ASIA-PAC EQUITIES UPDATE: APAC trades mostly higher but Hang Seng falters on Xi’s leadership overhaul

Analysis details (03:00)

Asia-Pac equities have succumbed to a mixed session after sentiment was initially bolstered by dovish Fed vibes emanating from the US after Fed whisperer Timiraos at the WSJ suggested the November meeting will be used to discuss a slowdown of Fed tightening, whilst Fed’s Daly said the Fed will not just keep going up at 75bps increments, will do a step-down, not to pause, but to 50 or 25bps increments. Weekend developments saw Chinese President Xi securing an unprecedented third term as the head of the party – signalling continuity, and market-friendly Rishi Sunak looks set to become UK PM after former PM Johnson dropped out of the leadership race. US equity futures opened higher and extended on Friday’s gains as electronics trade resumed, with the ES and NQ briefly topping 3,800 and 11,500 respectively before trimming gains. European equity futures kicked off trade on a firmer footing amid tailwinds from the US, with the Euro Stoxx 50 Dec +1.5%, although the FTSE 100 future (+0.7%) lags as Sterling claws back some lost ground. The ASX 200 (+1.7%) is boosted by its commodities sector as the rise in underlying metals supports mining names in the region, although South32revised down its FY production guidance by 5% at its Illawarra Metallurgical Coal to 7mln tonnes. Nikkei 225 (+1.2%) is also firmer but lagged behind peers (ex-China) following the touted FX intervention on Friday and again on Monday, although Japan’s Top Currency diplomat again offered no comment on intervention but reiterated that they will respond appropriately to excessive moves while monitoring markets 24/7. South Korea’s KOSPI (+1.5%) is led by gains in its IT names, but the region feels some jitters following an exchange of fire between North and South Korea after a North Korean boat crossed the South Korean maritime border. Shanghai Composite (-0.2%) initially traded flat after Chinese President Xi secured an unprecedented third term as the party leader, as expected, which signals continuity for the markets. Chinese President Xi also suggested China's economy has high resilience and sufficient potential. Xi added that China has room for manoeuvre and will open its doors even wider. The index also saw some brief upside after China released a myriad of delayed economic data, with Q3 GDP Y/Y topping forecasts and Trade Balance printing a larger surplus than expected, whilst exports also increased more than forecasts. However, Hang Seng (-2.4%) floundered as Xi’s leadership overhaul could prove to result in prolonged oversight and less autonomy for Hong Kong, with the Hang Seng Tech Index slumping over 4% and Alibaba shedding as much as 8%.

24 Oct 2022 - 02:59- Research Sheet- Source: Newsquawk