MNI EUROPEAN OPEN: Asia-Pac Equities Sharply Higher
EXECUTIVE SUMMARY
- FED’S WALLER SAYS RATES SHOULD BE CUT IN DEC - MNI
- CHINA’S MFG PMI LOWER BUT ABOVE 50 - MNI
- CHINA WILL REMOVE A VAT EXEMPTION ON RETAIL GOLD SALES - BBG
- CHINA TO EASE CHIP RESTRICTIONS ON EU - BBC
- CHINA’S REFINERS AVOIDING RUSSIAN CRUDE - BBG
Fig 1: Australia real household consumption y/y%
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
GROWTH (TIMES): “More than £1 trillion of government spending is expected to push economic growth higher than previously expected this year but the impetus will fizzle out in 2026, according to a leading independent think tank. The UK economy is on course to expand by 1.5 per cent in 2025, partly thanks to a rise in public spending, the EY Item Club said as it raised its forecast for the year.”
BUDGET (TIMES): “Rachel Reeves is considering more than one hundred separate tax and spending measures as she barters with the Office for Budget Responsibility (OBR) over the size of the financial shortfall.”
BUDGET (TIMES): “Fears mount in the City that the chancellor will increase the surcharge on profits of £100m million to 5% per cent or higher.”
BUDGET (TIMES): “Wealthy Britons fleeing the country for low-tax havens face being hit by a 20 per cent charge on their business assets when they leave the UK under plans being drawn up ahead of the budget.”
ENERGY (TIMES): “Britain should scrap its ban on extracting new oil and gas from the North Sea if it wants to be “the best ally to the US it can possibly be”, Donald Trump’s ambassador to London has said.”
EU
EU (BBC): “Beijing has said it will loosen a chip export ban it imposed after Dutch authorities took over Nexperia, a Chinese-owned chipmaker based in the Netherlands.”
NETHERLANDS (BBC): “Centrist liberal leader Rob Jetten has claimed victory in Wednesday's nail-biting Dutch election, after vote analysis indicated his party could not be beaten by anti-Islam populist Geert Wilders.”
UKRAINE (BBC): “Nato "will stand with Ukraine up to the day in which we will have them sitting around the table for a long-lasting peace", a senior official from the military alliance has told the BBC. Admiral Giuseppe Cavo Dragone, chair of Nato's military committee since January, added from an operational point of view he considered the Russia-Ukraine war was bogged down, and "it was almost time to sit and talk because it's a waste of lives".”
BELGIUM (POLITICO): “Suspicious drones spotted above Belgian military bases over the weekend are meant to spy on fighter jets and ammunition, Belgian Defense Minister Theo Francken said Sunday.”
MOLDOVA/EU (POLITICO): “Alexandru Munteanu was sworn in as Moldova’s prime minister on Saturday. Munteanu, a 61-year-old economist who has worked at the World Bank and Moldova’s National Bank, is taking political office for the first time to help lead his country’s push for EU membership.”
ENERGY (POLITICO): “Bulgaria is exploring requesting an exemption to new U.S. sanctions against Russia’s largest private oil company, according to two people familiar with the matter, as it fears the measures will cause severe fuel shortages and a populist backlash across the country.”
US
FED (MNI): “Federal Reserve Governor Christopher Waller on Friday said the central bank should continue to ease interest rates at its next meeting in December.”
FED (MNI): “Two Fed presidents said Friday the FOMC will continue discussing balance sheet policies in the coming weeks, noting varying degrees of comfort among policymakers for volatility in money markets after funding pressures prompted the Fed to announce an end to QT this week.”
POLITICS (BBG): “President Donald Trump said China knows the risks of any attack on Taiwan but refrained from explicitly saying the US would intervene militarily on behalf of the democracy.”
POLITICS (BBG): “President Donald Trump threatened possible US military action against Islamist militants in Nigeria if the country's government doesn't halt the groups' "killing of Christians."”
TRADE (BBG): “The US said China agreed to halt retaliatory tariffs following a key summit last week, and will ramp up purchases this year. China will suspend all levies announced since March 4 on soybeans and other US agricultural products, according to a White House fact sheet.”
TRADE (BBG): “Rick Woldenberg is challenging President Donald Trump's tariffs at the US Supreme Court, citing the impact on his educational-toy businesses, including the BubblePlush Yoga Ball Buddies.”
OTHER
PHILIPPINES (BBG): “The Philippine government is reversing restrictions on Chinese visitors by implementing easier electronic visas to help tourism workers like sailboat operator Sherwine Constantino.”
