USD down vs safe-haven FX, equities initially declined, losses were later cut on Trump comments

Asia market update: Democrats projected to win both the US Senate and House amid Republican rout; Trump suggested he will not challenge the results, made conciliatory comments regarding Iran; USD down vs safe-haven FX, equities initially declined, losses were later cut on Trump comments; US ADP employment data due.

General trends and developments

- US equity FUTs -0.5% to -0.4% during Asia trading.

- The 2026 US Midterm elections saw significant gains for the Democratic Party, with the party reportedly securing majority control of both the Senate and the House of Representatives.

- Several notable Senate victories contributed to this shift, including James Talarico's win in Texas, Adam Hamilton's victory in Kansas, Annie Andrews' success in South Carolina, North Carolina's Roy Cooper, and Sherrod Brown's Ohio race, marking significant milestones for Democrats in these traditionally Republican states.

- These results represent a notable shift in the political landscape, particularly given the historic nature of several victories, including Texas electing its first Democratic senator since 1988, Kansas breaking a 94-year Democratic Senate drought dating back to the Great Depression in 1932, and South Carolina electing its first female Senator while returning a Democrat to the Senate for the first time since 1998.

- Since the Democrats appear to have easily gained control of both US chambers, this should, perhaps, at least limit uncertainty regarding the actual midterm election voting result. President Trump even suggested that he would not challenge the election results. Even still, equity markets extended declines during Asia as it became more likely that the Democrats would be victorious.

- Financial and political topics ahead of the midterms included the SpaceX/Tesla merger, data center opposition, AI governance, Anthropic’s IPO and Trump’s foreign policy [Trade, Iran]. Impeachment, prosecutions and possible cabinet changes have, also, been focal points.

- NZ bond yields and RBNZ rate hike expectations decline on disappointing jobs data. The data may partially explain the caution by the NZ central bank when it unexpectedly left rates unchanged in late Oct.

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

- Mon Nov 2nd: Global EMEA Oct S&P/HCOB Mnfg PMI, Global AMER Oct S&P/ISM Mnfg PMI, (Mon night, KR Oct CPI, VN Oct CPI & Industrial Production & Retail Sales & Trade Balance & FDI - USD, AU RBA Interest Rate Decision + Statement, HK Q3 Preliminary GDP & Sept Retail Sales).

- Tue Nov 3rd: FR Sept Government Budget Balance, US Sept JOLTS, KR Oct FX Reserves - USD, (Tue night, NZ Q3 Unemployment Rate, Global APAC Oct S&P/RatingDog/HSBC Svcs PMI, JP Oct Monetary Domestic Base).

- Wed Nov 4th: Global EMEA Oct S&P/HCOB Svcs/Cmps PMI, EU Oct Preliminary CPI & Core CPI, US Oct ADP Nonfarm Employment Change, US Sept Trade Balance, CA Sept Trade Balance, Global AMER Oct S&P/ISM Svcs/Cmps PMI, BR BCB Interest Rate Decision, (Wed night, KR Sept Current Account, JP Sept 17-18th BoJ MPM Minutes, AU Sept Trade Balance, PH Oct CPI & Core CPI, TH Oct CPI & Core CPI, JP 10-Year JGB Auction, SG Q3 GDP & Sept Retail Sales, MY BNM Interest Rate Decision, TW Oct CPI & FX Reserves - USD).

- Thu Nov 5th: FR 10-Year OAT Auction, EU Sept PPI, UK BoE Interest Rate Decision + Statement, BR Sept Industrial Production, US Q3 Preliminary Nonfarm Productivity & Unit Labor Costs, MX BdeM Interest Rate Decision, (Thu night, PH Sept Industrial Production, ID Oct FX Reserves - USD).

- Fri Nov 6th: DE Sept Industrial Production, HK FX Reserves - USD, EU Sept Retail Sales, PH Oct FX Reserves - USD, US Oct Unemployment Rate, CA Oct Unemployment Rate, US Nov Preliminary Michigan Inflation Expectations, UR Oct FX Reserves - USD (Fri night, CN Oct FX Reserves - USD).

Holidays in Asia this week

- Mon Nov 2nd: Philippines.

-Tue Nov 3rd: Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 Index opens -0.6% at 8,835.

- Australia Sept Household Spending M/M: 0.6% v 0.2%e; Y/Y: 6.8% v 6.5% prior.

