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US stocks were in the red with pressure seen in the US afternoon amid reports that the Trump admin is mulling export controls to China on goods made with or containing US software, although some of the move attempted to pare as digestion of the further details seemed less extreme. Nonetheless, risk-off trade resumed into the close. Sectors were mixed with Industrials and Consumer Discretionary residing as the laggards, and Energy outperforming, buoyed by gains in the crude complex. USD marginally softened on what was a choppy performance as participants largely await the US CPI on Friday ahead of next week's FOMC where the Fed is widely expected to cut by 25bps. There remained little sign of progress regarding the government shutdown, although House Ways and Means Committee Chair Smith remarked that lawmakers are weighing a stopgap bill through December 2026, while House Minority Leader Jeffries hopes they can get the shutdown resolved by month-end. Looking ahead, highlights include Australian NAB Quarterly Business Confidence, Singapore CPI, BoK Rate Decision, Supply from Australia & Japan. More Newsquawk in 2 steps: 1. Subscribe to the free premarket movers reports 2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days LOOKING AHEAD Highlights include Australian NAB Quarterly Business Confidence, Singapore CPI, BoK Rate Decision, Supply from Australia & Japan. Click for the Newsquawk Week Ahead. US TRADE US stocks were in the red with pressure seen in the US afternoon amid reports that the Trump admin is mulling export controls to China on goods made with or containing US software, although some of the move attempted to pare as digestion of the further details seemed less extreme. Nonetheless, risk-off trade resumed into the close. Sectors were mixed with Industrials and Consumer Discretionary residing as the laggards, and Energy outperforming, buoyed by gains in the crude complex. SPX -0.53% AT 6,699, NDX -0.99% AT 24,879, DJI -0.71% AT 46,591, RUT -1.45% AT 2,452. Click here for a detailed summary. TARIFFS/TRADE US President Trump’s administration is considering a plan to restrict globally produced exports to China made with or containing US software, while the new export controls under consideration by the US could curb exports on a wide range of goods to China, and the plan would retaliate against China's rare earth export restrictions if adopted, according to Reuters sources. However, the sources said that the measure, details of which are being reported for the first time, may not move forward, and administration officials could announce the measure to put pressure on China but stop short of implementing it, while narrower policy proposals are also being discussed. US Treasury Secretary Bessent said any export control regarding China will be in coordination with G7 allies. USTR Greer on China trade said the location for the meeting between US President Trump and Chinese President Xi is on schedule, while Greer and Treasury Secretary Bessent will meet Chinese officials in Malaysia to see if there is room to move forward, according to CNBC. Furthermore, he said the rare earth move was totally disproportionate and there is a good landing zone where they can be more balanced. China's Trade Remedy and Investigation Bureau published questionnaires to gather intelligence for an anti-dumping investigation on some US-made analogue IC chips, according to Bloomberg. EU is reportedly preparing trade options to counter China's rare earths restrictions, according to reports. South Korea and the US are quite at the tail end of trade negotiations, according to Yonhap citing a senior Seoul official. NOTABLE HEADLINES US President Trump posted on Truth regarding cattle ranchers in which he commented "It would be nice if they would understand, but they also have to get their prices down, because the consumer is a very big factor in my thinking, also!" US Speaker Johnson said it is not the time to begin work on a longer-term spending bill, while he added it (the shutdown) is getting closer to November by the hour and the Democrats are "eating up" the clock, according to Fox's Pergram. US House Ways and Means Committee Chair Smith said lawmakers are weighing a stopgap bill through December 2026, according to Bloomberg's Wasson. US House Minority Leader Jeffries hopes they can get the shutdown resolved by the end of October. Fed floats plan with much smaller capital hikes for big banks, while officials calculated that the plan would lead to an increase of between 3-7% in total for most