APAC stocks traded mixed with global risk sentiment cautious ahead of the crucial FOMC policy decision.
White House said it was further extending the TikTok enforcement delay, with the deadline to sell TikTok extended until December 16th.
European equity futures indicate a positive cash market open with Euro Stoxx 50 future up 0.3% after the cash market closed with losses of 1.3% on Tuesday.
DXY is flat after yesterday’s selling pressure. EUR/USD retains a firm footing on a 1.18 handle, GBP awaits UK inflation metrics.
USTs and Bunds are steady. Crude futures slightly eased back from this week’s peak.
Looking ahead, highlights include ECB Wage Tracker, UK Inflation (Aug), EZ HICP Final (Aug), New Zealand GDP (Q2), US Atlanta Fed GDP, FOMC Announcement, BoC Announcement, BCB Announcement, Bank of Indonesia Announcement, ECB’s Lagarde, Nagel, Cipollone, Fed Chair Powell, BoC’s Macklem & US President Trump, Supply from Germany & UK, Earnings from General Mills.
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US TRADE
EQUITIES
US stocks were rangebound and finished with marginal losses as traders awaited the pivotal FOMC meeting on Wednesday, where the Fed is widely expected to cut by 25bps, but there remains an outside risk of a larger cut, and the attention will also be on the accompanying commentary and updated SEPs. There were some data releases in the form of Retail Sales, which printed above expectations across the board, while Import/Export Prices came in hotter than expected, and Industrial Production unexpectedly rose in August, but did little to inspire, with markets cautious ahead of this week’s main risk event.
SPX -0.13% at 6,607, NDX -0.08% at 24,274, DJI -0.27% at 45,758, RUT -0.09% at 2,403.
Click here for a detailed summary.
TARIFFS/TRADE
White House said it was further extending the TikTok enforcement delay, with the deadline to sell TikTok extended until December 16th.
US-China TikTok agreement is similar to the one worked out earlier this year, according to Reuters citing three sources.
TikTok deal would create a new US entity and would require US users to migrate to a new app, while ByteDance would own 20% of US TikTok, according to WSJ.
Chinese state media noted regarding US-China trade talks in Madrid that China will review and approve matters related to TikTok, technology export and intellectual property in accordance with the law, while it added that an agreement on TikTok is in the interests of both sides.
China and the US are in the “final stage” of negotiations for a state visit to Beijing by US President Donald Trump, with bulk purchases of American goods a critical part of the deliverables, according to sources cited by South China Morning Post.
EU and Indonesia concluded talks on a trade deal which they plan to sign next week as they accelerate efforts to reduce dependence on China and the US, according to FT.
NOTABLE HEADLINES
US House Republicans release draft bill which would fund the government through November 21st.
US House may vote on the Continuing Resolution before Friday, which could possibly occur on Thursday, while GOP leaders would like to waive the 72-hour rule if they can, according to Politico.
APAC TRADE
EQUITIES
APAC stocks traded mixed with global risk sentiment cautious ahead of the crucial FOMC policy decision where the Fed is expected to deliver its first rate cut for this year.
ASX 200 was pressured with underperformance in the Consumer Discretionary, Real Estate, Miners and Materials sectors front-running the declines, while there was some resilience seen in Utilities, Energy and Tech.
Nikkei 225 swung between gains and losses and briefly returned to the 45,000 level with price action choppy following initial currency headwinds and mixed Japanese trade data in which Exports fell for a 4th consecutive month, albeit at a much slower-than-feared pace, while Imports printed a wider-than-anticipated contraction.
Hang Seng and Shanghai Comp gained with the Hong Kong benchmark led higher by tech strength as Baidu (9888 HK) rallied after an analyst upgrade due to optimism regarding its in-house chip venture and with SMIC (981 HK) testing domestically-made advanced chip-making machinery. Furthermore, Hong Kong Chief Executive Lee made several pledges in his policy address, while China also recently issued measures on increasing consumption.
US equity futures (ES U/C, NQ U/C) remained subdued with participants bracing for the FOMC rate decision, updated SEPs and presser.
European equity futures indicate a positive cash market open with Euro Stoxx 50 future up 0.3% after the cash market closed with losses of 1.3% on Tuesday.
FX
DXY regained some composure after retreating beneath the 97.00 level yesterday, despite better-than-expected US Retail Sales and Industrial Production data, while markets now await the looming Fed rate decision, and participants will also be eyeing the latest dot plots, statement and post-meeting presser for clues on policy.
EUR/USD retained a firm footing at the 1.1800 handle after benefitting from the dollar’s recent demise to print a YTD high.
GBP/USD held on to the prior day’s spoils after gradually edging higher post-jobs data but with upside capped ahead of UK CPI, while participants will also be eyeing any agreements with US President Trump currently in the UK for a state visit.