- Australia Oct Final Services PMI: 48.5 v 47.8 prelim (confirms 1st month of contraction in 5 months).

- Australia sells A$400M v A$400M indicated in 5.00% June 2036 Bonds: Avg Yield: 5.0735% v 5.1874% prior; bid-to-cover: 4.19x v 5.76x prior.

- New Zealand Q3 Unemployment Rate: 5.7% v 5.5%e; Employment Change Q/Q: -0.1% v +0.4%e; Y/Y: 0.7% v 1.6%e; Average Hourly Earnings Q/Q: 0.3% v 1.4% prior.

China/Hong Kong

- Hang Seng Index opens -0.3% at 23,452.

- Shanghai Composite Index opens -0.1% at 3,605.

- CHINA OCT RatingDog services PMI: 50.8 V 51.7E (44th month of expansion); Composite PMI: 52.0 v 52.4 prior.

- Oracle [ORCL]: *CANCELS $7B TENCENT AI DEAL – FT [Reminder from Sept 30th: 700.HK Has agreed to 5-year leasing of 100,000 chips across multiple South-East Asia Oracle data centers worth ~$7B; Such lease deals, allowed under US rules, also offer access to Nvidia’s cutting-edge processors not available in China – FT].

- Nvidia [NVDA]: Follow-up: Nvidia China clients to receive 1% of $70B RTX chips ordered - US financial press.
[**Reminder Oct 20th NVDA: Bytedance, Alibaba and Tencent said to have collectively ordered more than 3 million Nvidia RTX PRO 5500 graphics cards, with a total value exceeding $35B – press].

- China PBOC sets the yuan mid-point at 6.7180 v 6.7150 prior (weakest level since October 23rd, 2026).

- PBOC-backed Financial News publication confirmed yesterday's FX move was aimed to curb one-way Yuan appreciation bets.

- PBOC: Banks requested over CNY200B ($29.98B) buyback quota.

- China firms announce share buybacks to support share prices [including CXMT] - Shanghai Securities News.

- China PBOC Gov Pan Gongsheng: To defend stable operation of stock, bond and FX markets - China press; To improve stabilization mechanism for capital market [from Nov 3rd].

- China said to reiterate its moderate loose monetary policy stance and keep liquidity ample.

- China PBOC Open Market Operation (OMO): Sells CNY257.5B in 1-day Overnight Reverse Repo; Net drains CNY515B v drains CNY332B prior.

- China reportedly proposes dual-use export control enforcement rules - press [Nov 3rd].

- China and Oman sign CNY30B currency swap agreement and digital currency cooperation [Nov 3rd].

- Hong Kong Oct PMI (whole economy): 50.2 v 49.2 prior (moves into expansion after 2nd month of contraction).

- Hong Kong Sept Retail Sales Value Y/Y: 6.4% v 4.7%e.

- Hong Kong Q3 Advance GDP Q/Q: 1.9% v 0.5%e; Y/Y: 5.2% v 3.7%e.

Japan

- Nikkei 225 Index opens -0.1% at 62,973.

- BOJ Outright Bond Purchase Operation for <1 Year; 1~3 Years; and >25 Years Bonds (Inline with planned amounts for Q4, 2026).

Korea

- Kospi Index opens +2.4% at 5,786.

- South Korea Oct Foreign Reserves: $443.2B v $440.6B prior.

-South Korea ruling party leader proposes delaying crypto tax - Yonhap.

-South Korea Military: North Korea fires unidentified projectile - Text.

- North Korea's Kim Yo Jong (sister of Kim Jong Un): Dialogue with the US is an option for peace; US continues to show hostility toward North Korea.

Other Asia

- (ID) Indonesia financial regulator announces new sanctions related to stock market violations.

North America

-(US) US democratic party to win majority control of the Senate, DDHQ projects.

-(US) President Trump: I wasn't on the ballot. Prepared to work with Democrats; will accept election results; "Absolutely willing to accept" election results.

-Democrat James Talarico wins TX Senate race with 54.0% votes, Republican Ken Paxton at 44.3% votes [25% of total votes counted] - first Democratic Senate win in the state since 1988).

- Democratic Adam Hamilton wins KS Senate race wins 53.0% votes [86% of total votes counted], Incumbent Roger Marshall at 43.9% votes - first time KS elected a democratic representative since the Great Depression in 1932.

