APAC stocks traded mixed, with the region somewhat cautious as participants digested disappointing Chinese activity data.
The lack of progress in US talks with China on tariffs and fentanyl is said to have reduced the chances of a Beijing summit, according to the FT.
Fitch cut France’s sovereign rating from AA- to A+; Outlook Revised to Stable from Negative; OATs -11 ticks.
European equity futures indicate a slightly positive cash market open with Euro Stoxx 50 futures up 0.3% after the cash market closed with gains of 0.1% on Friday.
In FX, DXY is steady and FX markets are contained heading into a week, which is set to be dominated by central bank activity.
US President Trump said he is ready to impose major sanctions on Russia when all NATO nations have agreed and started to do the same thing, and when all NATO nations stop buying oil from Russia.
Looking ahead, highlights include German Wholesale Price Index (Aug), NY Fed Manufacturing (Sep), Speakers including ECB’s Schnabel, Rehn & Lagarde.
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SNAPSHOT
US TRADE
EQUITIES
US stocks were mixed on Friday in what was an ultimately quiet trading session, although tech gains buoyed the Nasdaq but the majority of sectors closed in the red, in which Materials and Healthcare underperformed, while T-Notes were sold across the curve in likely profit taking after the recent rally and as participants braced for the central bank bonanza in the upcoming week including a widely anticipated Fed rate cut.
SPX -0.06% at 6,584, NDX +0.41% at 24,092, DJI -0.59% at 45,838, RUT -1.11% at 2,395.
Click here for a detailed summary.
TARIFFS/TRADE
US President Trump posted on Truth Social that “When Foreign Companies who are building extremely complex products, machines, and various other “things,” come into the United States with massive Investments, I want them to bring their people of expertise for a period of time to teach and train our people how to make these very unique and complex products, as they phase out of our Country, and back into their land.”
US President Trump said China is paying a lot in tariffs and talks with China in Spain are going well, while he also commented that they are still negotiating on TikTok and may let it die, but it depends on China.
China’s Commerce Ministry said it is to immediately open an antidumping investigation into certain US analogue chips and began an anti-discrimination investigation into US measures against China in the integrated circuit sector.
US Treasury said talks with China regarding TikTok and trade began in Madrid on Sunday, while talks will resume today.
Wall Street executives working on the TikTok deal said President Trump will announce another operating extension this week as the last one concludes on September 17th, although this could change, while the fate of the app is tied to the US-China trade talks and China is using it for leverage, according to Fox’s Gasparino who cited sources that noted it is easier for Trump to just extend the deadline and continue with negotiations.
The lack of progress in US talks with China on tariffs and fentanyl is said to have reduced the chances of a Beijing summit, and it is more likely that a Trump-Xi meeting will be a lower-profile event at the APEC forum in South Korea during October, according to FT. Furthermore, it was noted that China had made a formal invitation to President Trump for a state visit to Beijing, but the White House has yet to respond amid difficulties in making headway on trade and fentanyl.
US added 32 entities to the restricted trade list on Friday, including 23 from China, while other entities added to the list were based in countries including India, Iran, Turkey and the UAE, according to the Federal Register.
US and UK were reported on Friday to be rushing to finalise deals on nuclear reactors, artificial intelligence data centres and whisky ahead of a state visit to London by US President Trump, according to FT. It was also reported that the UK and the US are to sign a ‘ground-breaking’ tech deal during President Trump’s visit, according to Bloomberg.
South Korea’s Finance Ministry declined to confirm specific measures currently in discussion regarding an FX swap with the US, while it is in talks with the US to minimise any impact on the FX market from the US investment package. In relevant news, South Korea’s Foreign Ministry said US Deputy Secretary of State Landau expressed regret over the recent immigration raid on South Korean workers.
NOTABLE HEADLINES
US President Trump said the Fed chair is incompetent and is hurting the housing market, while Trump added that he has three people he likes a lot for Fed Chair.
US President Trump’s administration on Sunday renewed its request to an appeals court to fire Fed Governor Cook.
Fed Governor Cook declared her Atlanta property as a vacation home in documents, indicating it would not be her primary residence and appears to contradict mortgage fraud allegations, according to FT.
US Treasury Secretary Bessent was reported on Friday to have interviewed 4 of the 11 Fed Chair candidates, and had interviewed BlackRock’s Rieder, who was said to have climbed the ranks of contenders for the Fed Chair role, according to Bloomberg.
