Aussie Drops Amid RBA Speak

General Trend

• Australia Resources index declines, BHP moves lower after production update; Financials decline amid RBA speak
• Topix Insurance, Banks and Air Transportation indices are among the decliners in Japan
• Shanghai Composite traded generally flat during the morning session, financials traded generally lower
• Property and Financial indices decline in HK, Tech index rises
• Companies expected to report earnings during the NY morning include Lockheed Martin, Manpower, Procter & Gamble, ProLogis, Philip Morris, Travelers

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.1%
• (AU) Reserve Bank of Australia (RBA) Assist Gov Kent: Would not be unexpected for Bank Bill Swap rate (BBSW) to fall below 0%; bond purchases would be regular and aimed to bring down yields
• (AU) RESERVE BANK OF AUSTRALIA (RBA) OCTOBER MINUTES: Discussed options of reducing targets for cash rate and 3year yield towards 0% without going negative, buying Govt bonds further out on yield curve; as the economy opens up, members considered it reasonable to expect that further monetary easing would gain more traction than had been the case earlier; Members noted that the larger balance sheet expansions by other central banks relative to the Reserve Bank was contributing to lower sovereign yields in most other advanced economies than in Australia. [Members discussed the implications of this for the Australian dollar exchange rate]
• (AU) Australia total payroll jobs change between Sept 19th and Oct 3rd: 0.9%; weekly total wages 2.2%
• (AU) S&P Affirms Australia Sovereign rating at AAA; Outlook negative
• BHP [BHP.AU]: Reports Q1 Waio Iron Ore Production: 74Mt v 69Mt y/y, Copper Production 413 Kt v 394Kte; Affirms production and unit guidance [except for Cerrejón production guidance which is under review due to an ongoing strike]; Monitoring for any potential impacts from restrictions on coal imports into China
• (NZ) Reserve Bank of New Zealand (RBNZ) Gov Orr: Plenty of room left in QE program; Will update on development of policy tools in Nov

China/Hong Kong

• Hang Seng opened +0.1%, Shanghai Composite 0.2%
• (CN) China PBOC sets Yuan reference rate: 6.6930 v 6.7010 prior
• (CN) China PBoC may increase its reverse repos Securities Journal
• *(CN) CHINA PBOC LEAVES 1YEAR AND 5YEAR LOAN PRIME RATES (LPRS) UNCHANGED (AS EXPECTED); 6TH STRAIGHT MONTH OF STEADY FIXINGS
• *(CN) CHINA SEPT NEW HOMES PRICES M/M: 0.3% V 0.6% PRIOR; Y/Y: 4.6% V 4.8% PRIOR
• (CN) China NDRC: Cannot rule out tight supply of Natural gas in certain areas at certain times during 2020; China approved CNY17.2B in fixed investment projects in Sept [vs CNY88.2B m/m]
• (CN) China PBoC Open Market Operation (OMO): Injects CNY70B in 7day reverse repos v Injects CNY50B in 7day reverse repos prior; Net inject CNY70B v Net inject CNY50B prior
• (HK) Hong Kong Monetary Authority (HKMA) sells HK$20.4B to again defend peg as HKD currency trades at strong end of trading band; The central bank later sold a further HK$5.95B during the NY trading hours
• (HK) Banks in Hong Kong said to have been advised to report breaches of the security law to the police – FT
• (HK) Hong Kong Chief Exec Lam: Hong Kong Govt departments will study new authorizations to Shenzhen, has no conditions to relax social distancing rules

Japan

• Nikkei225 opened 0.4%
• (JP) There is speculation that the Bank of Japan (BOJ) could cut current year (FY20/21) economic and inflation forecasts in quarterly projections [which are due out during next week] financial press
• (JP) Japan Fin Min Aso: Can’t comment on possibility of subordinated loans for ANA.
• (JP) Japan MoF sells ¥1.2T v ¥1.2T indicated in 0.40% 20year JGBs: avg yield: 0.3940% v 0.4080% prior; bid to cover 3.9x v 3.7x prior
• (JP) Japan Govt Chief Cabinet Sec Kato: Japan cannot overlook malicious cyberattacks that threaten democracy; gathering information on cyberattack related to the Olympics
• (JP) Japan Sept Tokyo Condo Sales Y/Y: +5.0% v 8.2% prior

Korea

• Kospi opened 0.6%
• Hynix [000660.KR] Confirms to purchase Intel’s NAND flashmemory manufacturing business for KRW10.3T (~$9.0B) in all cash transaction (the transaction was speculated to be $10.0B)

North America

• (US) Speaker Pelosi spokesperson: Pelosi and Mnuchin spoke for almost an hour today and narrowed differences during the call; Will speak again tomorrow
• Moderna [MRNA]: CEO Bancel: Expects COVID19 vaccine interim results in Nov, vaccine could be authorized in Dec [2020] if the data are positive US financial press

Europe

• Euronext [ENX.FR]: Confirms all transactions done on Mon, Oct 19th after 11:30 ET (16:30 GMT) designated as not valid
• (IE) Follow Up: Ireland PM Martin: Ireland to close most stores, bars and restaurants for six weeks – press
• Logitech [LOGN.CH]: Reports Q2 $1.87 v $0.50 y/y, Rev $1.26B v $719M y/y; Op income + 372% y/y; Q2 PC Webcam Net sales +256% y/y

Levels as of 1:20 ET

• Nikkei 225, 0.6%, ASX 200 0.7% , Hang Seng 0.3%; Shanghai Composite +0.1% ; Kospi flat
• Equity S&P500 Futures: +0.3%; Nasdaq100 +0.5%, Dax 0.1%; FTSE100 0.5%
• EUR 1.17771.1764 ; JPY 105.61105.34 ; AUD 0.70740.7037 ;NZD 0.66080.6571
• Gold 0.4% at $1,904/oz; Crude Oil 0.5% at $40.80/brl; Copper flat at $3.0845/lb