Japanese Stocks Rise On Catch-Up Gains

Oct 15 19, 07:32 GMT

General Trend:

Japanese shipping companies outperform, equity markets in Japan have first reaction to announcement about US/China Phase 1 trade deal [Japanese markets were closed on Monday]
Companies in Japan continue to comment on the impact of typhoon Hagibis, major automakers note no impact on production; Japan’s government said it would consider an extra budget if needed, closely watching impact of typhoon on supply chains
China’s Sept CPI had largest y/y increase since 2013 as pork price rise accelerated, data hit China’s 3% target
China’s Sept PPI deflation worsened amid drop in raw-materials prices
PBOC said previously announced targeted RRR cut partially took effect today, released CNY40B in liquidity [original announcement was on Sept 6th]
RBA reiterated rate stance in Oct meeting minutes, debated whether to keep some of its monetary stimulus in reserve to deal with future shocks
South Korea’s largest hedge fund Lime Asset Management halted withdrawals from additional funds
Bank of Korea is widely expected to cut rates by 25bps at its meeting on Wed (Oct 16th)
NZD rises and then pares gain ahead of Wednesday’s Q3 CPI release
US corporate earnings in focus; Companies expected to report during the NY morning include Citigroup, BlackRock, Goldman, JPMorgan, Charles Schwab, Wells Fargo, JNJ and UnitedHealth

Headlines/Economic Data

Australia/New Zealand

ASX 200 opened -0.1%
AU) RESERVE BANK OF AUSTRALIA (RBA) OCT MINUTES: EXTENDED PERIOD OF LOW RATES LIKELY REQUIRED; PREPARED TO CUT RATES AGAIN IF NEEDED
RFG.AU Announces upsized A$170M underwritten capital raise at A$0.10/shr; affirms FY20 underlying EBITDA A$42-46M; raises share purchase plan by A$20M
TLS.AU Affirms FY20 (A$) underlying EBITDA 7.4-7.9B; Rev 25.3-27.3B; sees EBITDA lower by at least A$3B/year after NBN rollout
(AU) APRA: Launches review into capital treatment of authorized deposit-taking institutions’ (ADIs) investments in their banking and insurance subsidiaries

Japan

Nikkei 225 opened +1.2%
(JP) Japan Aug Final Industrial Production M/M: -1.2% v -1.2% prelim; Y/Y: -4.7% v -4.7% prelim
(JP) Bank of Japan (BOJ) Gov Kuroda: wont hesitate to add stimulus if needed; economy is expanding moderately as a trend but impacted by overseas slowdown – Branch Managers’s Meeting
(JP) Japan Chief Cabinet Sec Suga: Will consider an extra budget for typhoon recovery if needed; Cabinet decided to submit US trade deal to Diet
(JP) Japan Economy Min Nishimura: Closely watching typhoon impact on supply chains
(JP) Japan Finance Min Aso: To discuss global economic downside risks at G20; will deal with typhoon damage is a speedy manner; has ¥500B reserves for disaster recovery but will consider extra budget if needed
Many Japan companies reporting that some operations will remain closed due to impacts of typhoon, though none of the automakers were impacted
(JP) Japan Ruling LDP Party: Budget reserves along will not cover typhoon damage; LDP approved bill limiting foreign investment
(JP) Bank of Japan (BOJ) Regional Economic Report: Maintains economic assessment in 8 of 9 regions; Upgrades assessment in 1 of 9 regions

Korea

Kospi opened -0.1%
(KR) Top military officials from North Korea and China reaffirmed importance of bilateral relations, defending them is a “noble duty” of their armies – Yonhap
034220.KR LG said to have replaced all hydrogen fluoride with materials from companies in South Korea – Local Press
005380.KR Fitch: Q3 earnings of Hyundai Motor Co. and its subsidiary, Kia Motors Corp., will be affected by the recent settlement of a U.S. lawsuit on its faulty Theta 2 engine
(KR) South Korea’s largest hedge fund, Lime Asset Management, suspended withdrawals for more funds Monday, totaling $710M

China/Hong Kong

Hang Seng opened +0.3%; Shanghai Composite opened -0.1%
(CN) CHINA SEPT CPI M/M: 0.9% V 0.7% PRIOR; Y/Y: 3.0% V 2.9%E (highest since Oct 2013); Pork prices y/y: +69% v +46.7% prior
(CN) China US trade talks to resume next week, with the plan to sign something during Nov forum – US press
(CN) China PBoC Open Market Operation (OMO): Skips for the 7th consecutive session; Net drains CNY0B v CNY0B drain prior
(CN) Reminder China PBOC targeted RRR cut releases CNY40B into market today
(CN) China PBOC sets Yuan Reference Rate: 7.0708 v 7.0725 prior (strongest level since Sept 16th)
(HK) Hong Kong Chief Exec Lam to hold policy address tomorrow Oct 16th at 11:00 local time (23:00 ET, 03:00 GMT) which will focus on land and housing

North America

(US) Treasury Sec Mnuchin: we have a “fundamental agreement” with China that is still subject to documentation; it includes IP rights, currency, financial services, and structural issues in agriculture; If trade deal is not in place by Dec 15th, tariffs will likely be imposed but expect a deal by then – CNBC interview

Europe

(UK) Sources from Brussels and London say there is ‘cautious optimism’ for reaching a deal on Northern Ireland border, shifting tone from EU’s Barnier’s pessimism on Sunday – The Telegraph
(UK) EU considering emergency summit to get Brexit deal done – UK Press

Levels as of 1:20 ET

Nikkei 225, +1.8%, ASX 200 +0.1%, Hang Seng -0.1%; Shanghai Composite -0.6%; Kospi +0.1%
Equity Futures: S&P500 +0.2%; Nasdaq100 +0.3%, Dax +0.1%; FTSE100 +0.1%
EUR 1.1033-1.1021 ; JPY 108.45-108.27 ; AUD 0.6790-0.6764 ;NZD 0.6316-0.6292
Gold flat at $1,498/oz; Crude Oil -0.6% at $53.25/brl; Copper flat at $2.632/lb