APAC stocks began the week mixed amid several holiday closures throughout the week and the ongoing US government shutdown.
Nikkei 225 rallied, JPY fell and the JGB curve steepened amid hopes of fiscal loosening and a delay to BoJ policy normalisation following Sanae Takaichi’s LDP leadership victory.
Crude futures gained after OPEC+ producers agreed to a modest production increase of 137k bpd in November.
Israel and Hamas are preparing for mediated negotiations on Monday in Egypt; hopes for a ceasefire have increased.
NEC Director Hassett commented that mass layoffs of federal workers will begin if President Trump sees that shutdown talks are going nowhere.
Looking ahead, highlights include EZ Construction PMI (Sep), Sentix (Oct), Retail Sales (Aug), US Employment Trends (Sep), New Zealand NZIER (Q3), BoE’s Bailey, ECB’s de Guindos, Lane, Escriva & Lagarde.
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US TRADE
EQUITIES
US stocks were mixed on Friday with the tech-heavy Nasdaq 100 (-0.4%) lagging, and the small-cap Russell 2000 (+0.7%) outperforming. The former was weighed on by weakness in NVDA, AMZN, META, TSLA, and PLTR, which saw large-cap sectors Consumer Discretionary, Communication Services, and Technology as the only sectors in the red. Utilities and Health were the clear outperformers. Newsflow was very thin on Friday, with ISM Services and Fed speak the highlights given the postponement of the US payrolls report due to the US government shutdown. ISM Services disappointed on the headline and fell to 50.0 (exp. 51.7, prev. 52.0) and beneath the bottom end of the forecast range. Business activity and new orders tumbled, with the latter into contractionary territory, while employment and prices paid both ticked incrementally higher.
SPX +0.01% at 6,716, NDX -0.43% at 24,786, DJI +0.51% at 46,758, RUT +0.72% at 2,476.
Click here for a detailed summary.
TARIFFS/TRADE
EU is pushing a new AI strategy to cut its tech reliance on the US and China, according to FT.
Japan will expand the scope of anti-dumping duties to include indirect exports via third countries as China’s overproduction continues to hurt domestic industries, according to Nikkei.
Mexican President Sheinbaum said she will present advances in made-in-Mexico tech EV, semiconductors, satellite and drone projects in the coming weeks, while she is confident they will reach favourable agreements with the US and all nations worldwide regarding trade relations.
US Republican Senator Moreno said on Friday that President Trump is considering significant tariff relief for US auto production.
NOTABLE HEADLINES
US President Trump said Democrats are causing the shutdown and possible layoffs, while NEC Director Hassett separately commented that mass layoffs of federal workers will begin if President Trump sees that shutdown talks are going nowhere.
US House Republican leaders told members that they plan to stay away from Washington, D.C. during the government shutdown but are ready to get back to work as soon as Senate Democrats reopen the government.
US President Trump called for big US homebuilders to start building homes and said they’re sitting on 2mln empty lots, while he is asking Fannie Mae and Freddie Mac to get big homebuilders going and help restore the ‘American Dream’.
US President Trump authorised the deployment of 300 National Guard troops to Illinois despite the objections of state officials, including Governor Pritzker.
US Judge temporarily blocked the Trump administration from sending California National Guard troops to Portland, Oregon, and blocked the administration from sending Texas or other states’ National Guard to Oregon. It was also reported that California Governor Newsom will sue the Trump administration for sending California National Guard personnel to Oregon.
Fed Vice Chair Jefferson said on Friday that it was less than ideal not to get the jobs report, but added that he does not focus on a single report when deciding monetary policy and looks across an array of data to assess the economy. Furthermore, he said higher tariffs are showing through to higher inflation for some goods and expects that the effects of tariffs on inflation, employment, and economic activity will further show through in the coming months.
Fed Governor Miran said on Friday that he hopes they’ll have the needed data by the October FOMC meeting.
Fed’s Logan (2026 voter) said on Friday that tariffs have been contributing to inflation and that she is worried about non-housing services inflation that’s been elevated and stuck there. Logan added there are also upside risks to goods prices even after the tariff effect fades, and noted risks that tariff effects are more prolonged, increases the risk of a rise in long-term inflation expectations.
COVID-19 Stratus variant replaced the Nimbus variant as the most prevalent strain across the US, with the CDC suggesting some regions of the country are experiencing “very high” COVID-19 activity including Nevada, Utah, Connecticut and Delaware.
APAC TRADE
EQUITIES
APAC stocks began the week mixed amid several holiday closures throughout the week and the ongoing US government shutdown, while Japanese markets rallied on hopes of fiscal loosening and a delay to BoJ policy normalisation following Sanae Takaichi’s LDP leadership victory, which sets her on course to become Japan’s first female PM.
ASX 200 failed to sustain early marginal gains and retreated to back beneath the 9,000 level as losses in tech, healthcare, and the consumer sectors offset the strength in the commodity-related industries.
Nikkei 225 rallied to fresh record highs above the 48,000 level as the JPY weakened amid expectations of fiscal support and a potential delay to BoJ policy normalisation after the LDP leadership election victory by Abe-protege Takaichi.