CHINA
ECONOMY (MNI): “China's RatingDog manufacturing PMI, previously known as the Caixin manufacturing PMI, came in at 50.6 in October, down from September's 51.2, staying in the expansionary zone above the 50 mark for the third month, due to a softer rise in output linked to a slowdown in output linked to a slowdown in new order growth, the publisher said on Monday.”
GOLD (BBG): “China is scrapping a long-standing gold tax incentive, which will no longer allow retailers to offset a value-added tax when selling gold.”
DEMOGRAPHICS (MNI): “Multi-generational households in China, once common, are becoming increasingly rare as the average number of children per family declines, said Jiang Quanbao, professor at the School of Labor Economics, Capital University of Economics and Business.”
FX (MNI): “China’s upcoming 15th Five-Year Plan will promote the prudent internationalisation of the renminbi, strengthening its global functions in pricing, payments, investment and reserves, and expanding its use in trade and offshore markets, according to Guan Tao, former senior official at the State Administration of Foreign Exchange.”
TRADE (BBG): “China will effectively suspend implementation of additional export controls on rare-earth metals and terminate investigations targeting US companies in the semiconductor supply chain.”
OIL (BBG): “Chinese oil refiners, including state-owned giants and smaller private refiners, are shunning Russian shipments after the US and others blacklisted Moscow's top producers and some of its customers.”
HONG KONG (BBG): “Hong Kong plans to ease rules to encourage crypto trading activity in the city, its top market regulator said.”
MNI: PBOC Net Drains CNY259 Bln via OMO Monday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY78.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY259 billion after offsetting maturities of CNY337.3 billion today, according to Wind Information
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4336% at 10:047 am local time from the close of 1.4551% on Friday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Friday, the same as the close on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.0867 Mon; +0.72% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0867 on Monday, compared with 7.0880 set on Friday. The fixing was estimated at 7.0880 by Bloomberg survey today.
MARKET DATA
AUSTRALIA SEPT. HOUSEHOLD SPENDING +5.1% Y/Y; EST. 5.5%; AUG. 5.0%
AUSTRALIA SEPT. HOUSEHOLD SPENDING +0.2% M/M; EST. +0.4%; AUG. 0.0%
AUSTRALIA SEPT. PRIVATE-SECTOR HOME APPROVALS +4.0% M/M; AUG. -1.0%
AUSTRALIA SEPT. BUILDING APPROVALS +12.0% M/M; EST. 5.0%; AUG. -3.6%
AUSTRALIA OCT. ANZ JOB ADVERTISEMENTS -2.2% M/M; SEP. -3.5%
AUSTRALIA S&P GLOBAL OCT MANUFACTURING PMI 49.7; SEP. 51.4; PRE. 49.7
AUSTRALIA MI INFLATION GAUGE OCT. +0.3% M/M & 3.1% Y/Y; SEP. 0.4% & 3.0%
AUSTRALIA COTALITY HOME VALUES OCT. +1.1% M/M; SEP. 1.0%
NZ SEPT. HOME-BUILDING APPROVALS +7.2% M/M; AUG. +6.1%
SOUTH KOREA S&P GLOBAL MFG PMI OCT 49.4; SEP 50.7
CHINA RATINGDOG OCT. MANUFACTURING PMI 50.6; EST. 50.7; SEP 51.2
MARKETS
AUSSIE BONDS: Weaker Ahead Of Tomorrow's RBA Policy Decision
ACGBs (YM -5.0 & XM -5.5) are weaker and at or near session lows.
- Tomorrow, the local calendar will see the RBA Policy Decision.
- The Q3 trimmed mean print at 3.0% y/y up from 2.7% and at the top of the 2-3% target band was a “material miss” for the RBA and meant that the Board is now highly likely to leave rates at 3.6% at its 4 November decision.
- The Board is likely to remain highly data-dependent and cautious given inflation’s renewed shift higher and the emerging domestic recovery, but easing labour market conditions. (see MNI RBA Preview here)
- Cash ACGBs are 5bps cheaper.
- The bills strip is -2 to -6 across contracts, with a steepening bias.
- RBA-dated OIS pricing implies almost no chance of an easing, with just a 2% probability assigned. As it currently stands, the OIS market has only an 80% chance of a 25bp cut by mid-2026. (see chart)
- The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond on Wednesday and A$800mn of the 3.00% 21 November 2033 bond on Friday.
Figure 1: RBA-Dated OIS – Cash Rate Vs. Priced Change Next Meeting
Source: Bloomberg Finance LP / MNI
STIR: Market Gives A RBA Cut Tomorrow No Chance
Going into tomorrow’s RBA policy decision, RBA-dated OIS pricing implies almost no chance of an easing, with just a 2% probability assigned.