USD/JPY lacked conviction after being dragged lower yesterday by a weaker buck and following mixed Japanese trade data.
Antipodeans pared some of the prior day’s mild gains amid the mixed overnight risk appetite with the FOMC horizon.
PBoC set USD/CNY mid-point at 7.1013 vs exp. 7.1021 (Prev. 7.1027).
FIXED INCOME
10yr UST futures lacked direction after yesterday’s choppy performance and with participants tentative ahead of the FOMC, while an overall solid 20yr auction stateside did little to spur prices as participants await today’s FOMC policy announcement.
Bund futures kept afloat within tight parameters following recent whipsawing and ahead of today’s Bund issuances.
10yr JGB futures initially conformed to the non-committal mood across global peers following mixed trade data from Japan which showed a narrower-than-feared contraction in exports, but was later mildly supported after the latest 20yr JGB auction which resulted in the highest bid-to-cover since May 2020.
COMMODITIES
Crude futures slightly eased back from this week’s peak after rallying yesterday, with support seen after a report that Russia’s Transneft informed producers it is restricting oil storage in its systems and that Russia could be forced to cut oil output.
US Private Inventory Data (bbls): Crude -3.4mln (exp. -0.9mln), Distillate +1.9mln (exp. +1.0mln), Gasoline -0.7mln (exp. +0.1mln), Cushing -0.4mln.
Japan’s JERA reportedly in advanced talks to buy USD 1.7bln worth of US natural gas production assets.
Spot gold marginally declined with headwinds seen alongside selling pressure in metals, including a 1% drop in silver, shortly after Shanghai commodities trade got underway, and with demand subdued ahead of today’s Fed rate decision.
Copper futures retreated amid the mixed risk appetite in the region and cautiousness heading into today’s main risk event.
CRYPTO
Bitcoin ultimately weakened on what was a choppy and rangebound performance above the USD 116k level.
Binance reportedly nears a deal to escape the compliance monitor imposed by the DoJ, according to Bloomberg.
UK is set to announce closer co-operation on cryptocurrencies and UK Chancellor Reeves hopes greater regulatory alignment will allow better access to America’s deep capital markets, according to FT.
NOTABLE ASIA-PAC HEADLINES
Hong Kong Chief Executive Lee reaffirmed economic growth of 2%-3% for this year in the annual policy address, while he said they will accelerate development of the northern metropolis area close to the mainland China border, will continue to increase public housing supply, and create land for large development projects. Lee also stated that Hong Kong is to set up a working group to boost AI development and is to set up a task force to help mainland Chinese companies go overseas. Furthermore, Lee said the Hong Kong Monetary Authority is to encourage banks to establish regional headquarters in Hong Kong, and the HKEX is to lure more Southeast Asia companies for secondary listing.
China trials its first advanced tools for AI chipmaking with SMIC (981 HK) testing domestically-made machinery as Beijing seeks to rival US-made processors, according to FT.
Wells Fargo (WFC) banker who had been barred from leaving China for several months, has been allowed to return to the US, according to the Washington Post.
DATA RECAP
Japanese Trade Balance Total Yen (Aug) -242.5B vs. Exp. -513.6B (Prev. -117.5B, Rev. -118.4B)
Japanese Exports YY (Aug) -0.1% vs. Exp. -1.9% (Prev. -2.6%)
Japanese Imports YY (Aug) -5.2% vs. Exp. -4.2% (Prev. -7.5%, Rev. -7.4%)
GEOPOLITICS
MIDDLE EAST
Japan will not recognise a Palestinian state at the UN General Assembly, according to Asahi.
RUSSIA-UKRAINE
US President Trump posted on Truth “I had a wonderful phone call with my friend, Prime Minister Narendra Modi…Thank you for your support on ending the War between Russia and Ukraine!”
Indian PM Modi said, like US President Trump, he is also fully committed to taking the India-US comprehensive and global partnership to new heights, while he supports Trump’s initiatives towards a peaceful resolution of the Ukraine conflict.
European Commission President von der Leyen said they will propose speeding up the phase-out of Russian fossil imports, while she had a call with US President Trump on strengthening joint efforts to raise economic pressure on Russia.
IAEA team at Ukraine’s Zaporizhia nuclear power plant reported hearing shelling close to the site on Tuesday and saw black smoke rising from three locations nearby after multiple artillery shells struck an area outside of the nuclear power plant site perimeter, although there were no reports of casualties or equipment damage.
EU/UK
NOTABLE HEADLINES
Office for Budget Responsibility told UK Chancellor Rachel Reeves that it will downgrade productivity forecasts for the UK economy, according to CityAM.
Microsoft’s (MSFT) president said they will invest over USD 30bln in the UK over the next four years, and will spend USD 15.1bln on UK operations, including a London AI lab, gaming, and other work.
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