US companies reportedly put the brakes on hiring after US President Trump’s tariffs hit, with industries most exposed to the increased costs due to trade wars launching a wave of job cuts, according to FT.
Axios reported on Friday that many of the claims were fake regarding the massive spike in jobless claims on Thursday that heightened labour market fears and was “a result of attempted fraudulent unemployment filings in Texas.”
OpenAI plans to share 8% of its revenue with Microsoft (MSFT), while it is expected to gain USD 50bln from cutting the revenue share with Microsoft and partners, according to The Information. In relevant news, xAI is cutting staff by about 500 workers with the Co. laying off about a third of its data annotation team.
APAC TRADE
EQUITIES
APAC stocks traded mixed with the region somewhat cautious ahead of this week’s flurry of central bank updates and as participants digested disappointing Chinese activity data, while Japanese participants were away for a holiday
ASX 200 marginally declined amid weakness in the healthcare, mining and financial sectors, in which the latter was pressured by losses in Big 4 bank ANZ after it admitted to widespread misconduct related to incorrectly reporting bond trading data and agreed to pay AUD 240mln in penalties.
Hang Seng and Shanghai Comp were kept afloat with the Hong Kong benchmark lifted by tech strength after China announced an antidumping investigation into certain US analogue chips and began an anti-discrimination investigation into US measures against China in the integrated circuit sector, while US and Chinese officials also began talks on TikTok and trade in Madrid on Sunday. Nonetheless, the gains were limited as participants also digested disappointing activity data.
US equity futures (ES +0.1%, NQ +0.1%) were rangebound in quiet trade ahead of this week’s key events which are predominantly centred around central bank announcements.
European equity futures indicate a slightly positive cash market open with Euro Stoxx 50 futures up 0.3% after the cash market closed with gains of 0.1% on Friday.
FX
DXY struggled for direction with participants awaiting this week’s central bank announcements, in particular, the FOMC meeting on Wednesday, with money markets fully pricing in a Fed rate cut. Ahead of the Fed meeting, participants also await Fed nominee Miran’s Senate confirmation vote set for Monday, while it was also reported that documents showed Fed Governor Cook declared her Atlanta property as a vacation home in documents, indicating it would not be her primary residence, which contradicts mortgage fraud allegations. Furthermore, there were some comments from US President Trump who reiterated criticism against the Fed Chair and stated that there are 3 people he likes a lot for Fed Chair.
EUR/USD marginally softened in quiet FX trade and despite hawkish comments from ECB’s officials including Nagel, who warned on Friday that more rate cuts could threaten price stability, while ECB’s Kocher said the rate-cutting cycle is either over or very close to the end, and the central bank can keep its interest rates steady at 2% for the time being.
GBP/USD traded little changed with the BoE unanimously expected to keep rates unchanged later in the week, while the attention will also be on US President Trump’s state visit to the UK this week, with the UK and the US reportedly to sign a ‘ground-breaking’ tech deal during Trump’s visit.
USD/JPY trickled lower in the absence of Japanese participants due to Respect for the Aged Day and as political uncertainty lingered ahead of the LDP election on October 4th. Furthermore, it was reported that Japan’s Chief Cabinet Secretary Hayashi will announce on Tuesday his intention to run in the leadership race, while a recent Kyodo News poll showed ex-economic security minister and former PM Abe protege Takaichi was seen as the most suitable candidate to lead the ruling LDP.
Antipodeans remained afloat and gradually edged higher despite disappointing Chinese activity data.
PBoC set USD/CNY mid-point at 7.1056 vs exp. 7.1213 (Prev. 7.1019)
Canadian PM Carney said the budget deficit will be ‘substantial’, meaning bigger than it was last year due to US tariffs, while he announced a new federal agency with CAD 13bln to build affordable housing.
FIXED INCOME
10yr UST futures remained subdued after last Friday’s pullback and ahead of this week’s central bank announcements, including the FOMC on Wednesday and with overnight cash treasuries trade shut due to the holiday closure in Tokyo.
Bund futures languished around the prior week’s trough after recently sliding to a sub-129.00 territory and with German Wholesale Prices due later, while exit polls from the election in Germany’s bellwether state of North Rhine-Westphalia showed Chancellor Merz’s Christian Democrats won with 34% of votes, but support for the far-right AfD tripled with 16.5% of the votes.
