crude prices saw modest declines in NY as the US Energy Department announced a new 40M bbl release from the SPR and reportedly was pressuring the EU to release strategic diesel stockpiles. Meanwhile, the Trump Administration continues to debate a possible diesel export ban ahead of the Nov US mid-term elections [FT]. Unsurprisingly, the US/Iran talks were said to have yielded little progress, according to Axios.

- Crude prices saw modest declines in NY as the US Energy Department announced a new 40M bbl release from the SPR and reportedly was pressuring the EU to release strategic diesel stockpiles. Meanwhile, the Trump Administration continues to debate a possible diesel export ban ahead of the Nov US mid-term elections [FT].

- Fed rate hike probabilities collapsed after comments from NY Fed’s Williams [currently 47.1% v 70.9% prior day]. During the NY session, the comments pulled the short end of the US Treasury curve lower into the NY afternoon. Less tightening by the Fed could, perhaps, leave reduced work for the BOJ, as markets ponder whether the Japanese central bank will have the appetite for back-to-back rate hikes when it next meets in Oct. Japan bond traders seem unscathed regarding October as evidenced by the stronger demand seen at today’s 2-year JGB auction into month/quarter-end. Tomorrow’s releases out of Japan [Sept BOJ Summary of Opinions and Q3 Tankan Survey] may offer more clarity on the BOJ’s thinking.

- Big misses seen for South Korea and Japan Aug industrial production amid one-off factors. Both figures were weighed down by weaker auto output. South Korea’s auto production saw the largest decline since May 2020. Hyundai Motor’s domestic labor union had announced a 5-day strike in late Aug. Japanese automakers had, also, noted Aug production disruptions due to the Kumamoto earthquake.
-Meanwhile, Japan Retail sales fell -1.2% m/m, in line with expectations, as the country continues to work towards its 2% underlying inflation target. (**Note: Japan delivered its sixth rate hike of the current tightening cycle on 17/09/2026, extending the BoJ’s gradual policy normalization.).

- Chinese RatingDog and official PMIs all expanded during Sept. The RatingDog manufacturing data showed the 16th straight monthly rise for new orders. There was interest among some clients in building safety stocks amid higher purchasing cost, according to analysts. PBOC adhered to targeted easing pledge.

- Australia’s core inflation was inline with expectations and the prior data. The 5.6% y/y rise in transportation costs helped lift the headline index. Some in the market are now debating whether the RBA will pause its monetary tightening after Tuesday’s rate hike. OIS have placed an >55% probability that the RBA will be reluctant to implement back-to-back rate hikes when the central bank next meets in Nov.

- Looking back at the Australian RBA decision on 11/08/2026 to maintain cash rate target unchanged at 4.35%, in the statement, RBA affirmed to do what is necessary to bring CPI back to its inflation target range of between 2.0-3.0%. Today’s Australia August CPI reading remained elevated at 4.0% y/y, materially above the target range, justifying the most recent RBA decision on 29/09/2026 to raise the cash rate target by +25bp to 4.60%. (**Note: 4th hike under the current tightening cycle but follows 3 consecutive pauses since 02/02/2026 in its current phase of the tightening cycle.).

- US equity FUTs -0.1% to +0.1% during Asia trading.

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

- Mon Sep 28th: IN Aug Industrial Production, MX Aug Trade Balance, (Mon night, AU RBA Interest Rate Decision & Statement, JP July Leading Index & Coincident Indicator).

- Tue Sep 29th: EU Sept Economic Confidence, CA July GDP, US Sept CB Consumer Confidence, US Aug JOLTS Job Openings, (Tue night, KR Aug Industrial Production & Retail Sales, JP Aug Industrial Production & Retail Sales, AU Aug Building Approvals, CN Sept Government & RatingDog Mnfg/Svcs/Composite PMI, JP Aug Housing Starts & Construction Orders, UK Q2 GDP).

