Asia stocks vault higher with JP/KR fresh records following record-setting US session

Asia Market Update: Asia stocks vault higher with JP/KR fresh records following record-setting US session; Focus on UK July GDP.

General trend and developments

- Nikkei 225 opened up to fresh record highs on the back of more record highs for US stocks.

- Kospi again outperformed +1.9% to fresh record highs, powered by Hynix +7% as it announced it is readying for mass production of its world-first HMB4 chip.

- Hang Seng also +1.6% with Alibaba +8% and Baidu +4% as investors backed their own new chips will rival Nvidia’s H20 and Baba's $3.2B bond offering to help the company meets its AI and Cloud capex targets.

- Dow, S&P and Nasdaq all hit fresh new highs as global 10-year yields continued moving down, none more obviously than in the US where 10-year yields dipped below 4% for the first time since the initial tariff shock in early April. US drop came with August CPI mostly inline if a little sticky, but a big jump in weekly jobless claims to a four-year high. (All on the background of the Fed clearly signaling in recent weeks it is more concerned about a worsening job market than any sustained increase in inflation).

- Last night’s surprise reporting that the Chinese government would be offering to help local govts with more than $1T of bills for comparison purposes dwarfs the ~$610B (CNY4.4T) in local govt special bonds quota for the whole year of 2025 and is about 5.4% of China’s entire GDP. [The support will provide cash-flow relief to local suppliers of debt in the liquidity-strapped regions, but is basically balance-sheet plumbing rather than new fiscal spending].

- AI talent-poaching war may be going global, with Tencent denying it had poached a top OpenAI researcher for a salary more than CNY100M.

- The Euro rose last night after the ECB left rates unchanged (as expected) and emphasized policy and inflation are in a good place.

- Japan, US Finance Ministers reaffirmed G7 commitment of not targeting exchange rates for competitive purposes. Japan OIS chances yesterday of a BOJ hike virtually unchanged from the steep rise the past couple of days; 32.5% for October and 64% for December.

- Japan LDP leadership race continues to widen with Agriculture Min Koizumi said to have confirmed is running, and Fin Min Kato affirming he is also considering to run.

- New Zealand August Manufacturing PMI dipped into contraction.

- In China trade news US Pres Trump said to withdraw nomination of China hawk Landon Heid for US Dept of Commerce post, a move which one China analyst says may be a sign of a more dovish US stance in the ongoing China trade talks.

- Comes as US Treas Sec Bessent to join Pres Trump on his official state visit to UK over the next few days, stopping first in Spain for another meeting with his China trade counterparts.

- Push back from China after Mexico raised its tariffs from Asia, including China, threatening the move may impact further enterprise investment in Mexico.

- Ahead of Europe’s further Russian sanctions likely to be announced later today, and on the back of US urging G7 to impose high tariffs on China and India over Russian oil purchases, Japan imposed additional asset freeze and export control sanctions on Russia, and will lower price cap on Russia crude oil from $60/bbl to $47.60, effective from today. Japan Trade Ministry also restricted exports to additional entities including 6 in China, 2 in Turkey and 1 in UAE as part of Russia sanctions due to invasion of Ukraine.

- US equity FUTs flat during Asian trading.

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

- Fri Sept 12th (Fri eve UK July GDP, US Michigan Sept Consumer Sentiment).

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.5% at 8,844.

- Australia RBA Asst Gov (Financial) Jones: Anti-fragility and the Financial System - speech at FINSIA The Regulators 2025, Sydney.

- New Zealand Aug Manufacturing PMI: 49.9 v 52.8 prior (1st month of contraction).

- New Zeand Aug Total Card Spending M/M: 0.4% v 0.6% prior.

China/Hong Kong

- Hang Seng opens +1.7% at 26,539; Shanghai Composite opens flat at 3,875.

- US Pres Trump withdraws nomination of China hawk Landon Heid for US Dept of Commerce - PBOC insider: "We may not necessarily follow any Fed rate cut; Any policy action will depend on the state of the Chinese economy. The stock market is very active right now - if we cut rates, wouldn’t that just be like adding fuel to the fire?".

- China bond flow said to be suspended following market sell off - US financial press.

- China analysts now expect PBOC to resume bond purchases in Q4 - Securities Times.

- (US) Treas Sec Bessent to join Pres Trump on official state visit to UK, Sept 12th - 18th; Also to meet with China trade team in Spain - US Treasury.

- Baidu and Alibaba have adopted their own chips for training AI models – TheInformation [overnight update].

- Tencent: *Denies hiring former OpenAI researcher Shunyu Yao at CNY100M+ salary (~$14M)

solve problems which trade firms face [overnight update].

- China Commerce Ministry (MOFCOM): Planned Mexico tariffs on China to seriously impact the business environment in Mexico; reduce confidence of enterprises in investing in Mexico.

- Mexico Pres Sheinbaum: We're not looking for a conflict with China tariffs.

- Mexico Econ Min Ebrard: Tariffs on Asian imports would only affect 8.6% of trade - press interview [overnight update].

- China PBOC sets Yuan reference rate: 7.1019 v 7.1034 prior.

- China PBOC Open Market Operation (OMO): Injects CNY230B in 7-day reverse repos; Net injectsCNY42B v injects CNY79B prior.

Japan

- Nikkei 225 opens +0.9% at 44,800 (fresh record high).

- Japan July Final Industrial Production M/M: -1.2% v -1.6% prelim; Y/Y: -0.4% v -0.9% prelim;

- Japan, US Finance Ministers release joint statement; Reconfirms G7 commitment of not targeting exchange rates for competitors purposes.

