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StreetAccount Summary - Asian Market Recap: Nikkei +1.93%, ASX (0.74%), Taiex +0.75% as of 04:10 ET

Oct 01 ,2024

• Synopsis:

  • Asian equities ended mixed Tuesday in a relatively quiet session. Biggest gains in Japan, which rose all morning only to plateau in the afternoon. Taiwan also higher along with a handful of Southeast Asia benchmarks. Australia lower, India flat. Greater China, South Korea markets closed for a holiday. US futures lower, Europe markets mixed in the first hour. US dollar flat, yen and yuan weaker. Treasuries mixed, JGB yields lower, Australia 10Y yield at month-long highs. Crude slightly higher, precious metals higher, industrials mixed.

  • Asia markets showed mixed trends in a subdued day's trading given the numerous holidays in the region. Japan boards led the gainers amid a weaker yen after newly-appointed prime minister Ishiba said he supported the BOJ's current trajectory on rates. An overnight strengthening in the dollar on Fed Chair Powell remarks also helped the yen to weaken back toward the 144 per dollar mark. Today, the BOJ's September Summary of Opinions reiterated normalization path with several members noting uncertainties warranted no change to policy.

  • BOJ September Tankan survey showed large manufacturer sentiment broadly steady. Regional PMIs showed a marked slowdown in activity especially in new orders and output sub-indexes. India PMI at eight-month low. South Korea export growth slowed from July. Australian retail sales growth built on July's slight improvement. New Zealand business survey showed notable pick up in confidence following RBNZ's pivot. Indonesia inflation declined to three-year low 1.8%.

  • Mizuho Financial Group (8411.JP) has acquired a passive 5% stake in Golub Capital and will market Golub's products to retail and high net worth investors in Japan. Rohm (6963.JP) and Denso (6902.JP) are said to be considering a strategic partnership in the semiconductor sector that will include Denso acquiring Rohm shares. JD.com (9618.HK) has renewed the process to list its industrial unit, more than six months after it first proposed the idea. Mitsui (8031.JP) and Wesfarmers (WES.AU) are said to be among the interested buyers of Mineral Resource's (MIN.AU) Perth Basin assets. TSMC (2330.TT) said it was not expecting a major disruption from approaching typhoon Krathon. Thai Airways (THAI.TB) said it will issue baht 42B in new shares to creditors and other investors by December in a step toward exiting court-ordered debt restricting; stock remained suspended.

• Digest:

  • Japan lower house elects Ishiba as prime minister:

    • Kyodo reported the lower house voted in Shigeru Ishiba as the new prime minister on Tuesday, replacing Fumio Kishida. Separate vote will be conducted in the upper house, though seen as a formality given the ruling coalition holds a majority in both houses. Attention shifts to cabinet appointments later this evening, though the line-up has already been reported. Takeaways have mainly noted that Ishiba is drawing on party heavyweights in the LDP executive committee, which includes former PMs Yoshihide Suga as Vice President and Taro Aso as chief advisor, albeit largely in symbolic roles as neither title possesses executive power. Such selections seen indicative of Ishiba's efforts to unify the party after the disbandment of almost all party factions in response to the political fundraising scandal led to the nominations of a record nine candidates in the LDP leadership race. There was some attention earlier on reports that Sanae Takaichi turned down Ishiba's offer for the LDP General Council Chair. Nikkei reported Chief Cabinet Secretary Katsunobu Kato will be named as Finance Minister, replacing Shunichi Suzuki who will move to the LDP General Council Chair. Former defense ministers Takeshi Iwaya and Gen Nakatani reportedly selected for minister of foreign affairs and minister of defense respectively. Markets already looking ahead to the 27-Oct general election which was cited as a factor in today's market strength.

  • BOJ Summary of Opinions showed uncertainties kept board members on hold:

    • Summary of Opinions for the September MPM contained several remarks to reaffirm the policy normalization path if economic developments are in line with projections. They continued to see underlying inflation tracking a level generally consistent with the price stability target towards FY26. However, they raised several uncertainties to warrant staying on hold in this meeting. Notable attention on sensitivities to US risk factors -- Fed policy, prospects for a US soft landing and looming presidential election -- which will take time to assess. One member acknowledged the sharp yen rebound and subsequent concerns about adverse ripple effects. Another suggested BOJ should assess overseas developments for the time being, and mentioned reduced inflation risk from yen strength provides time to assess. More dovish remarks saw market uncertainties as enough justification to keep rates steady, arguing there is currently no risk of falling behind the curve and with the price stability target still not achieved. In contrast, one hawk continued to advocate increasing the policy rate to 1% in 2H25 at the earliest, though conceded they did not need to move now.