Hang Seng declined amid the absence of mainland participants for most of the week due to the National Day ‘Golden Week’ holiday and with underperformance in casino stocks following the recent flooding from Typhoon Matmo.
US equity futures (ES +0.3, NQ +0.4%) eked out marginal gains, albeit with upside capped amid little fresh bullish macro catalysts stateside.
European equity futures indicate a marginally higher cash market open with Euro Stoxx 50 futures up 0.1% after the cash market closed with gains of 0.1% on Friday.
FX
DXY rose back above the 98.00 level with the upside mainly a function of a surge in USD/JPY, while the performance of the greenback against other major peers was mostly contained amid the ongoing US government shutdown and with the White House threatening the start of mass federal layoffs if President Trump deems that shutdown talks are going nowhere.
EUR/USD marginally softened amid uncertainty regarding French politics after PM Lecornu unveiled a government which may not last long, although the downside was limited with participants awaiting ECB speakers and EU Retail Sales.
GBP/USD attempted to nurse some of its losses, but was hampered by a lack of pertinent drivers for the UK.
USD/JPY gapped higher and continued to advance to north of the 150.00 level in reaction to the LDP leadership election win by fiscal dove and Abe-protege Sanae Takaichi which resulted in a winding back of BoJ rate hike bets with money markets pricing around a 78% likelihood that the central bank will remain on hold in the October 30th meeting, while the yen swaps market also showed just a 41% chance of a 25bps hike by December vs. 68% probability on Friday.
Antipodeans clawed back early losses and returned to flat territory with mild tailwinds seen amid the gains in commodities, including the rally in oil and gold.
FIXED INCOME
10yr UST futures remained lacklustre after last Friday’s pullback and as the US government shutdown continues.
Bund futures lacked demand amid very few pertinent drivers and ahead of several ECB speakers.
10yr JGB futures initially surged at the open as participants reacted to the LDP leadership result, but then wiped nearly all of the gains as the curve steepened with super-long-end yields rising as Takaichi’s victory is seen as likely to delay the BoJ’s policy normalisation, but not indefinitely.
COMMODITIES
Crude futures gained after OPEC+ producers agreed to a modest production increase of 137k bpd in November.
Eight OPEC+ members agreed to raise oil production by 137k bpd in November, citing a steady economic outlook and current healthy market fundamentals, while they will meet next on November 2nd.
Qatar set the November marine crude Official Selling Price at Oman/Dubai plus USD 2.00/bbl and land crude OSP at Oman/Dubai plus USD 2.05/bbl.
Shell (SHEL LN) said US President Trump’s attacks on wind projects harm investment in the US and the decision to halt fully permitted offshore wind energy projects is very damaging to investment, according to FT.
Spot gold extended on record highs after breaching through resistance to above the USD 3,900/oz level amid the ongoing US government shutdown and with money market rates leaning towards two more Fed rate cuts by year-end.
Copper futures held on to most of the spoils after last week’s rally, but with further gains capped amid the mixed risk appetite and with several holiday closures in the region, including in the metal’s largest buyer, China.
CRYPTO
Bitcoin gained overnight but was off the record highs seen over the weekend after briefly rallying above the USD 124k level.
UK retail investors are said to face a short delay before they can buy regulated crypto products and may have to wait nearly a week longer than the FCA’s planned schedule to lift its ban on crypto ETF products for retail investors from next Wednesday, according to FT citing five people familiar with the matter.
NOTABLE ASIA-PAC HEADLINES
Japan’s ruling LDP elected Sanae Takaichi as its leader, who is set to become Japan’s first female PM.
Japan’s newly elected LDP President Takaichi said they need speedy support for weak small- and medium-sized companies to help with wage growth, while she added that support is also needed for the farm sector, and urgent help is needed for the medical and nursing care sectors. Takaichi said one policy option is to increase subsidies to local governments and that she wants to submit a bill to abolish the extra gasoline tax and lower diesel fuel costs during the next parliament. Takaichi also said she won’t rule out lowering the consumption tax as an option and that they will honour the bilateral agreement made with the US. Furthermore, she noted that the government and BoJ need to be aligned on economic policy, while she added they will closely communicate with the BoJ until demand-led economic growth is achieved and wants to carefully consider whether the current government-BoJ accord is most appropriate.
Credit Agricole Chief Japan Economist Aida, who is widely considered as a close advisor to LDP’s Takaichi, said in a note on Saturday that Takaichi will likely tolerate another 25bps BoJ rate hike by January next year if the economy is in firm shape. Such a move would be on condition that the BoJ maintains relatively loose monetary policy with no further rate hikes likely until 2027.
Chinese Foreign Minister Wang Yi will visit Italy and hold the 12th joint meeting of the China-Italy government committee, and will visit Switzerland for a 4th round of the China-Switzerland foreign ministers-level strategic dialogue.
NVIDIA’s (NVDA) major server production partner Hon Hai (2317 TT) reported quarterly sales rose 11% to TWD 2.06tln which reportedly signals healthy demand for AI infrastructure, according to Bloomberg.
Indonesia revoked its TikTok licence suspension after the social media platform submitted data that the Indonesian government requested, according to Bloomberg.