- Japan Fin Min Kato: It is the role of the government to respond to inflation; affirms considering whether to run in the LDP leadership race.

- Japan Chief Cabinet Sec Hayashi: To impose additional asset freeze and export control sanctions on Russia over Moscow's invasion of Ukraine; to lower price cap on Russia crude oil from $60/bbl to $47.60, effective Friday.

- Reportedly Min of Agriculture Shinjiro Koizumi confirms to run for LDP leader in Japan – Sankei [overnight update].

- Japan MOF sells ¥649.2B v ¥650B indicated of JGBs in liquidity enhancement auction.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.4352% v 0.4521% prior; bid-to-cover: 3.11x v 3.02x prio.

Korea

- Kospi opens +0.9% at 3,374.

- South Korea sells KRW800B in 50-year Bonds: Avg Yield: 2.570% v 2.615% prior; bid-to-cover: x v 1.73x prior.

Other Asia

- Taiwan says to continue advanced tariff talks with the US; "Some progress" made.

- Indonesia Fin Min Purbaya Yudhi: My review 2026 budget draft and could include deficit target [overnight update].

- (ID) China PBOC launches bilateral transaction local FX cooperation project with Indonesia Central Bank for settlement framework and QR code interconnection [overnight update].

- (IN) Commerce Sec Lutnick: We're going to sort out the India trade deal once they stop buying Russian oil [overnight update].

North America

- (US) Reportedly US will urge G7 to impose high tariffs on China and India over Russian oil purchases - FT.

- (BR) Brazil Govt: US issued EO on Sept 5th removing most Brazilian pulp exports from US tariffs.

- (PE) Peru Central Bank (BCRP) cuts Reference Rate by 25bps to 4.25%; as expected.

- (US) Treasury Sec Bessent met with Warsh, Lindsey and Bullard this week; Targets adding 1-2 more names to Fed chair candidate shortlist; Waiting for end of blackout period to speak with any sitting Fed officials - CNBC.

- (US) GOP leaders reportedly considers stopgap funding until Nov 21st to avoid Govt shutdown - press.

- *(BR) Former Pres Bolsonaro found guilty of 5 crimes by a justice majority.

- (AR) Argentina Pres Milei govt reportedly vetoes a healthcare emergency bill - press.

- (US) AUG CPI M/M: 0.4% V 0.3%E; Y/Y: 2.9% V 2.9%E; (ex-food/energy) M/M: 0.3% v 0.3%e; Y/Y: 3.1% v 3.1%e.

- (US) INITIAL JOBLESS CLAIMS: 263K V 235KE (~4-year high); CONTINUING CLAIMS: 1.94M V 1.95ME [*Note: the week ended Sept 6th included the Labor Day holiday, so some analysts point to potential holiday noise in this data].

- (US) WEEKLY EIA NATURAL GAS INVENTORIES: +71 BCF VS. +66 BCF TO +69 BCF INDICATED RANGE.

- (US) Q2 FINANCIAL ACCOUNT HOUSEHOLD CHANGE IN NET WORTH: +$7.086T V -$1.595T PRIOR.

- (US) TREASURY $22B 30-YEAR BOND REOPENING DRAWS 4.651% V 4.889% PRIOR; BID TO COVER 2.38 V 2.38 PRIOR AND 2.43 OVER LAST 8 REOPENINGS.

- (US) GOP leaders reportedly considers stopgap funding until Nov 21st to avoid Govt shutdown - press.

Europe

- (EU) ECB's Simkus (Lithuania): Inflation has settled at the target; Important to keep doors open to all possibilities - radio interview in Lithuania.

- (RU) Russia govt spokesperson: No agreement for call with President Trump yet.

- (UK) Chancellor Reeves reportedly summoned to London for emergency meeting.

- (IE) Ireland Aug CPI M/M: 0.4% v 0.1% prior Y/Y: 2.0% v 1.7% prior..

- (CH) Reportedly Swiss govt proposed gold refinery in US in trade talks - press.

- (TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 250BPS TO 40.5%; MORE-THAN-EXPECTED.

- (EU) EU Commission spokesman: Won't reduce its own standards on autos, which have been established over decades, due to trade deal with US.

- (SE) Sweden Central Bank (Riksbank) Gov Thedeen: Inflation remains above Jun Staff Projections but slightly encouraging.

(EU) ECB LEAVES KEY RATES UNCHANGED; AS EXPECTED; Raises headline 2025 and 2026 inflation forecast.

- (RU) EU Energy Commissioner Jorgensen: We need to import more US LNG; Pleased that US agrees we need to put more pressure on Russia.

- (EU) ECB chief Lagarde: Inflation currently around the 2% medium-term target; Headwinds to growth should fade in 2026: Underlying inflation indicators are consistent with 2% target - Prepared Remarks.

- (EU) ECB chief Lagarde: Decision to keep policy steady was unanimous; policy is in a good place; inflation is where we want it to be - Q&A responses.

- (EU) Reportedly ECB rate cut debate is not over; The next real discussion will likely be in Dec as Oct is seen as too soon - press.

Levels as of 01:20 ET

- Nikkei 225 +1.0%, ASX 200 +0.8%, Hang Seng +1.4%; Shanghai Composite +0.2%; Kospi +1.8%.

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

- EUR 1.1721-1.1741; JPY 147.13-147.56; AUD 0.6656-0.6669; NZD 0.5961-5979.

- Gold +0.6% at $3,695/oz; BTC +1.1% at $115,490; Crude Oil -0.8% at $61.90/bbl; Copper +0.3% at $4.6855/lb.