- In the wake of the surprise rise in the September unemployment rate to 4.5% in mid-October, markets had briefly priced as much as an 80% probability of a 25bp rate cut in November.
- However, that confidence faded in the lead-up to last week’s Q3 CPI release.
- Compared with previous episodes in this easing cycle, markets appeared noticeably less certain about a November 4 cut ahead of the CPI release.
- That caution proved justified, with the Q3 CPI printing well above expectations.
- As it currently stands, the OIS market has only an 80% chance of a 25bp cut by mid-2026.
Figure 1: RBA-Dated OIS – Cash Rate Vs. Priced Change Next Meeting
Source: Bloomberg Finance LP / MNI
BONDS: NZGBS: Modest Bear-Steepener After A Subdued Session Of Trading
NZGBs closed showing a modest bear-steepener, with yields 1-3bps higher.
- The session was relatively subdued, with no cash US tsys trading due to the Japanese market being closed.
- The key event in NZ this week is the Q3 labour market and wages data released on Wednesday. Filled jobs for the quarter signal a stabilization, but employment is likely to have remained weak, with consensus forecasting it to rise only 0.1% q/q to be still down 0.2% y/y. The unemployment rate is expected to rise 0.1pp to 5.3%, in line with the RBNZ's August projections. Soft labour demand is likely to weigh on private wage growth, which is forecast to rise around 0.4% q/q after 0.6%.
- “The RBNZ said that the results of its 2025 bank stress tests showed that large banks are well placed to withstand and manage the impact of heightened geopolitical risks, according to a Monday statement.” - MTN
- RBNZ dated OIS pricing is little changed across meetings. 23bps of easing is priced for November, with a cumulative 30bps by February 2026.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.50% May-35 bond and NZ$50mn of the 5.00% May-54 bond.
FOREX: Asia-Pac FX - BBDXY Moves Into Pivotal Resistance
The BBDXY has had a range of 1220.25 - 1221.11 in the Asia-Pac session; it is currently trading around 1220, -0.05%. The USD built on its gains from last week into the month-end. The 1220-30 area remains tough resistance, only a sustained close back above 1230 would start to challenge the conviction of the longer-term USD shorts. Risk/Reward does still favour fading this moving initially but the price action is starting to look more constructive as higher lows are being made on the Daily chart through October. A sustained move back above 1230 would potentially signal a medium term low is in place and a deeper pullback is on the cards.
- EUR/USD - Asian range 1.1522 - 1.1538, Asia is currently trading 1.1530. The pair has moved back toward its support just above 1.1500. A break under this support could signal a deeper correction, first target 1.1400 and then the 1.1100/1.1200 area.
- GBP/USD - Asian range 1.3130 - 1.3142, Asia is currently dealing around 1.3140. The pair looks to be building some downward momentum. This 1.3100/1.3150 area has proved to be supportive on more than 1 occasion this year so some work around this level could be expected. I continue to favor fading rallies though as GBP attempts to put in a medium term top.
- USD/CNH - Asian range 7.1178 - 7.1249, the USD/CNY fix printed at 7.0867, Asia is currently dealing around 7.1190. The support below 7.1000 looks to be pretty solid for now as USD/Asia moves in sympathy with a higher USD/JPY. The range of 7.08-7.16 looks set to continue for now.
- Cross asset : SPX +0.15%, Gold $4007, US 10-Year 4.0775%, BBDXY 1220, Crude Oil $61.18
- Data/Events : Italy HCOB Italy Manufacturing PMI/Budget Balance, Germany HCOB Germany Manufacturing PMI, EZ HCOB Eurozone Manufacturing PMI, France HCOB France Manufacturing PMI, Spain HCOB Spain Manufacturing PMI
Fig 1: BBDXY Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
JPY: Asia-Pac - USD/JPY Consolidates Around 154.00
The USD/JPY range has been 154.00 - 154.25 in the Asia-Pac session, it is currently trading around 154.10, -0.05%. The pair remains well supported thanks to a combination of a hawkish FED and a BOJ that is still unsure about when it will raise rates. We are approaching some resistance back toward the 154/155 area and I would expect we might to do some work around here initially. I also suspect any sustained break back above 155 could see the move begin to accelerate and with that the potential for further intervention, though personally I think they will wait for levels closer to 160 to get involved. Look for dips to continue to be supported while above 149-150.
- Options : Close significant option expiries for NY cut, based on DTCC data: 152.50($1.42b). Upcoming Close Strikes : 150.00($1.13b Nov 3) - BBG.
