Yen steadies after last week's volatility

Asia market update: Quiet start to week with JP on holiday; Weaker Asia data; PBOC cuts 14-day RR; Yen steadies after last week's volatility; Focus on RBA rates & BOJ Gov Ueda speech tomorrow.

General trend

- A holiday for Japan saw a very quiet start to the week in Asia. Regulatory concerns weighed on Australian Consumer Discretionary stocks with the overall ASX 200 index lagging.

- Weaker Asia data: Weaker PMI data out of Australia, weaker exports out of NZ as well as weaker exports out of Korea.

- AU M&A deals in focus with several deals out of Australia today.

- Intel M&A intrigue also remains in the headlines.

- Politics remain in focus ahead of Tuesday's RBA decision.

- Late Friday, after failing to be moved by the BOJ decision to hold Japan rates steady on Friday (and despite the addition of the word ‘uncertainty’ to the Statement), the Yen fell more than two Big Handles during and after Gov Ueda’s press conference. Ueda’s overall tone was dovish as he suggested that there is no need to rush rate hikes, while there is a need to be more careful on hikes as we approach the neutral rate (which is “not yet possible to determine”).

- Late Friday, amid suggestions of German govt support for Volkswagen to prevent closures in Germany, Volkswagen said it would cut corporate jobs in China as sales falter. Meanwhile the Mercedes-Benz CFO said the Co was ‘taking a cautious view of the Chinese market’.

- Unsurprisingly, the China PBOC cut the 14-day Reverse Repo rate by 10bps today, bringing it in line with the 10bps cut in the 7-day ops last month.

- Following the 50bps cut to the Fed Funds rate last week, CME probabilities of a further 50bps cut at the next Fed meeting is up to 50% (Nov 7th, 2024).

- Gold FUTs rose to another record high.

- US equity FUTs +0.3% to +0.5% during the Asia session.

Looking ahead (Asian time zone)

- Mon Sep 23rd (Mon eve DE Sept Mnfg Flash PMI).

- Tue Sep 24th AU RBA Interest Rate Decision + Presser, JP BOJ Gov Ueda; (Tue eve DE IFO Biz Climate).

- Wed Sep 25th AU Aug CPI, JP MOF meets w JGB dealers, KR Consumer Confidence.

- Thu Sept 26th JP BOJ Minutes (2 mtgs prior), AU RBA Financial Stability Review; (Thu eve US Final Q2 GDP, US Fed Powell).

- Fri Sept 27th JP LDP leadership race, KR Biz Conf; (Fri night US Aug Core PCE).

Holidays in Asia this week

- Monday Sept 23rd Japan.

- Upcoming Chinese market holidays: Sept 29th (Sun); Tue Oct 1st to Mon Oct 7th; Sat Oct 12th.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.2% at 8,173.

- Australia Sept preliminary manufacturing PMI: 46.7 V 48.5 prior [8th month of contraction, 4-year low].

- (AU) Quad leaders of Australia, India, Japan and the US announce plans for new security initiatives in the Indian Ocean - financial press (update) [weekend update].

- ACCC [Australia competition regulator] takes Woolworths and Coles to court.

- New Zealand Aug Trade Balance (NZD): -2.2B v -1.0B prior.

- Kiwibank recommends the RBNZ should cut the OCR to 4.25% by the end of 2024 – Press.

- BNZ: New Zealand Aug Job Ads M/M: -1.3% v +3.4% prior.

China/Hong Kong

- Hang Seng opens -0.1% at 18,237; Shanghai Composite opens -0.1% at 2,735.

- PBOC’s Pan: Reiterates to continue with accommodative monetary policy.

- China PBOC, SCRC and NFRA to hold briefing on Tuesday, 9am local time - financial press.

- Nvidia: Speculation 'mounts' in China over possible discontinuation of H20 chip; notes the annual US export control review is approaching - Digitimes.