  • September Asia-ex PMIs show manufacturing slowdown:

    • Asia (ex China and Japan) PMIs revealed drop in output and new orders leading to either expansion deceleration or straightforward contraction as manufacturing battled geopolitical concerns, macro-economic uncertainties. Taiwan posted marginal expansion amid growing client hesitancy, weaker output and new order gains, lower employment, confidence at YTD low; final PMI 50.8 from August's 51.5. Indonesia saw more new orders and output declines blamed on subdued macroeconomic environment; final PMI49.2 from 48.9. Thailand manufacturing conditions expand again but pace of growth lost momentum; PMI 50.4 from 52.0. Malaysia reported scaled back production on stagnant new orders but business confidence reached eight-month high, employment conditions also improved; PMI 49.5 from 49.7. Vietnam saw significant output and new order declines as typhoon Yagi caused major impact on output; PMI 47.3 from 52.4. Bright spot was Philippines, where output and new orders surged as domestic demand offset international demand headwinds; PMI 53.7 from 51.2.

  • China home sales slide deepens in September:

    • Data from CRIC showed value of new home sales from 100 biggest property developers dropped 37.7% y/y to CNY251.7B ($35.9B), faster than 26.8% decline in August. Transactions gained 0.2% m/m. Bloomberg noted weak data underscores why Chinese authorities last week made its most determined pledge yet to stabilize property sector. Separate survey by China Index Academy showed average new home prices in 100 cities rose 0.14% m/m and 1.85% y/y, compared with rise of 0.11% m/m and 1.76% y/y in August; while resale home prices dropped 0.70 m/m and were in decline for 29^th straight month. They fell 7.13% y/y. Reuters reported Beijing became latest top tier cities in China to relax homebuying restrictions, following similar moves by Shanghai and Shenzhen, in bid to boost demand. China Index Holdings analyst noted homebuyers were on the sidelines in September, watching for property stimulus. Added home purchases may pick up a bit in October but called for more loosening measures to stop declining further nationwide.

  • India factory activity growth slows to eight-month low in September:

    • HSBC India final manufacturing PMI fell to 56.5 in September from 57.5 in August, the weakest since January, and slightly below flash reading of 56.7. Rates of expansion in factory production and sales receded for third straight month. International orders rose at slowest pace in 1.5 years. Bright spots were net employment and quantities of purchases that both rose. Business confidence largely aligned with long-run average while overall level fell to lowest since Apr-2023. There were moderate increases in input costs and selling charges. For Q2, manufacturing PMI averaged 57.4, lowest since Oct-Dec 2023. Reuters noted weakening factory production growth likely to have further affected expansion rate in India's economy in Q2 after economy growth softened to 6.7% in Q1 FY25. Moneycontrol added economists said government will have to ramp up spending for higher growth despite it wants to keep fiscal deficit contained.

  • Notable Gainers:

    • +23.0% SIG.AU (Sigma Healthcare): ACCC consults on Sigma Healthcare's proposed remedy for Chemist Warehouse acquisition

    • +6.8% 6963.JP (ROHM Co.): ROHM, DENSO considering strategic partnership in semiconductor field

    • +6.5% CHI.NZ (Channel Infrastructure NZ): Enters conditional project development agreement to develop biorefinery

  • Notable Decliners:

    • -2.9% TGM.AU (Theta Gold Mines): Reports FY NPAT ($6.4M) vs year-ago ($7.0M)

• Data:

  • Economic:

    • Japan

      • August unemployment rate 2.5% vs consensus 2.6% and 2.7% in prior month

        • Job offers to applicants ratio 1.23 vs consensus 1.24 vs 1.24 in prior month

      • September final manufacturing PMI 49.7 vs preliminary 49.6 and 49.8 in prior month

    • Australia August

      • Retail sales +0.7% m/m vs consensus +0.4% and revised +0.1% in July

      • Building approvals (6.1%) m/m vs consensus (4.3%) and revised +11.0% in July

    • South Korea

      • September exports +7.5 y/y vs consensus +6.5% and +11.2%% in prior month

        • Imports +2.2 y/y vs consensus +3.0% and (3.1%) in prior month

  • Markets:

    • Nikkei: 732.42 or +1.93% to 38651.97

    • Hang Seng: Closed

    • Shanghai Composite: Closed

    • Shenzhen Composite: Closed

    • ASX200: (60.90) or (0.74%) to 8208.90

    • KOSPI: Closed

    • SENSEX: 23.22 or +0.03% to 84323.00

  • Currencies:

    • $-¥: +0.34 or +0.24% to 143.9800

    • $-KRW: +2.81 or +0.21% to 1321.7900

    • A$-$: (0.00) or (0.12%) to 0.6905

    • $-INR: (0.01) or (0.01%) to 83.8111

    • $-CNY: +0.01 or +0.13% to 7.0268