Asian stocks join in the party after US equities see fresh all-time highs

Asia Market Update: Asian stocks join in the party after US equities see fresh all-time highs; Markets unlikely to receive BLS Non-farm Payrolls tomorrow (Fri) amid US govt shutdown.

General trend and developments

- US stocks brushed off the US government shutdown late in the US session to see the Nasdaq and S&P hit fresh new highs – further extended during Asian trading.

- Kospi opened up 2% to a fresh record and continued higher as much as 4.0% as Samsung rose >4.5% (to highest since Jan 2021) and Hynix as much as +12% to multi-decade highs following OpenAI Stargate supply deal for DRAM chips.

- Then from Japan today, OpenAI announced a strategic collaboration with Japan’s Digital Agency to make gen-AI available to Japan govt employees.

- With Chinese markets closed for the Golden Week holidays, Hang Seng charged higher 1.8% to 4-year highs, back over 27K. Nikkei +1.0% lagged Asia, underscoring the strength in Asian equities.

- Friday’s US BLS Non-farm Payrolls data unlikely to be released, with today’s negative territory ADP payrolls data (amid revisions) seeing boosted expectations (>99%) of another Fed cut in October and two more rate cuts this year nearly fully priced in at 47bps.

- US told South Korea that it is reviewing a potential currency swap (in conjunction with the US-Korean trade deal) but is not optimistic.

- Meanwhile South Korea Sept CPI inline with overall expectations and only a smidgen above Bank of Korea’s target of 2%.

- China tightened its domestic telecoms market beyond US firms to curb the use of both Nokia and Ericsson amid its national security drive.

- OIS chances of a BOJ 25bp rate hike this year slightly dipped yesterday. October hike chances fell to 61.0% vs 65.5% Tuesday and by December fell to 80.5% vs 83% Tuesday. USD/JPY steady, recovering the 147 handle after falling steeply this week from nearly 150 late Friday.

- Goldman Sachs says Yen set to gain after LDP leadership election, suggesting the result will reduce uncertainty.

- Japan benchmark 10-year bond auction for October had an above average bid-to-cover compared to the previous 12 months but saw a wide tail of 19bps (v 6bps at last month’s auction). JP yield curve steepened somewhat at the long-end after the auction.

- Australia Aug trade surplus much lower than expected (largest drop in AU exports since Jul 2022) on falling exports and rising imports. Australia Stats agency said the drop was primarily driven by non-monetary gold.

- Australia Household spending also rose less than expected, with m/m figures only a notch above zero.

- US Dept of Energy reported the termination of 223 projects amid the US govt shutdown followed later by Pres. Trump saying Republicans must use this opportunity of Democrat-forced closure to clear out “dead wood, waste, and fraud.”.

- Reports that Universal Music is reportedly close to a "landmark" AI licensing deal with Warner Music, details not yet .available.

- Gold and Silver took a breather after fresh record highs in the US session for Gold and further 14-year highs for Silver. BTC +3.5% back to >$118K and ETH continued to recover after last week's lows.

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

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

- Fri Oct 3rd JP BOJ Gov Ueda speech, (Fri night US Sept Nonfarm Payrolls**, US ISM Sept Services PMI).

[** Note: Friday’s US Sept Nonfarm Payrolls may not be released if the US govt is still shut down].

Holidays in Asia this week

- Wed Oct 1st China, Hong Kong.

- Thu Oct 2nd China, India.

- Fri Oct 3rd China. South Korea.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.7% at 8,906.

- Australia Aug Household Spending M/M: 0.1% v 0.3%e; Y/Y: 5.0% v 5.2%e.

- Australia Aug Trade Balance (A$): 1.8B v 6.2Be.

- Australia Central Bank (RBA) Financial Stability Review: Australia’s financial system remains well positioned to navigate a period of elevated global uncertainty.

- New Zealand Sept Cotality Home Value M/M: +0.1% v -0.4% prior.

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

China/Hong Kong

- Hang Seng reopens +0.2% at 26,918; Shanghai Composite closed for holiday (reopens Oct 9th).

- China Oct 1st holiday cross-regional trips +1.7% y/y (first day of Golden Week holiday season).

- Maersk: Autumn 2025 Market Update notes a marked increase in China's container exports to Latin America, Africa, and Europe, while exports to North America have declined by 15% y/y (update).

- China said to curb use of Nokia and Ericsson in its domestic telecoms networks amid national security drive - FT.

Japan

- Nikkei 225 opens +0.5% at 44,770.

- Japan Sept Consumer Confidence: 35.3 v 35.2e.

- JAPAN SELLS ¥2.6T VS. ¥2.6T INDICATED IN 10-YEAR JGB BONDS; AVG YIELD: 1.6350% V 1.6120% PRIOR; BID-TO-COVER: 3.34X V 3.92X PRIOR (above 12-month avg of 3.23x); Tail of 19bps v 6bps prior.

- Japan Sept Monetary Base Y/Y: -6.2% v -4.1% prior.

- Japan releases weekly flows data [period ended Sept 26th]: Foreign buying of Japan equities: -¥963.3Bv -¥1.75T prior; Japan buying of foreign bonds: -¥162.0B v ¥816.7B prior.