- Follow Up: US confirms to propose ban on connected vehicle software and hardware from China – financial press [update].

- Former PBOC adviser Liu Shijin proposes $1.4T in stimulus measures related to ultra-long-term treasury bond issuance– financial press [update].

- China, US held fifth meeting of economic working group; China expressed concern on tariff, investment cap and sanctions issues - State TV [weekend update].

- Volkswagen: Said to cut corporate jobs in China as sales falter; Targeting hundred of staff cuts at group level over three years – press [weekend update].

- Mercedes Benz CFO: See no need to change dividend plan; CEO: Taking cautious view of Chinese market; Preparing EV product offensive in China; Cars segment 2024 unit sales to be slightly lower y/y [weekend update].

- China Securities Regulator (CSRC) publishes revised rules to tighten risk control at brokerages – press [weekend update].

- China reportedly raises capital requirements for financial leasing companies – press [weekend update].

- Hong Kong Aug CPI Composite Y/Y: 2.5% v 2.6%e [weekend update].

- China PBOC sets Yuan reference rate: 7.0531 v 7.0644 prior (strongest level since May 26, 2023).

- China PBOC Open Market Operation (OMO): Sells CNY160B in 7-day reverse repos; Net CNY96B v net injects CNY336B prior.

- China PBOC open market operation (OMO): Sells CNY74.5B in 14-day reverse repos; cuts rate on 14-day operations by 10BPS to 1.85%.

Japan

- Nikkei 225 closed for holiday.

- Japan LDP Leadership candidate Shigeru Ishiba sees room for corporate tax increase – Japanese press [update].

- Flood-induced landslides leave at least one dead, seven missing and tens of thousands evacuated in Noto peninsula (epicenter of the New Year earthquake earlier this year) - Japanese press [weekend update].

Korea

- Kospi opens higher by 0.1% at 2,596.

- South Korea Sept 1-20 Exports Y/Y: -1.1% v 18.5% prior; Imports Y/Y: -4.5% v 10.1% prior.

Other Asia

- Netflix: India FRRO said to be investigating Netflix' local business practices, including allegations of visa violations, tax evasion and racial discrimination - financial press [weekend update].

- Philippines Central Bank (BSP) on 2025: Sees economy maintaining growth momentum [weekend update].

North America

- Congressional leaders said to announce ‘deal’ to avoid government shutdown; the Congressional leaders announced 3-month spending agreement – US press.

- US) VP Harris confirms she will give a speech on the economy this week – financial press.

- (US) Fed's Waller (voter): 50 bps was right move, want to keep economy strong; Inflation data in blackout period pushed me to 50 bps camp – CNBC [weekend update].

Europe

- (IL) Israel Military: Conducting extensive strikes on Hezbollah targets in Lebanon - financial press.

- (IL) Lebanon's Hezbollah confirms top military commander Ibrhaim Aqil was killed in Israel airstrike on Beirut [weekend update].

- (EU) Eurozone sept advance consumer confidence: -12.9 V -13.2E [weekend update].

- (IT) Italy Econ Min Giorgetti: Sees GDP 'slightly up' from data review - Italian press [weekend update].

- (DE) Reportedly German Economy Min Habeck floated the idea of additional support for German carmakers; To discuss ways to address the challenges facing the embattled sector in talks with executives on Mon, Sept 23rd – press [weekend update].

Levels as of 01:20 ET

- Nikkei 225 closed; ASX 200 -0.6%; Hang Seng +0.3%; Shanghai Composite +0.6%; Kospi +0.1%.

- Equity S&P500 FUTs +0.3%; Nasdaq100 FUTs +0.5%, Dax +0.6%; FTSE100 +0.6%.

- EUR 1.1155-1.1166: JPY 143.70-144.45; AUD 0.6801-0.68.37; NZD 0.6230-0.6248.

- Gold +0.3% at $2,653/oz; Crude Oil +0.8% at $71.58/brl; Copper +0.3% at $4.3432/lb.