Trump-Xi phone call accounts differ

Asia market update: Asia equities [ex-CN/HK] power higher; Trump-Xi phone call accounts differ; New H-1B visa fee causes confusion, concern for US tech.

General trend and developments

- Nikkei 225 rose strongly (1.5%) to start the week, heading towards new target of 46K once more as traders put behind them Friday’s knee-jerk reaction to sell Japanese equities and buy JPY following the BOJ decision on Fri to hold rates (with two hawkish dissenters) and start offloading ETFs soon. Even on Friday itself Japanese equities pared most of their losses as the BOJ plan seen to be taking up to 100 years to sell off its vast holdings in ETFs (¥75T or $507B).

- Kospi also up 1.4% over 3,600 to touch a fresh record high, with Taiwan’s Taiex also hitting a record high.

- Hang Seng underperformed -1.0% with Shanghai also down to flat.

- Japanese yield curve ticked higher. Long-end 40-year yields moved the most +2.7bps [Note: 40-year JGB auction on Thu Sept 25th], while the 2-years, 5-years and 10-year JGB all ticked higher to 2008 levels.

- OIS pricing last Friday for a BOJ Oct hike ticked up to 55% (vs 54% the day before), with a hike by Dec at 77.5% (vs 64.5% day before).

- Australia RBA Gov Bullock said that since the Aug meeting of the RBA domestic data has been broadly in line with our expectations or if anything slightly stronger.

- Pres Trump and China’s Pres Xi call on Friday had different outcomes depending on which side you listened to afterwards. Trump stated that Xi approved a deal for the US operations of TikTok. However, China state media described the outcome in terms of general principles only, signaling that negotiations are still ongoing and did not confirm that an agreement had been reached, including the potential surrender of TikTok’s algorithm.

- No word either on Chinese purchases of soybeans or Boeing jets, with trade only discussed in broad terms. Trump and Xi agreed to meet at the APEC leaders’ summit in South Korea (Oct 31 to Nov 1st), and an invitation has been extended for Trump to visit China in 2026.

- China PBOC left the monthly LPR (Loan Prime Rate) settings unchanged, as expected.

- PBOC also injected liquidity via the 14-day reserve repo market ops for the first time since late January, amid the period leading into the Golden Week holidays Oct 1st through 8th. (PBOC also noted today’s 14-day Reverse Repo operation was conducted through fixed-volume, interest-rate bidding with multiple-price allocation).

- China today issued its work plan to stabilize its steel sector, vowing stricter control on steel sector's capacity and will prohibit new production capacity in steel sector

- China's Fujian province said to launch first Arctic shipping route to Europe. Service to e a week faster than the China-Europe rail service and more than 20 days faster than traditional routes through the Suez Canal or around the Cape of Good Hope,

- South Korean exports and imports both increased strongly for the first 20 days of September compared to the previous year, but with no thanks to US exports, which again fell sharply (-16%) y/y amid the Trump tariffs.

- In Japanese politics ahead of the Oct 4th LDP leadership race, Chief Cabinet Sec Hayashi backed the current cautious rate-hiking stance of the BOJ, while contest-leading Takaichi (a known Abe-style dove to stimulate growth) said that she will not call a snap election if elected PM by the LDP party membership.

- The White House over the weekend attempted to downplay widespread panic on Friday among US H-1B visa holders and the companies they work for whereby existing holders may not be able to get back into the US unless they pay a new $100K fee, supposedly on an annual basis (two orders of magnitude higher than the current $1K). Companies such as Google even issued an advisory urging their H-1B holders to remain in the US. However, the White House clarified on Saturday that the new $100K fee will only apply to new petitions, not existing holders. Further, the fee is not per year, but is a one-time fee that applies only to the petition. (Commerce Sec Lutnick had originally said on Friday that the $100K fee would be per year).

- Some Indian companies as well as India’s NASSCOM said today they do not expect significant impact on ops or financials due to the new visa fees, while JP Morgan’s APAC CEO said it was too soon to tell. Indian IT outsourcing companies saw shares fall 3 or 4%.