- Japan will convene extraordinary diet session on Oct 15th - press.

- Japan's Koizumi slightly leads LDP leadership race (no % update) - Asia press citing poll.

- Japan Fin Min Kato: Difficult to raise tariffs on countries importing Russian oil; G7 finance ministers met online just now on sanctions against Russia.

- Goldman Sachs says Yen set to gain after LDP leadership election; suggests the election result will reduce uncertainty; notes the USD is 'overvalued' - US financial press.

- OpenAI announces strategic collaboration with Japan’s Digital Agency to make gen-AI available to govt employees in Japan.

Korea

- Kospi opens +2.0% at 3,525 (fresh record high).

- *(KR) SOUTH KOREA SEPT CPI M/M: 0.5% V 0.5%E; Y/Y: 2.1% V 2.0%E.

- South Korea Sept Current Account Balance: $9.1B v $10.8B prior.

- South Korea Foreign Min Cho: US is reviewing currency swap with South Korea, but tells Seoul it isn't optimistic - Korean press.

- Shares of Hynix and Samsung jump higher following OpenAI Stargate supply deal for DRAM chips.

- Bank of Korea (BOK) Official: Not seeing huge US tariffs impact on exports yet, expects it to be more evident next year [follows earlier release of Current Account and Goods Balance].

Other Asia

- Thailand Dep Fin Min: Bank of Thailand (BOT) must be ready to use tools to maintain a stable baht (THD) in event of prolonged US govt shutdown.

- (MY) China and Malaysia are said to be in talks for a rare earths refinery project - press.

- Thailand Sept Business Sentiment Index: 48.0 v 47.5 prior.

North America

- Universal Music reportedly close to "landmark" AI licensing deal with Warner Music - financial press, citing sources.

- (US) Former White House nominee for BLS head, E.J. Antoni: Looking forward to continuing work at Heritage Foundation; Will advocate for BLS reforms.

- (AR) Follow up: Pres Milei says US financial aid negotiations have three blocks; Possibility the US will buy debt in the primary market - financial press.

- (US) DOE reports termination of 223 projects amid US govt shutdown - financial press.

- (US) Fed's Goolsbee (voter for 2025): Uncertainty is a significant part of low hiring; Nervous counting on inflation being transitory - radio interview.

- (US) Reportedly The Council of Economic Advisers (CEA) warns that the US will lose $15B in GDP for each week in shutdown - Politico citing House memo.

- (US) Reportedly Pres Trump is delaying pharma tariffs to negotiate deals on drug prices - Politico.

- (US) Pres Trump: US soybean farmers being hurt by China not buying; Some tariff money will go to farmers - Truth Social post.

- (US) MBA Mortgage Applications w/e Sept 26th: -12.7% v 0.6% prior.

- (US) SEPT ADP EMPLOYMENT CHANGE: -32K V +51KE (1st back-to-back negative prints since pandemic); Includes preliminary rebenchmarking of the National Employment Report; Notes US employers have been cautious with hiring and job creation continued to lose momentum across most sectors.

- (US) SEPT ISM MANUFACTURING: 49.1 V 49.0E (7th straight month of contraction); New orders into contraction.

- (CA) Canada Sept Manufacturing PMI: 47.7 v 48.3 prior.

- (US) US Supreme refuses to allow Trump to immediately remove Cook; Will hear arguments over Pres Trump's bid to remove Fed Gov Cook in January.

- (CA) Bank of Canada (BOC) Summary of Deliberations (Sept Minutes): Weighed Sept pause before deciding to cut.

Europe

- Tata Motors: UK Business Secretary said to have approved £1.5B Jaguar Land Rover loan guarantee despite civil service concerns – FT.

- (UK) Chancellor Reeves: Said to be set to remove higher business rates for UK retailers - FT.

- (UR) US to reportedly provide Ukraine with intel for striking deep inside of Russia - WSJ.

- (IE) Ireland Sept Unemployment Rate: 4.7% v 4.7% prior.

- (UK) BOE's Mann (hawkish dissenter): Inflation expectations have drifted, more of a concern than labor market; I prefer a longer hold on rates; We are taking heat out of labor market - BB conf.

- (ES) Spain Sept New Car Sales Y/Y: +16.4% v +17.2% prior - ANFAC.

- (RU) G7 Ministers Statement: Will target those who continue to increase purchasing Russian oil.

Levels as of 01:20 ET

- Nikkei 225 +1.0%, ASX 200 +1.3%, Hang Seng +1.6%; Shanghai Composite closed; Kospi +3.4%.

- Equity S&P500 Futures +0.1%%; Nasdaq100 +0.2%%; DAX +0.5%; FTSE100 +0.3%.

- EUR 1.1724-1.1742; JPY 146.94-147.32; AUD 0.6603-0.6622; NZD 0.5803-5836.

- Gold -0.1% at $3,894/oz; BTC +3.5% at $118,550; Crude Oil +0.7% at $62.20bbl; Copper +0.3% at $4.9093/lb.