Fig 1 : USD/JPY Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia-Pac - AUD/USD Consolidates Around 0.6550 In A Quiet Session
The AUD/USD has had a range of 0.6539 - 0.6551 in the Asia- Pac session, it is currently trading around 0.6545, +0.03%. US yields retraced on Friday night but the USD continues to grind higher challenging levels last seen in July/August. The AUD/USD is back within its recent 0.6400-0.6650 range with the pivot being around 0.6500-0.6550 where I would expect some demand first up, RBA tomorrow but the market is not expecting them to move.
- Ex Alcohol & Tobacco, Q3 Consumer Spending Robust: September household spending was softer than expected rising 0.2% m/m to be up 5.1% y/y after a downwardly-revised 4.9% y/y. Q3 consumption volumes rose 0.2% q/q, the lowest rate since Q3 2024 but the fifth consecutive quarterly rise. Growth continued to recover rising 2.7% y/y, the highest since Q1 2024 but pressured by contracting alcohol & tobacco expenditure. The data point to a continued gradual recovery in private consumption. While the RBA is widely expected to be on hold this week, its consumption forecasts will be monitored for upward revisions.
- Bloomberg is reporting that “Pimco is betting on a rebound in Australian government bonds on expectations the RBA will resume easing next year, favoring the five- to 10-year part of the yield curve.”
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6600(AUD 338m). Upcoming Close Strikes : 0.6625(AUD944m Nov 4), 0.6300(AUD600m Nov 4) - BBG
- EUR/AUD - Asia-Pac range 1.7602 - 1.7638, Asia is currently trading around 1.7605. The pair topped out again around 1.7700 and is once again testing the support in the 1.75-1.76 area. I suspect rallies toward 1.7700/1.7800 would now be faded but a break under the 1.7500 area is needed to signal a potential deeper pullback toward the 1.7000 area.
Fig 1: EUR/AUD spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
NZD: Asia-Pac - NZD/USD Finds Support Towards 0.5700
The NZD/USD had a range of 0.5713 - 0.5727 in the Asia-Pac session, going into the London open trading around 0.5725, +0.05%. US yields retraced on Friday night but the USD continues to grind higher challenging levels last seen in July/August. The NZD found some demand back toward 0.5700 and consolidated in a tight range over month-end. While price remains below the 0.5800/50 area I suspect rallies continue to be faded looking for a potential move back towards the 0.5500/0.5600 area. NZD continues to stand out as a short against a resurgent USD but it is worth noting that because of the size of the market the market can very quickly become all positioned the same way, so I think the USD will need to build on its challenge higher for the NZD to test those lows.
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5650(NZD1.1b Nov 5), 0.5675(NZD1b Nov 5), 0.5750(NZD604m Nov 5) - BBG
- AUD/NZD range for the session has been 1.1423 - 1.1453, currently trading around 1.1445. The Cross has bounced hard after finding solid demand back toward 1.1300. This 1.1400/1.1500 area remains tough resistance but the price action suggests the market wants to test it. Above 1.15/16 and the markets focus will start to turn toward 1.2000 and beyond.
Fig 1: AUD/NZD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA STOCKS: KOSP Hits New Highs on Tech Rush
News that Nvidia has signed deals with Korean semi conductor companies like Samsung continue to underpin the rally in the KOSPI that is reaching new levels daily, and looking overbought on many valuation metrics. The rally now is the strongest in more than 20 years as Asia and particularly Korea position themselves in the global tech race. In China, gold related stocks were hit after a tax rebate on gold was ended by the government and could potentially increase costs. With Japan out, it was down to China to lead and despite the KOSPI's rally, China stocks were mixed on the day.
- The Hang Seng and CSI 300 were again going in opposite direction with the HSI up +0.58% and the CSI 300 down -0.45% whilst the Shanghai Comp was close to flat, whilst Shenzhen fell -0.61%
- The KOSPI hit 4,202 to be up +2.25% today to continue its run, now up over 70% YTD.
- The FTSE Malay KLCI has had a quiet period but is up today by +0.58% whilst the JCI in Indonesia is having its best start to a trading week in a fortnight with gains of +1.10%
- The NIFTY 50 posted new highs last week, before fading back and has started the week slowly flat at 25,727.
OIL: Crude Post-OPEC Gains Unwinding As Excess Supply Remains A Concern
Oil prices rose moderately when the APAC session started today following OPEC’s decision to increase output in December by 137kbd, in line with November, but announced it would pause production rises through Q1, which is a time of lower demand. It has been increasing quotas to regain market share but a jump in both non-OPEC and OPEC output is driving excess supply with a record surplus forecast for 2026.