-Democratic Annie Andrews wins SC Senate race with 51.1% votes, Republican Incumbent Senator Darline Graham at 46.8% [86.2% of total votes counted] - first time a woman has been elected to Senate in South Carolina (first Dem win in the 21st century, hasn't occurred since 1998).

-Democratic Roy Cooper wins NC Senate race with 58.3% votes, Republican Michael Whatley 39.5% votes [92% of total votes counted], as expected - 18 years since NC last elected a Democrat as Senator.

-Democratic Sherrod Brown wins Ohio senate race with 48.5% votes, Incumbent Senator Jon Husted at 46.6% votes [86% of total votes counted].

- *(US) US Democratic Party gain majority control of the House of Representatives according to various news outlets.

-(US) SEPT JOLTS JOB OPENINGS: 7.52M V 7.16ME; Quits rate 2.1% v 1.9% prior [US market close].

-(US) Pres Trump: US will stop paying Israel after year-end; Close to fertilizer deal from Canada; We will make great deal with Canada soon - Fox interview [US market close].

- AMD [AMD]: Reports Q3 $2.09 v $1.94e, Rev $13.4B v $13.1Be; Guides Q4 Rev strong, OpEx lower.

-(US) META Reportedly seeking to raise up to $25B in its debt offering (up from $20B previously reported) - press [US market close].

- Super Micro Computer [SMCI]: Reports Q1 $1.81 v $1.24e, Rev $19.9B v $18.5-19.5B prelim; Raises FY27 Rev again; Guides Q2 well above ests.

-(CA) Bank of Canada (BOC) Gov Macklem: Reiterates that there could be a need to raise policy rate further; Additional rate hikes are necessary to reduce inflation risk [US market close].

-(BR) Brazil Oct Manufacturing PMI: 46.1 v 44.8 prior (4th month of contraction) [US market close].

-(MX) Mexico Oct Manufacturing PMI: 49.5 v 50.3 prior (moves back into contraction) [US market close].

-(VZ) Trump Administration said to be negotiating agreement with Venezuela on long term US troop presence - press [US market close].

-(CO) Colombia Oct Manufacturing PMI: 51.7 v 54.6 prior (19th month of expansion) [US market close].

Europe

-(EU) ECB's Nagel (Germany): Rate hike in Dec is very likely to be necessary; Inflation picture has worsened since September [EU market close].

- (UK) London Times Shadow MPC: Bank of England (BoE) "must raise interest rates" to tackle inflation; the vote was unanimous [9-0].

-(UK) National Cyber Security Centre (NCSC) chief: Country faces large rise in cyberattacks in the coming months [EU market close].

-(PL) Poland PM Tusk: We have been informed it is possible that groups of armed people could enter the territory of Poland in first half of Nov [EU market close].

-(IE) Ireland Oct Preliminary CPI EU Harmonized M/M: 0.5% v 0.2% prior; Y/Y: 4.0% v 3.8% prior [EU market close].

-(DE) BMW [BMW.DE] Cuts FY26 automotive margin -0.5% to +0.5% (prior 1-3%), affirms FCF >€2.5B; Cites expansion of portfolio and structural measures [EU market close].

Middle East

-(US) President Trump has no immediate plan to strike Iran, Trump states [comments ahead of the US Midterm election results] - FT.

-(IR) Iran Security Chief Rezaee: Reiterates Hormuz will only open once US has acted on Iran's seven conditions [EU market close].

-(IR) Iran President Pezeshkian: Supreme Leader has allowed talks on non-negotiable issues [EU market close].

-(IR) Senior Iranian Official: There's no deadline for exchanging messages with Washington through mediators or in reviewing responses [EU market close].

-(IR) Reportedly Israeli intelligence told US officials that Iran is considering the use of chemical weapons; US met the Israeli report with alarm and skepticism - NYT [EU market close].

Levels as of 01:20 am EDT

Nikkei 225 -1.5%; ASX 200 -0.6%; Hang Seng +1.1%; Shanghai Composite +1.9%; Kospi +0.2%.

Equity S&P500 Futures -0.4%; Nasdaq100 -0.5%; DAX -0.5%; FTSE100 -0.7%.

EUR 1.1263-1.1187; JPY 158.76-157.40; AUD 0.6986-0.6954; NZD 0.5613-0.5581.

Gold +2.1% at $4,012/oz; BTC +1.6% at $77,903; WTI Crude Oil +0.3% at $96.42/bbl; Copper -0.4% at $6.3905/lbs.