COMMODITIES
Crude futures eked out mild gains following recent comments by US President Trump that he is willing to impose sanctions on Russia, but noted that Europe has to toughen sanctions and should stop purchasing oil from Russia.
Iraq signed a joint operation agreement with TotalEnergies and QatarEnergy LNG, according to the Iraqi PM.
Egypt signed three new agreements for investments worth more than USD 121mln for oil and gas exploration in the Western Desert, Suez Gulf and north of Sinai.
Ecuador’s government is withdrawing its diesel subsidy and will redirect funds to social programs.
Spot gold was choppy ahead of this week’s central bank meetings and with the spotlight on Wednesday’s FOMC.
Copper futures edged marginally higher but with the upside contained as participants digested the latest Chinese activity data, which fell short of expectations.
CRYPTO
Bitcoin was ultimately little changed after rebounding from an early decline with the help of support at the USD 115k level.
NOTABLE ASIA-PAC HEADLINES
China’s stats bureau said the economic operation was generally steady in August and they are facing many uncertainties, while it was noted that the external environment is very severe and uncertainties are rising, and some firms are having difficulties in operations. NBS said China will expand domestic demand and boost consumption and promote a rebound in prices, as well as stated that employment is generally steady with jobless rates expected to ease as college graduates find jobs. It also stated that China will further stabilise the economy and stabilise employment, and that more efforts are needed to support the property sector, but expects Q3 economic operations to maintain a stable trend as macro policies gain traction.
China MIIT aims for vehicle sales to rise around 3% Y/Y to about 32.3mln this year, while it was also reported that Hong Kong is in talks with several Chinese EV makers to establish local EV manufacturing.
South Korea’s Foreign Minister will visit China from September 17th to 18th and will discuss plans including Chinese President Xi’s visit to South Korea in October.
Australian Foreign Minister Wong said Australia and China will hold high-level talks in Beijing this week.
DATA RECAP
Chinese Industrial Output YY (Aug) 5.2% vs. Exp. 5.7% (Prev. 5.7%)
Chinese Retail Sales YY (Aug) 3.4% vs. Exp. 3.9% (Prev. 3.7%)
Chinese Urban Investment (YTD)YY (Aug) 0.5% vs. Exp. 1.4% (Prev. 1.6%)
Chinese Unemployment Rate Urban Area (Aug) 5.3% (Prev. 5.2%)
Chinese House Prices MM (Aug) -0.3% (Prev. -0.3%)
Chinese House Prices YY (Aug) -2.5% (Prev. -2.8%)
GEOPOLITICS
MIDDLE EAST
Israeli PM Netanyahu said getting rid of Hamas chiefs living in Qatar would rid the main obstacle to releasing all hostages and ending the war in Gaza.
Hamas said on Sunday it suspended talks on a prisoner swap with Israel after accusing Israel of targeting its negotiating delegation in Doha last week.
Israel’s Qatar strike left US President Trump with little time to object, and the plan relied on ballistic missiles fired over Saudi Arabia by jet fighters hundreds of miles from the target, according to a report on Friday by WSJ.
Qatar’s PM said Israel’s attack will not lead to anything but aborting de-escalating efforts, and Israeli ‘practices’ will not stop Doha from its Gaza mediation efforts with Egypt and the US to end the war.
Iran’s top security body warned on Sunday that EU threats to reinstate UN sanctions on Iran could jeopardise efforts to restore international monitoring of the country’s nuclear program, according to Economic Times.
Afghan Foreign Ministry said US officials held talks in Kabul over Americans detained in Afghanistan.
RUSSIA-UKRAINE
US President Trump said he is ready to impose major sanctions on Russia when all NATO nations have agreed and started to do the same thing, and when all NATO nations stop buying oil from Russia. Trump said NATO is placing 50%-100% tariffs on China, to be fully withdrawn after the Russia-Ukraine war ends, while he added that China has strong control, and even grip, over China and these powerful tariffs will break that grip. Trump later commented that he is willing to impose sanctions on Russia, as well as stated that Europe has to toughen sanctions and should avoid purchasing oil from Russia.
G7 Finance Ministers discussed options to increase pressure on Russia to end its war against Ukraine and agreed to accelerate discussions to further use immobilised Russian sovereign assets to fund Ukraine, while they also agreed to explore other mechanisms that would allow further increasing financial support to Ukraine. Furthermore, they discussed a range of possible economic measures, including further sanctions and trade measures such as tariffs.
