• Asian equity markets began the week mixed as the region’s attempts to pick itself up following last week’s stock rout.
• FX markets were quiet as the DXY held steady near the 96.50 level and with its major counterparts also uneventful.
• Looking ahead, highlights include UK mortgage lending, US Core PCE and UK Chancellor Hammond to deliver the Autumn budget statement. Note: UK clocks moved back an hour on Sunday 28th October.

ASIA

Asian equity markets began the week mixed as the region’s attempts to pick itself up following last week’s stock rout, waned heading into this week’s key earnings releases and month-end. ASX 200 (+1.1%) and Nikkei 225 (-0.3%) were both initially positive in which the healthcare sector led the broad upside in Australia, while the Japanese benchmark was less decisive as earnings dominated news flow. Elsewhere, Hang Seng (-0.2%) and Shanghai Comp. (-2.1%) were subdued with the mainland worst hit following softer Industrial Profit growth and a net liquidity drain by the PBoC, while this week’s key earnings including China’s big 4 banks further added to the tentativeness. Finally, 10yr JGBs were choppy as prices reflected the indecisiveness across stocks and eventually edged higher as the risk tone in Japan deteriorated.

PBoC skipped open market operations for a net daily drain of CNY 120bln. (Newswires)
PBoC set CNY mid-point at 6.9377 (Prev. 6.9510)

Chinese Industrial Profits (Sep) Y/Y 4.1% (Prev. 9.2%). (Newswires)

UK/EU

UK Chancellor Hammond said UK will require new tax and spending plans, as well as an extension of austerity policies in the event of a no deal Brexit, while he added BoE may also need to act by adjusting interest rates. (Sky News)

German Chancellor Merkel’s governing coalition suffered heavy losses in the Hesse elections with the CDU (27.9% vs. Prev. 38.3%) and SPD (19.9% vs. Prev. 30.7%) each down around 10% compared to the previous election, while the Green party rose to 19.5% from 11.1% and AfD secured 12%. (BBC)

S&P affirmed Italy at BBB; outlook cut to negative from stable and affirmed Germany at AAA; outlook stable. (Newswires)

Fitch affirmed United Kingdom at AA; Outlook Negative, affirmed the Netherlands at AAA; Outlook Stable and affirmed Latvia at A-; Outlook Stable. (Newswires)

FX

FX markets were quiet as the DXY held steady near the 96.50 level and with its major counterparts also uneventful as EUR/USD eyes a retest of the 1.1400 handle to the upside, while GBP/USD was lacklustre after last week’s Brexit-related losses in which the pair briefly slipped to below 1.2800. Antipodean marginally extended on Friday’s upside following a rebound in commodity prices and firmer fix by the PBoC, while USD/JPY and JPY-crosses were slightly choppy amid a similar flimsy risk tone in the region. Elsewhere, LKR and MXN were pressured overnight in which the former weakened to a record low against the greenback on political uncertainty in Sri Lanka, while the Mexican currency was spooked after the country voted to scrap its ongoing new airport project through an unofficial ballot which incoming President AMLO has vowed to make binding and in turn raises concerns regarding honouring long-term contracts.

Brazil conducted the 2nd round of its Presidential Election in which far-right leader Bolsonaro was the official winner. Note: This was as expected considering polls had him ahead prior to the election and as also he had the most votes at the 1st round of the election. (Newswires)

COMMODITIES

Commodities were little changed overnight amid a lack of drivers for the complex and indecisive risk tone, with WTI crude futures holding on to Friday’s recovery but with upside capped by resistance heading into the USD 68/bbl. Elsewhere, gold traded sideways in tandem with an uneventful greenback, while copper traded choppy and  at the whim of the indecisive risk tone.
 

US

US President Trump said on Friday that China wants to make a deal badly but are not ready yet. (Newswires)

US Ways and Means Chair Brady said President Trump’s tax cuts are to wait until 2019. (Roll Call)