Asia Market Update
The AUD rises to a new 23 yr high above $0.9100
Japan's September core inflation drops: (JP SEPT NATIONAL CPI YOY: -0.2% V -0.1% expected, -0.2% prior; CORE YOY: -0.1% V -0.1% expected, -0.1% prior) The inflation data reinforces the consensus that the Bank of Japan will keep interest rates on hold while waiting for clarity on the U.S. economic outlook. Responding to the data, Economics Minister Ota said that the declaration of the end of deflation has been delayed. The Japanese government said that it would not incorporate cheaper mobile phone fees into future CPI calculations, and some analysts suggest that the change in calculation could lead to a y/y rise in next month's inflation data
Japanese economy takes a hit from September's credit market chaos: (JP SEPT PRELIMINARY INDUSTRIAL PRODUCTION MOM: -1.4% V -1.2% expected, +3.5% prior; YOY: 0.8% V 1.2% expected, +4.4% prior) The JPY softened in the moments after the release as September's industrial production data suggests that the Japanese economy was badly hit by recent market turbulence. However, analysts say that the uptrend for industrial production remains intact, and output is expected to continue to be firm toward next year on the back of solid exports to Asia and Europe
Forex: The AUD rose to a new 23 yr high (above $0.9100) on carry trades. The NZD is currently higher across the board on yield demand (NZD/USD is above $0.7600, and NZD/JPY is above 87.00). The USD is weaker against most currencies with the exception of the yen and the USD index is currently off by about 0.04%. The yen is weaker across the board on a rise in risk appetite due to positive earnings from Microsoft and the rise in the Nikkei.
Asian Equities: The Nikkei 225 is higher by more than 0.60% on gains in shares of Sony (earnings), Honda (earnings) and commodities related shares (rise in oil and gold prices). The ASX 200 is higher by more than 0.75% on gains in shares of resource stocks. The Kospi is higher by more than 1% on gains in shares of Hyundai Motors (positive broker commentary) and oil refiners. Chinese equities are currently little changed, while the Hang Seng opened at a new record high and the index is currently higher by more than 1% and trading above the 30,000 level.
Commodities: NYMEX crude oil prices are trading near record levels (around $90.90/bbl) on supply fears, the weaker USD and geopolitical concerns in the Middle East. Earlier during the Asian session crude rose to a new record high of about $91.10/bbl. Spot Gold is higher by more than 0.50% and trading around $776/oz, after the metal touched a new 28 yr high earlier during the Asian session. Gold continues to track the weakness in the USD and gains in oil prices.
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