- Wed Sep 30th: IN Q4 Trade Balance, US Q2 GDP, US Aug PCE & Aug Core PCE, RU Aug GDP & Retail Sales & Unemployment Rate, CO BanRep Sept Interest Rate Decision, (Wed night, Global Asia Sept S&P/HCOB Mnfg PMIs Day, JP BoJ Sept Summary of Opinions, JP Q3 Tankan Index, KR Sept Prelim Trade Balance, AU Aug Trade Balance & RBA Financial Stability Review, ID Aug Trade Balance).

- Thu Oct 1st: Global Europe Sept S&P/HCOB Mnfg PMIs Day, EU Aug Unemployment Rate, US Sept S&P/ISM Mnfg PMI, (Thu night, KR Sept CPI, JP Sept Tokyo CPI & Core CPI, JP Aug Unemployment Rate, HK Aug Retail Sales).

- Fri Oct 2nd: AU Sept Preliminary CPI & Core CPI, US Sept Unemployment Rate & Non-Farm Payrolls & Average Hourly Earnings & Participation Rate, SG Sept S&P Mnfg PMI, (Fri night, VN Q3 GDP, Sept CPI & Trade Balance & Retail Sales & Industrial Production).

Holidays in Asia this week

- Mon Sep 28th: Taiwan.

- Thu Oct 1st: China, Hong Kong.

- Fri Oct 2nd: China, India.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens flat at 8,714.

-(AU) AUSTRALIA AUG CPI M/M: 0.4% V 0.5%E; Y/Y: 4.0% V 4.1%E.

-(AU) Australia Aug Building Approvals M/M: -6.1% v -1.0%e.

-(AU) Australia Aug Private Sector Credit M/M: 0.6% v 0.5%e; Y/Y: 8.4% v 8.4% prior.

-(AU) Former RBA Gov Lowe said Labor should be running surpluses in order to slow inflation – AFR [update].

-(AU) Australia ASIC: Increases low volume financial market transaction threshold by A$1M.

-(AU) Australia Greens Party announces new leadership team: Elects Senator Shoebridge as new leader.

-(NZ) New Zealand Sept ANZ Business Confidence: 51.9 v 53.7 prior.

-(NZ) RBNZ: New Zealand Aug residential lending growth hit a 10-month low - update.

China/Hong Kong

-(CN) Shanghai Composite Index opens +0.2% at 3,839; (HK) Hang Seng Index opens -0.5% at 24,393.

-(CN) China PBOC sets the yuan mid-point at 6.7351 v 6.7411 prior [strongest CNY fix since Feb 2nd, 2023].

-(CN) China Sept (govt official) Manufacturing PMI: 50.1 V 50.1E (1st month of expansion after 2nd month of contraction).

-(CN) China Sept RATINGDOG Manufacturing PMI: 52.1 V 51.7E (11th month of expansion).

-(CN) China PBOC adjusts some monetary policy tools; cuts PSL rates by 0.25ppts with 1-year psl down from 1.75% to 1.50%, effective oct 1st [EU Market Close].

-(CN) China Commerce Ministry (MOFCOM): If European side persists in introducing discriminatory restrictions on Chinese enterprises or products, China will resolutely respond in interest of China's industry.

-(CN) China Commerce Ministry (MOFCOM): Beef imports from Brazil reached quota; Brazil beef imports to add extra tariffs from October 1st, 2026.

-(CN) China Military: Stationed readiness patrols over Scarborough Shoal's sea and airspace.

-(CN) China NDRC solicits opinion on risk management of electricity market; risks include unfair competition, contract defaults and abnormal market prices - US financial press.

-(CN) China: Fully allocated CNY250B in funds for trade-in program.

-(CN) China to issue 3 ultra-long special government bonds in October - Press.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY0 in 7-day Reverse Repos; Net injects CNY127B v injects CNY93B prior.

-(HK) Weak demand has led companies in China in cancel planned HK IPOs as >10 Chinese A-share companies have withdrawn their HK IPOs – China Securities Times.

-(HK) HKMA: IP financing sandbox has cleared 7 pilot cases - Press.

Japan

-(JP) Nikkei 225 Index opens +1.0% at 66,091.

-(JP) Japan Aug Retail Sales M/M: -1.2% V -1.1%E; Y/Y: 2.7% V 3.2%E.

