ASIA STOCKS: China's Focus on Crypto; Ueda's Signal to Markets
Markets were mixed across the region with Japan and Korea up modestly whilst China's major onshore bourses were all lower. In China authorities are focusing on crypto with the PBOC signaling that tougher enforcement are intended, spooking crypto markets which fell today. The BOJ"s Ueda continues to impact markets with further speculation of a December rate hike and key Japanese ministers making it clear that monetary policy is for the BOJ to decide. Japan's FANUC saw it's share rise over 6% on news it is partnering with Nvidia to include Nvidia's open-source robotic simulation in factory lines. The markets will look ahead to the US for signs of confirmation of a December rate hike, a move seen as stabilizing some markets in Asia. Korea saw the US announce a reduction in Auto tariffs and expectations for the approval of the 2026 budget plan, which will included changes on dividend income driving sentiment today.
- The NIKKEI is up +0.20% with FANUC the biggest gainer today, spurring gains for other robotic and heavy machinery stocks.
- The major onshore bourses in China are all down, with CSI 300 down -0.6% and Shenzhen down -0.7% whilst the Hang Seng bucked that trend to be modestly up +0.11%.
- The KOSPI was up also, by +1.85% today with the tariff reduction specifically fueling gains in carmakers like Hyundai Motor, which jumped over 4.5%, and Kia Corp, which rose just over 4%. Additionally major chip stocks including Samsung Electronics and SK Hynix, also performed strongly, which contributed to the overall market sentiment.
- India's NIFTY 50 continues to moderate from last weeks high, declining -0.38% Tuesday with Rupee weakness attributed to the decline as markets await the RBI decision.
- Malaysia and Indonesia's major bourses are strong Tuesday, with the JCI up +0.65% and the FTSE Malay up +0.4%. Recent gains for the FTSE Malay KLCI has seen it trend above all major moving averages and at 1,630 sits above the nearest - the 20-day EMA of 1,620
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