big banks, according to Bloomberg. FX USD marginally softened on what was a choppy performance as participants largely await the US CPI on Friday ahead of next week's FOMC where the Fed is widely expected to cut by 25bps. There remained little sign of progress regarding the government shutdown, although House Ways and Means Committee Chair Smith remarked that lawmakers are weighing a stopgap bill through December 2026, while House Minority Leader Jeffries hopes they can get the shutdown resolved by month-end. EUR eked slight gains after rebounding from a brief dip beneath the 1.16 handle, while there were several ECB comments, including from Kazaks who said it may well be the case that the next rate move could as easily be a hike as a cut. GBP slightly weakened but is off today's lows after clawing back some of the losses seen in the aftermath of the softer-than-expected UK CPI data. JPY was ultimately flat against the dollar with USD/JPY testing the 152.00 level to the upside, while there were comments from Japan's Finance Minister Katayama that PM Takaichi will proceed with fiscal reform both in terms of spending and revenue. SNB's Schlegel said inflation is expected to rise slightly in the coming quarters and that planned US tariffs on some pharma products could increase downside risk for the economy. Furthermore, he said uncertainty in the economy remains high, while they will continue to observe the situation and adjust monetary policy where necessary. FIXED INCOME T-notes settled flat in choppy trade with focus on US/China relations, while there was also an overall decent 20yr auction. COMMODITIES Oil prices crude complex trended higher throughout the duration of the day, with further upside late in the session on geopolitical headlines including reports that the Trump admin lifted key restriction on Ukraine's use of Western long-range missiles, which Trump later refuted, while Treasury Secretary Bessent said a substantial pick up in Russia sanctions is expected, and will be announced today or tomorrow. US EIA Weekly Crude Stocks w/e -0.961M vs. Exp. 1.205M (Prev. 3.524M) US Energy Secretary Wright said the SPR will be gradually filled up, oil prices are 'low', and it is a great time to buy. GEOPOLITICAL MIDDLE EAST Iran's Foreign Minister said Tehran will not return to the negotiating table with the US as long as it makes unreasonable demands, according to Tasnim. RUSSIA-UKRAINE Ukrainian President Zelensky called US President Trump's idea a good compromise regarding the concept of stopping at the current lines. US President Trump’s administration reportedly lifted a key restriction on Ukraine's use of Western long-range missiles, according to WSJ. However, US President Trump later posted that the WSJ story on Ukraine being allowed to use long-range missiles deep into Russia is fake news. US Treasury Secretary Bessent says a substantial pick up in Russia sanctions is expected, will be announced today or tomorrow. EU diplomats said the EU's 19th sanctions package against Russia includes four companies in China's oil industry. Russian President Putin held strategic nuclear drills and planned a drill on the management of nuclear forces. Russian Deputy Foreign Minister Ryabkov said preparations for a Russia-US summit are ongoing and there has been no agreement on a Lavrov-Rubio meeting, while he sees no major obstacles for a Trump-Putin meeting, according to RIA. ASIA-PAC NOTABLE HEADLINES Japan's Finance Minister Katayama announced that Prime Minister Takaichi will proceed with fiscal reform both in terms of spending and revenue, and aims to balance fiscal prudence whilst pursuing fiscal and economic policy. Katayama said it is too early to talk about the size of the supplementary budget, but it is important to have a sufficient size of a supplementary budget, while she added that specifics on monetary policy are up to the BoJ and need the BoJ and the government to work together to have effective economic policies. EU/UK NOTABLE HEADLINES UK is to announce emergency measures to boost London housebuilding as soon as Thursday, according to Bloomberg. ECB President Lagarde said they need to address the fragmentation of EU trading venues, while she welcomed German Chancellor Merz's comment in support of the capital markets union. ECB's de Guindos said development of inflation is positive. ECB's Kazaks said it may well be the case that the next rate move could as easily be a hike as a cut, according to Econostream. DATA RECAP UK CPI MM (Sep) 0.0% vs. Exp. 0.2% (Prev. 0.3%) UK CPI YY (Sep) 3.8% vs. Exp. 4.0% (Prev. 3.8%) Loading...