- Pres Trump said on Monday to expect a medical announcement “for American children” and that “I think we have an answer on autism”, in reference to the pending HHS report on Autism report due in September.

- Pres Trump, VP Vance, Def Sec Hegseth, Sec of State Rubio, DNI Dir Gabbard, HHS Sec Kennedy today attended the memorial for Turning Point USA’s Charlie Kirk at State Farm Stadium, Glendale, AZ.

- Spot silver +1% to fresh record >$43.50/oz.

- US equity FUTs flat to slightly down during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Tue 23rd Sept Global Flash PMIs, (Tue night US Fed Chair Powell).

- Wed 24th JP Sept Flash PMIs, AU Aug CPI, JP BOJ outright purchases, (Wed eve DE Sept Ifo Business Climate).

- Thu 25th JP BOJ Minutes, JP 40-yr JGBs, (Thu night US Aug Durable Goods, Final Q2 GDP. US Aug Home Sales).

- Fri 26th JP Tokyo CPI, JP BOJ Noguchi, (Fri night US Aug Core PCE).

Holidays in Asia this week

- Tue 23rd Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens s +0.4% at 8,807.

- Australia RBA Gov Bullock: Since Aug meeting, domestic data has been broadly in line with our expectations or if anything slightly stronger; Board will discuss this and other developments at our meeting next week. - testimony to the House of Representatives Standing Committee on Economics.

China/Hong Kong

- Hang Seng opens -0.3% at 26,459; Shanghai Composite opens +0.1% at 3,822.

- China PBOC monthly loan prime rate (LPR) setting: Leaves rates unchanged (as expected).

- Follow up: China issues work plan for steel sector growth for 2025 and 2026 - China state media.

- China Pres Xi: China position on TikTok is clear; Talks with US Pres Trump were pragmatic, positive and constructive; China-US relations are very important - China state media [weekend update].

- (US) Pres. Trump: Had a very productive call with President Xi of China; We made progress on many very important issues including Trade; "appreciate the TikTok approval"[weekend update].

- China Cabinet Meeting chaired by Premier Li Qiang: Passed draft amendment to banking supervision law in principle - China state press [weekend update].

- China's Fujian province said to launch first Arctic shipping route to Europe - Xinh.

- China PBOC: To conduct 14-day RRP ops [amid upcoming holiday between Oct 1-8th] [weekend update].

- HKMA: China PBoC sells total CNY60B in 6-month bills at 1.72% in Hong Kong.

- China govt promises to increase demand in automotive aftermarket [weekend update].

- Provinces in China are adapting to US tariffs at different speeds - SCMP [weekend update].

- China PBOC sets Yuan reference rate: 7.1106 v 7.1128 prior.

- China PBOC Open Market Operation (OMO): Injects CNY241B in 7-day reverse repos; Net drains CNY40B v injects CNY124B prior.

- China PBOC Open Market Operation (OMO): Sells CNY300B in 14-day Reverse Repos: Net injects CNY261B.

Japan

- Nikkei 225 opens +0.5% at 45,262.

- Japan LDP Takaichi: Will not call snap election if becomes PM.

- Japan Chief Cabinet Sec Hayashi, speaking as candidate for LDP Leadership race: BOJ is conducting monetary policy in a way that does not deviate much from govt thinking.

- Japan Chief Cabinet Sec Hayashi: Comprehensively considering Palestine recognition - press.

- Japan's Takaichi leads the LDP leadership race at 28% - Asahi.

- BOJ Gov Ueda to speak at Paris Europlace forum in Tokyo on Oct 8th [weekend update].

Korea

- Kospi opens +0.5% at 3,463.

- South Korea Sept Exports 1-20 Days Y/Y: 13.5% v 7.6% prior; Imports 20 Days Y/Y: 9.9% v 0.4% prior.

- BP and other companies to join the South Korean deep-sea gas project - Korean press.

