CN 2025 bull market shudders – US Jobs, jobs, jobs, one down two to go

Asia Market: CN 2025 bull market shudders; US Jobs, jobs, jobs, one down two to go; Also focus on US Aug ISM Services PMI.

General trend and developments

- Following recent reports of China securities firms funding margin deposit ratio for new client financing to 100% from 80% (an action also seen during the volatile 2015 year for Chinese equities), today just before the Shanghai open China said to consider curbs on stock speculation, including the removal of certain short selling curbs.

- Shanghai quickly fell -1.2% with CSI AI and chip indices -5%. CSI300 blue chip index -2% and the tech Star50 index -4% with giant chipmaker SMIC -5%.

- China slid further to -2.1% after it was reported from internal sources that BYD had cut its sales targets by 16% for 2025, down to 4.6M units from 5.5M back in March. Amid China’s severe "involution" issue of over-competition, the sources confirmed BYD said to face "tougher competition".
[**Trader’s Note: The cumulative fall in Chinese equities in recent days following a recent double top on the Daily chart as the rest of the global markets are relatively stable is looking rather familiar to a decade ago. Back in 2015 after extended price gains Shanghai’s 50-day moving average fell below its 200-day moving average, creating a so-called "death cross" on the charts. FWIW, today’s current Shanghai price is 3,737, with Shanghai Composite's 50-day moving average at 3,598 and its 200-day - moving average is at 3,401. Something to watch.]
STOP PRESS: For no particular reason Shanghai Composite pared back to only -1.5% losses over a period of around 30 minutes at time of publication.

- The US markets took the tepid US JOLTS data overnight as a sign that the priced-in Fed rate cuts will stay, yet not so poor as to indicate impeding recession, with risk assets, currencies and bonds gaining on the release. Tonight sees US ADP jobs numbers followed by Friday’s Nonfarm Payrolls, where presumably the same market expectations will be present.

- Nikkei outperformed Asia +1.6%, with Softbank +6.9%.

- Australia ASX today rebounded somewhat with Financials +1.2% and IT 1.4% paring back some of their outsize losses yesterday that helped drag the ASX down.

- One day after better than expected Q2 GDP numbers, Australia’s trade surplus came in higher than expected for July. The Stats agency said exports increased $1.45B, +3.3% driven by Non-rural goods. Meanwhile Australian July Household Spending was inline.

- Japanese rates fell back across the curve after recent rises, following falls in US and EU yields. Chances of an October hike by the BOJ fell to 40.5% vs 43.5% Tuesday and a December hike to 63.5% vs 64.5% Tuesday.

- Japan 30-year yields down -4bps, falling along with the rest of the JP yield curve, with today’s reasonably well supported 30-year auction doing nothing to change yields. 

- As Japan grapples with balancing reduced bond issuance with the need to contain government spending, Japan’s MOF announced that budget requests from all government agencies for next FY26/27 total ¥122.5T. Significantly higher than the ¥115.2T budget for the current year (FY25/26) and higher than even the high-end estimates of ¥120T.

- Salesforce fell -5.6% after hours after Q3 Rev outlook softer than estimates.

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu Sept 4th (Thu night US ADP jobs, US Aug ISM Services PMI).

- Fri Sept 5th JP July House Spending (Fri eve UK July Retail Sales, US Aug Nonfarm Payrolls).

Holidays in Asia this week

- Tue Sept 2nd Vietnam.

- Wed Sept 3rd Vietnam.

- Fri Sept 5th Indonesia, Malaysia.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.3% at 8,767.

- Australia July Trade Balance (A$): 7.3B v 4.9Be.

- Australia July Household Spending M/M: 0.5% v 0.5%e; Y/Y: 5.1% v 5.0%e.

- RBA Gov Bullock: Domestic consumer spending is a bit more but slowing; Do not know what will happen to rates at this stage; Spending has been little stronger than RBA though, if keeps going, might Not need as many rate cuts [overnight update].

- New Zealand Q2 Volume of All Buildings Q/Q: -1.8% v -1.0%e.

- New Zealand Aug Cotality Home Value M/M: -0.2% v -0.4% prior.

- New Zealand sells total NZ$450M vs. NZ$450M indicated in 2030 and 2035 bonds.

China/Hong Kong

- Hang Seng opens +0.6% at 25,489; Shanghai Composite opens -0.2% at 3,807.

- China said to consider curbs on stock speculation to foster 'steady gains'; [including the removal of certain short selling curbs] - US financial press.

- BYD said to cut 2025 sales target to 4.6m units (from 5.5M prior) - financial press, citing sources from internal communications 'last month'.

- China Commerce Ministry: Announces anti-dumping duties on some types of US optical fibers, effective immediately.

- PBOC and China MOF vow to strengthen collaboration to promote stable development of China bond market overnight update].

- Russia Pres Putin: Visit to China was positive; We finally found consensus with China on energy; Prices will be based on certain market based formula, and provide stable and reliable supplies of gas overnight update].