Ukrainian President Zelensky posted on Friday that they can confirm the Russian offensive operation on Sumy had been completely thwarted by their forces.
Ukraine’s Defence Minister said Ukraine will need at least USD 120bln next year for defence efforts.
Ukrainian military said Ukraine attacked Russia’s Kirishi oil refinery, while the regional governor said the refinery sustained a fire, which was put out.
Russia’s UN Envoy said on Friday that Russia was not targeting Poland and that it was physically impossible for Russian drones to have reached Polish territory.
Russian troops struck control points, launch sites and storage sites for long-range drones in Ukraine, while Russian troops captured Novomykolaivka in eastern Ukraine, according to TASS. Furthermore, Russia’s Defence Ministry said early on Sunday that Russia had shot down 361 Ukrainian drones over the past day, while it also stated that Russia test-fired a Zircon hypersonic cruise missile at a target in the Barents Sea during ’Zapad’ exercises.
Polish and allied aircraft were deployed on Saturday in a “preventive” operation in Poland’s airspace because of a threat of drone strikes in neighbouring areas of Ukraine, and the airport in Lublin was closed, while the alert lasted about two hours, according to The Guardian.
Romania scrambled two F-16 fighter jets after a Russian drone entered Romania’s airspace on Sunday, while the drone was tracked by the Romanian air force for nearly an hour before leaving.
OTHER
US, Japan and the Philippines held joint maritime exercises in the Philippines’ Exclusive Economic Zone in the South China Sea from Thursday to Saturday.
Chinese military conducted ‘routine’ cruises in the South China Sea and said it will continue to defend China’s sovereignty in the South China Sea, while it also stated that the Philippines must immediately stop provoking incidents and must stop escalating tensions in the South China Sea.
Pakistan’s Foreign Affairs Ministry said the Pakistani Deputy PM received a call from US Secretary of State Rubio and they both expressed satisfaction over a positive trajectory of US-Pakistan ties, as well as discussed recent developments.
Venezuela said a US Navy destroyer intercepted and boarded a Venezuelan tuna vessel on Friday in waters in Venezuela’s economic zone, while its government demanded that the US stop targeting Venezuelan vessels, which it said places the security and peace of the Caribbean at risk.
EU/UK
NOTABLE HEADLINES
UK Chancellor Reeves plans to scrap VAT on energy to lower bills and told cabinet members that ‘all options were on the table’ for a budget giveaway to ease the cost of living, according to The Sunday Times.
UK government announced over GBP 1.25bln of inward investment from US finance companies which will create 1,800 UK jobs, while the deal lines up GBP 20bln in trade between the two countries, including an expected GBP 7bln commitment from BlackRock (BLK) to grow in the UK.
UK government announced over GBP 1.1bln in joint government and industry investment for the maritime sector.
ECB’s Kocher said the rate-cutting cycle is either over or very close to the end, and the central bank can keep its interest rates steady at 2% for the time being, provided there are no major shocks, according to FT.
ECB’s Nagel said on Friday that more rate cuts could threaten price stability, while he added there are “convincing reasons” to keep rates unchanged and that a “steady hand” policy is appropriate at the moment. Nagal also stated that with inflation and rates at 2% “we can closely monitor developments over the coming weeks and months and react if necessary”, as well as noted that the rise in services prices is still high, and the great uncertainty is known to all, especially in geopolitical terms, according to Faz.
Exit polls from the election in Germany’s bellwether state of North Rhine-Westphalia showed German Chancellor Merz’s Christian Democrats won with 34% of the votes, although support for the far-right AfD tripled with 16.5% of the votes, according to The Guardian.
Italy’s Economy Minister said the government is to confirm its GDP growth estimates in the upcoming Budget plan, while he added that the Italian banking sector must consolidate to face challenges posed by giants such as Amazon and others that will compete for their market share.
Fitch cut France’s sovereign rating from AA- to A+; Outlook Revised to Stable from Negative, and raised Portugal’s sovereign rating from A- to A: Outlook Revised to Stable from Positive, while S&P raised Spain’s sovereign rating from A to A+; Outlook Stable.
DATA RECAP
UK Rightmove House Prices MM (Aug) 0.4% (Prev. -1.3%)
UK Rightmove House Prices YY (Aug) -0.1% (Prev. 0.3%)
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