- WTI reached a high of $61.48/bbl early in the session and has trended lower since and is currently +0.2% to around $61.12, close to the intraday low. Initial support is at $59.64. Brent rose to $65.26/bbl to start with and then fell to a trough of $64.89, above support at $63.37. It is currently up 0.3% to $64.95.
- It appears that the latest US/EU sanctions targeting Russian oil majors Rosneft and Lukoil are having an impact with reports that refiners in China are looking to alternatives. Bloomberg reports that around 400kbd are impacted or around 45% of China’s Russian oil imports, which is pressuring prices for Russian grades.
- Morgan Stanley has lifted its Brent forecast $2.50 to $60/bbl for Q1, as OPEC decides to leave production targets unchanged over Jan-Mar, according to Bloomberg.
- Later the Fed’s Daly and Cook appear with Cook speaking on the economy and monetary policy. With US data still scarce due to the government lockdown, the October manufacturing PMI & ISM data are likely to be watched closely. European October manufacturing PMIs are also released and the ECB’s Lane speaks.
GOLD: Softer USD Helps Gold Recover From China VAT Change Losses
Gold prices dipped to $3962.59/oz early in the APAC session driven by news that China was removing the retail tax exemption on gold but they have since recovered to make a high of $4015.42 supported by a weaker US dollar (BBDXY -0.1%). They are currently up 0.1% to $4005.5.
- China’s retailers will no longer be able to offset VAT on gold sales including bars and jewellery, which is likely to reduce demand through higher prices. The main impact is likely to be on sentiment which has contributed to gold’s major rally in 2025, according to Bloomberg.
- Silver is 0.2% higher at $48.80, close to the intraday peak at $48.911 but holding below initial resistance at $49.456.
- Equities are generally stronger with the S&P e-mini up 0.2% and Hang Seng +0.6%. Oil prices are higher with WTI +0.4% to $61.19/bbl. Copper is flat.
- Later the Fed’s Daly and Cook appear with Cook speaking on the economy and monetary policy. With US data still scarce due to the government lockdown, the October manufacturing PMI & ISM data are likely to be watched closely. European October manufacturing PMIs are also released and the ECB’s Lane speaks.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 03/11/2025 | 0700/0200 | * |  TR | Turkey CPI |
| 03/11/2025 | 0730/0830 | *** |  CH | CPI |
| 03/11/2025 | 0815/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 03/11/2025 | 0845/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 03/11/2025 | 0850/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 03/11/2025 | 0855/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 03/11/2025 | 0900/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 03/11/2025 | 0930/0930 | ** |  GB | S&P Global Manufacturing PMI (Final) |
| 03/11/2025 | 1200/1300 | EU | ECB Lane Lecture In Dublin | |
| 03/11/2025 | - | *** |  US | Domestic-Made Vehicle Sales |
| 03/11/2025 | 1445/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 03/11/2025 | 1500/1000 | *** | US | ISM Manufacturing Index |
| 03/11/2025 | 1500/1000 | * | US | Construction Spending |
| 03/11/2025 | 1500/1000 | * | US | Construction Spending |
| 03/11/2025 | 1630/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 03/11/2025 | 1630/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 03/11/2025 | 1700/1200 | US | San Francisco Fed's Mary Daly | |
| 03/11/2025 | 1830/1330 |  CA | BOC Governor fireside chat at The Logic conference | |
| 03/11/2025 | 1900/1400 | US | Federal Reserve Governor Lisa Cook | |
| 04/11/2025 | 0030/0930 | ** |  JP | S&P Global Final Japan Manufacturing PMI |
| 04/11/2025 | 0330/1430 | *** |  AU | RBA Rate Decision |
| 04/11/2025 | 0740/0840 | EU | ECB Lagarde Keynote Speech At Bulgarian National Bank | |
| 04/11/2025 | 0745/0845 | FR | Budget Balance | |
| 04/11/2025 | 0945/1045 | EU | ECB Lagarde At Bulgarian National Bank Press Conference | |
| 04/11/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 04/11/2025 | 1135/0635 | US | Fed Vice Chair Michelle Bowman | |
| 04/11/2025 | 1140/1140 | GB | BOE Breeden at International Banking Conference | |
| 04/11/2025 | 1330/0830 | ** | CA | International Merchandise Trade (Trade Balance) |
| 04/11/2025 | 1330/0830 | ** | US | Trade Balance |
| 04/11/2025 | 1330/0830 | ** | US | Trade Balance |
| 04/11/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