GEOPOLITICS
MIDDLE EAST
Israel and Hamas are set to begin mediated negotiations on Monday in Egypt after US President Trump hailed Hamas’s offer to release all hostages, according to Bloomberg.
Israeli government spokeswoman confirmed negotiations for the release of hostages are expected to begin on Monday and stated there is no ceasefire in place in Gaza, but there has been a temporary halt in certain bombings, while she added the military can continue to act in Gaza for defensive purposes.
Israeli military spokesperson issued a warning for residents of Gaza City on Saturday morning and called on them to avoid returning north, while the spokesperson added that Gaza City remains a dangerous combat zone. It was separately reported by an Al Arabiya correspondent that violent explosions were heard in the Gaza Strip on Sunday.
US President Trump posted that after negotiations, Israel has agreed to an initial withdrawal line which has been shown to, and shared with Hamas, while he added that when Hamas confirms, a ceasefire will be immediately effective and a hostages and prisoner exchange will begin.
US President Trump posted that there have been very positive discussions with Hamas and countries from all over the World (Arab, Muslim, and everyone else) this weekend, to release the hostages and end the war in Gaza but, more importantly, finally have long sought peace in the Middle East. Trump added that these talks have been very successful and are proceeding rapidly, while the technical teams will again meet Monday, in Egypt, to work through and clarify the final details, while he was told that the first phase should be completed this week, and he is asking everyone to move fast.
US President told CNN that Hamas will face ‘complete obliteration’ if it refuses to cede power in Gaza and noted that Israeli PM Netanyahu is on board with ending the bombing in Gaza.
US Secretary of State Rubio said that meetings are taking place on the Israel-Hamas deal and that Hamas agreed in principle to what happens after the war, while he responded ‘not yet’ and that some work remains to be done when asked if this is the end of the war in Gaza. Rubio suggested the second phase of discussing disarmament and demobilisation will be difficult and stated they will know very quickly if Hamas is serious. Furthermore, he said they are the closest they have been in a very long time to having no hostages held by Hamas, but added that no one can say it is a 100% guarantee.
Hamas handed over its response to US President Trump’s Gaza plan to mediators on Friday and said it agreed to release all Israeli hostages, alive or bodies, under US President Trump’s Gaza proposal, while it affirmed its readiness to immediately engage in negotiations through mediators to discuss the details of this matter and reiterated its agreement to hand over the administration of the Gaza Strip to a Palestinian body of independent technocrats. However, it was also reported that a senior Hamas official told Al Jazeera that handing over hostages held in Gaza within 72 hours is ‘theoretical and unrealistic’.
RUSSIA-UKRAINE
US President Trump said Russian President Putin’s offer last month to voluntarily maintain limits on deployed nuclear weapons sounds like a good idea.
Russian President Putin warned that the possible supply of Tomahawk missiles to Ukraine will ruin the Russia-US relationship.
Russia conducted a massive airstrike against targets across Ukraine using missiles and drones which killed at least five people and injured several others, according to Bloomberg. Furthermore, Russia’s Defence Ministry said Russian forces captured Kuzminovka in Ukraine’s Donetsk region and carried out a massive strike on Ukrainian military-industrial enterprises, as well as gas and energy infrastructure facilities.
Ukrainian President Zelensky said on Sunday morning that Russia launched over 50 missiles and almost 500 drones in an overnight attack on Ukraine.
Ukraine’s Energy Minister said the Russian overnight air attack damaged energy infrastructure in Ukraine’s Zaporizhzhia, Sumy and Chernihiv regions. It was also reported that a Russian strike hit a passenger train in Ukraine’s Sumy region, causing casualties.
OTHER
US President Trump’s administration directed US diplomats to lobby against a UN resolution calling for Washington to lift its embargo on Cuba, while the US will tell countries that Cuba is actively supporting Russia’s invasion of Ukraine, according to a diplomatic cable cited by Reuters.
US President Trump said the US hit another boat on Saturday off Venezuela and that the US will have to start looking at drug trafficking by land. In relevant news, US Defense Secretary Hegseth said he has every authorisation needed for Caribbean strikes against vessels allegedly carrying illegal drugs off the coast of Venezuela.
North Korean leader Kim said Pyongyang allocated strategic assets to respond to the buildup of US military forces in Korea, while he also said they will develop additional military measures, according to KCNA.
EU/UK
NOTABLE HEADLINES
Roland Lescure is set to be named the new French Finance Minister and Bruno Le Maire is set to be appointed as the new French Defence Minister, according to BFM Television.
French National Rally leader Bardella said the new PM Lecornu cabinet fails to break with the past, while a French socialist party official said the party will vote against the new government if there is no change in policies.
Czech billionaire Andrej Babis’s populist ANO party won the parliamentary election, although it failed to achieve an overall majority with just under 35% of the vote to win 80 seats in the 200-seat lower house, while he is seeking an agreement with two smaller groups, which are the populist Motorists and the anti-migration Freedom and Direct Democracy (SPD).
The UK economy could be on shakier ground than initially assumed amid a “chunky” revision to ONS data has increased doubts about how much households have been saving, according to The Times.
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