-(JP) Japan Aug preliminary industrial production M/M: -1.7% V +1.3%E; Y/Y: 3.4% V 6.8%E.

-(JP) Japan sells ¥2.8T VS. ¥2.8T indicated in 2-year JGB bonds; AVG YIELD: 1.9640% V 1.7080% prior; bid-to-cover: 3.89X V 2.97X PRIOR.

-(JP) Japan Aug Annualized Housing Starts: 753K v 766Ke; Y/Y: 6.1% v 7.0%e.

-(JP) USD/JPY Japanese yen strengthens as much as +0.4% in early trading.

-(JP) Japan, US, Europe to agree to a steel monitoring framework at the ministerial meeting of the international conference GFSEC, Wisconsin, USA - Yomiuri.

Korea

-(KR) Kospi Index opens +1.1% at 6,943.

-(KR) South Korea Aug Industrial Production M/M: -4.8% v 0.2%e; Y/Y: -2.2% v 3.7%e.

-(KR) South Korea Finance Ministry: South Korea closely monitoring government bond market; Reiterates South Korea may conduct emergency buybacks if rates rise too much - Statement.

-(KR) North Korea claims that South Korea is 'cooking up groundless results' over the Minen blast in the DMZ that injured S. Korean troops - North Korean state media.

-(KR) UN Command: DMZ blast is violation of armistice agreement - Yonhap.

-(KR) South Korea Military: North Korea's fortification works increase tensions on Korean peninsula; North Korea should stop fortification works immediately.

Other Asia

-(IN) India finalizes the more strict fuel efficiency rules for passenger vehicles, effective for 5-years from Apr 1st 2027.

-(TH) Thailand Aug ISIC Manufacturing Production Index Y/Y: 4.4% v 1.0%e.

-(TH) Thailand revises manufacturing index to capture new industries - US financial press.

-(PH) Philippines Aug Trade Balance: +$3.9B v -$5.4Be.

-(PH) Philippine Central Bank (BSP): Sept inflation likely within range between 6.4% to 7.4% (vs. 6.1% prior).

-(SG) Singapore July M2 Money Supply Y/Y: 3.2% v 2.7% prior.

-(ID) Indonesia Central Bank committed to respond to FX volatility with spot instruments when necessary.

-(SL) Sri Lanka Central Bank (CBSL) leaves Overnight Rate unchanged at 8.75%; as expected.

North America

-(US) President Trump: AI meeting very productive; What we discussed will make the world safer [US Market Close].

-(US) Fed's Williams (moderate, voter): No need for urgency after Sep hike; See inflation slowing to just above 2% next year [US Market Close].

-(US) US DOE offers up to 40M barrels from strategic oil reserve (SPR) - US Energy Dept statement [US Market Close].

-(US) Sept consumer confidence: 81.9 V 89.0E [US Market Close].

-(US) AUG JOLTS JOB OPENINGS: 7.079M V 7.228ME [US Market Close].

-(US) JULY FHFA HOUSE PRICE INDEX M/M: 0.3% V 0.1%E [US Market Close].

-(US) SEPT DALLAS FED SERVICES ACTIVITY: -1.8 V 1.6E [US Market Close].

-(US) JULY S&P COTALITY HOUSE PRICE INDEX (20-CITY) M/M: 0.32% V 0.21%E; Y/Y: 2.47% V 2.20%E [US Market Close].

-(US) Fed's Barr (voter): Expects GDP growth to pick up a bit in second-half of year from 2% pace in first half [US Market Close].

-(US) White House said to have urged EU to draw down diesel emergency inventories to help lower global prices - press [US Market Close].

-(US) Fed's Musalem (non-voter, hawk): Fed framework does not promise a specific interest rate path; A clear framework helps policy transmission [US Market Close].

- (US) OPENAI.IPO OpenAI unveils 'dots', always on autonomous agents across Pro paid tiers; Launches ChatGPT 6.1 Sol, at one fifth the price of Astra.

- DevDay keynote [US Market Close].

- (BR) Brazil Sept FGV Inflation IGPM M/M: 1.6% v 1.6%e; Y/Y: 3.3% v 3.3%e [US Market Close].