- Samsung.

- South Korea President Lee said South Korea would face 'financial crisis' if it accepts US investment demands without safeguards - Yonhap [update] shares +3.6% and hits 2025 intraday high following reports Co has passed Nvidia's quality testing - Korean press.

- North Korea's Leader Kim Jong Un said he has "good memory" of US Pres Trump; Open to talks with US if denuclearization demand is dropped - South Korea press (update).

Other Asia

- Philippines Central Bank (BSP) official: GDP may fall below target in 2026 - BSP report.

- (TW) US Agriculture Sec Rollins: Taiwan commits to purchasing $10B of US agricultural exports over next 10 years [weekend update].

- (IN) India Foreign Min spokesman Jaiswal: US and India to intensify talks for a trade pact [weekend update].

- Thailand said to plan to cut borrowing by 7.8% to ~THB2.37T in FY26 [starts in Oct] - press.

North America

- (US) Pres Trump to make medical announcement for American children at 4pm ET, Monday.

- (US) Pres Trump: Elon came up to me and said 'Hello' - comments to press gaggle en route back to DC following Charlie Kirk memorial service in Arizona.

- (US) Pres Trump: Lachlan and Rupert Murdoch likely involved in US TikTok deal - Fox News interview (update).

- (US) Pres Trump said to plan Tuesday meeting in NYC with Arab leaders on war in Gaza - Axios, citing Arab officials.

- (US) Follow up: Senator Ted Cruz (R-TX); Urges Trump Admin to raise mandatory pilot retirement age to 67 - letter to Admin.

- (US) Trump: If Afghanistan doesn’t give Bagram Airbase back to those that built it, the United States of America, BAD THINGS ARE GOING TO HAPPEN!!! President DJT [weekend update].

- (US) Trump: I think we have an answer on autism and will make an announcement on Monday.

- Alphabet: Issues advisory against international travel for its H1-B visa holders, urges them to remain in the US - press citing internal email [weekend update].

- (US) Trump officially launches "Trump Gold Card" will be available for $1M for individuals, and $2M for Corporations [weekend update].

- (US) Trump says US military was ordered to destroy another narcotrafficking vessel in international waters [weekend update].

- (US) Trump: The Republican Party wants, very badly, a Convention for the 2026 Midterm Election. We will have one at the highest level. It will be both fun, and very productive. MAKE AMERICA GREAT AGAIN! [weekend update].

- (US) Trump: Pam Bondi is doing a GREAT job as Attorney General - Truth Social [weekend update].

- (US) Lawmakers will introduce bill to 'kill' coffee tariffs; Note: Bill has near zero chance of passing. - Washington Post [weekend update].

Europe

- (CH) Switzerland Govt said to be in a 'fresh push' to 'woo' Trump on tariffs - FT.

- (IL) Follow up: Canada, UK, Australia recognise Palestinian statehood, as expected - press (update).

- (EU) Cyberattack has disrupted major European airports, leading to delays and cancellations - press [weekend update].

- (RU) European Commission Pres Von der Leyen: Propose expanded sanctions on Russian shadow fleet and ending exemptions on Rosneft and Gazprom Neft; Proposes wider transaction ban on more Russian banks; Will move up ban on Russian LNG purchases by one year beginning from Jan 2027 (all as expected); Will propose actions on frozen Russian central bank assets soon [weekend update].

Levels as of 01:20 ET

- Nikkei 225 +1.2%, ASX 200 +0.4%, Hang Seng -0.8%; Shanghai Composite +0.3; Kospi +1.0%.

- Equity S&P500 Futures -0.1%; Nasdaq100 flat; DAX flat; FTSE100 +0.6%.

- EUR 1.1726-1.1752; JPY 147.88-148.38; AUD 0.6581-0.6601; NZD 0.5847-5870.

- Gold +0.7% at $3,733/oz; BTC -0.9% at $114,730; Crude Oil +0.7% at $62.86/bbl; Copper +0.2% at $4.6370/lb.