- China PBOC sets Yuan reference rate: 7.1052 v 7.1108 prior.

- China PBOC Open Market Operation (OMO): Injects CNY213B in 7-day reverse repos; Net drains CNY203B v drains CNY151B prior.

Japan

- Nikkei 225 opens +0.3% at 42,079.

- Japan releases weekly flows data [period ended Aug 29th]: Foreign buying of Japan equities: -¥785.7B v -¥496.2B prior; Japan buying of foreign bonds: +1.42T v -¥167.2B prior.

- Japan trade negotiator Akazawa: Visiting US as administrative issues have been resolved - Japanese press.

- Japan Finance Ministry (MOF): Budget requests from govt agencies for new FY26/27 total ¥122.5T – press [overnight update].

Korea

- Kospi opens +0.1% at 3,188.

- South Korea July Current Account Balance: $10.8B v $14.3B prior.

- South Korea Vice Fin Min Lee: Discussing FX with the US, comments on US $350B investment, South Korea economy - financial press.

Other Asia

- Thailand's Pheu Thai Party: Will propose Chaisaksem Nitisiri for PM, will dissolve parliament if elected as PMTaiwan, Japan to launch cross-border ETFs in Sept - Taiwan Stock Exchange statement.

- Thailand Parliament official: Will hold vote on new PM on Friday, Sept 5th [overnight update].

North America

- (US) Weekly API Crude Oil Inventories: +0.6M v -1.0M prior.

- (US) MBA Mortgage Applications w/e Aug 29th: -1.2% v -0.5% prior (3rd week of declines).

- (US) Punchbowl: House Republicans seem to be gravitating toward a stopgap funding resolution that would keep the federal government funded through mid-November.

- (MX) Mexico Aug Consumer Confidence: 46.7 v 46.2e.

- (US) Fed's Waller (voter, dovish dissenter): Repeats should cut rates at next FOMC meeting; Could see multiple rate cuts over the next 3-6 months.

- (US) Fed's Musalem (voter): Tariffs will likely pass through in 2 or 3 quarters and then fade, but there is some risk of persistence.

- (US) July JOLTS job openings: 7.181M V 7.382ME (lowest since early 2021).

- (US) July factory orders: -1.3% V -1.3%E.

- (US) Fed's Bostic (non-voter for 2025 & 2026): Not ruling out Sept rate cut depending on upcoming jobs report, other data.

- (US) Aug preliminary NA Class 8 Net Orders 13K units, +4% m/m, -14% y/y - FTRintel.com.

- (US) Fed's Kashkari (non-voter): Fed is not done with work to bring inflation back to 2%; Interest rates have room to come down gently.

- (US) Fed Beige Book: Most districts reported little to no change in optimism or economic activity with 4 districts reporting modest growth; Most districts saw price increases to continue.

- (US) US Sec of State Rubio: If you are on a boat full of cocaine or fentanyl, you are an immediate threat the US; Pres Trump has the right to eliminate such threats.

Europe

- Russia Energy Min Tsivilev: Co signs deal for additional supply of additional 2.5M tons of oil to China via Kazakhstan - Interfax.

- Sperbank CEO Cooling down of Russia's economy continues; Has reached "technical stagnation" - financial press.

- (UR) Russia Foreign Ministry: Russian does not plan to discuss any foreign military intervention in Ukraine, in any format - press, citing spokesperson.

- (UK) PM Starmer: Reiterates fiscal rules non-negotiable; Borrowing costs have risen across the world.

- (IT) Italy Economy Min and League party discuss ways to collect resources from financial institutions to fund budget policies - press.

- (PL) Poland central bank (NBP) cuts base rate by 25bps to 4.75%; as expected.

- (UR) Ukraine Pres Zelenskiy: Russia keeps hitting Ukraine energy sector; Showing clear signals they want to keep fighting - comments from Copenhagen.

- (UR) Russia Pres Putin: We are not discussing security for territory swap in Ukraine, we are fighting for people's rights.

- (EU) ECB's Villeroy (France): Trump's attacks on Fed independence are 'dangerous for democracy'.

- (DE) Germany Chancellor Merz: Will be inviting companies and stakeholders affected by high tariffs to a national steel summit.

- (PL) Poland Pres Nawrocki: President Trump strongly guaranteed Poland security; Discussed increasing number of troops in Poland.

- OPEC+ Said to consider another production hike at this week's meeting - Press.

Levels as of 01:20 ET

- Nikkei 225 +1.5%, ASX 200 +1.0%, Hang Seng -1.1%; Shanghai Composite -1.5%; Kospi +0.1%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.2%; DAX +.2%; FTSE100 flat.

- EUR 1.1649.1669; JPY 147.79-148.28; AUD 0.6523-0.6550; NZD 0.5865-5890.

- Gold -1.3% at $3,587/oz; BTC -0.1% at $110,920; Crude Oil -0.7% at $63.53/bbl; Copper -1.0% at $4.5705/lb.