- (US) Weekly API Crude Oil Inventories: +1.0M v +1.8M prior.

- (US) White House holds talks on diesel export ban as Midterms near - FT.

- (US) FHFA Dir Pulte: AI will lower costs in title, mortgage insurance - post on X.

- (US) Reportedly President Trump plans to unveil $54B Alaska LNG plan - press.

- (US) USTR Greer: Will take trade deal tariff caps into consideration in determining any tariffs in Section 301 excess capacity investigation.

- (US) US Navy plans to order 30 Medium Unmanned Surface Vessels with an expected avg cost of $40M per MUSV - press.

- (US) White House: President Trump and US Commerce Sec Lutnick to make an announcement on Wed at 3:30 PM ET.

- (US) Hedge funds now hold a record share of the US Treasury market – CNBC [update].

- (US) President Trump: Jay Clayton would be a good AI Czar - comments to Axios.

- (US) ANTHROPIC.IPO Company received 47% of sales from distributors Amazon, Google in 2025 - IPO filing.

- (US) TSLA Enters $20B, 3-yr delayed draw term loan facility along with two additional credit agreements - filing.

- (US) SPCX CEO Musk: SpaceX is aiming together with Tesla to do 200GW of solar production annually; Targeting at least 300BW annually of AI compute - comments from Washington event.

- (US) BA Awarded US Navy's next generation fighter jet contract worth over $20B.

- (US) OPENAI.IPO Facing a lawsuit by the Legal Advocates for Safe Science & Technology (LASST) over autonomous AI agent hacks under California's Unfair Competition Law - US financial press.

- (CA) Canada said to have a backup plan in case US President Trump bans diesel exports - US financial press.

- (CA) CLF Canada PM Carney: Canada very disappointed by Cleveland-Cliffs' decision to idle part of the Hamilton plant.

Europe

-(EU) Energy Commissioner: Not planning an EU-wide windfall tax, better to have any such tax on a national level [US Market Close].

-(EU) IEA Chief Birol: Europe is going to enter a very difficult winter; Additional oil stock release not at top of the agenda [EU Market Close].

-(EU) ECB's Escriva (Spain): Still not in a restrictive territory; What I would start to worry about is the global upward trajectory of long-term rates [EU Market Close].

-(UK) BOE’s Mann: Inflation staying above 2% is a credibility problem [EU Market Close].

-(UK) BOE's Taylor: Policy should not mechanically react to movements in energy prices if those movements remain primarily relative price shocks [EUI Market Close].

-(UK) PM Burnham: Will honour promise to keep pension triple lock for now; In April 2030 will adjust state pension to fund National Care Service [EU Market Close].

-(UK) Sept Lloyds Business Barometer: 41% v 53% prior [marking a 17th month low].

-(UK) UK Aug Vehicle Manufacturing Y/Y: 40.9K, +5.7% - SMMT [update].

-(FI) Finland Aug Retail Sales Volume Y/Y: 3.7% v 2.0% prior.

-(FI) Finland Aug GDP Indicator Y/Y: 2.3% v 1.4% prior.

-(HU) Hungary Central Bank (MNB) Dep Gov Kurali: Hungary paused rate-cut cycle on worsening market risks [EU Market Close].

-(PL) Polish Army: Ground-based air defense systems and radar reconnaissance have reached a state of readiness.

Middle East

-(SA) Senior Saudi Arabia official denies meeting between any Saudi official and Israeli officials - US financial press.

Levels as of 01:20 ET

Nikkei 225 +1.9%; ASX 200 +1.0%; Hang Seng flat; Shanghai Composite +0.3%; Kospi -0.6%.

Equity S&P500 Futures +0.1%; Nasdaq100 -0.1%; DAX +0.7%; FTSE100 +0.6%.

EUR 1.1346-1.1329; JPY 157.46-156.37; AUD 0.6997-0.6959; NZD 0.5651-0.5634.

Gold -0.3% at $4,172/oz; BTC -0.1% at $83,349; WTI Crude Oil +0.4% at $89.70/bbl; Copper -0.5% at $6.6233/lbs.