Market Close Sep 29

US presidential debate spurs caution 

Bank of Japan policy strategy review urged; Gold and US Treasuries bid up as investors seek havens; RBA rate cut hopes pushed back; Sri Lanka bonds tumble after downgrade

US presidential debate spurs caution 
Workers prepare for the first presidential debate between Joe Biden and US President Donald Trump, which is scheduled to take place on Tuesday September 29 (Sept 30, Asian time). Photo: Reuters.

(ATF) Hong Kong: Investors are holding their breath ahead of the first of the three televised debates between President Donald Trump and challenger Joe Biden that will influence voters in the November US Presidential elections.

Also awaited are speeches from two Federal Reserve officials and a rash of data from the world’s two largest economies.

Japan’s benchmark the Nikkei 225 edged up 0.12% after the Bank of Japan’s summary of opinions showed board members felt the economy’s “pick-up has been slow” and there was a case for review of monetary policy conduct.

“Given that the path toward achieving the price stability target is not in sight amid the situation of significant changes in economic developments, it will be necessary to reconsider the strategy toward achieving the target comprehensively,” the summary showed.

The Hang Seng index tumbled 0.85% and Australia’s S&P/ASX 200 edged down marginally as expectations of a near-term rate cut were pared back. The regional outperformer was the CSI300, China’s benchmark as sentiment was boosted by hopes of accelerated reforms with Beijing considering its latest reform plan – to launch Real Estate Investment Trusts. The CSI 300 advanced 0.22%.

Investors Down Under are looking for a rate cut by the Reserve Bank of Australia in November rather than in October.

“The government is due to deliver an expansive budget on October 6. We expect the RBA to ease monetary policy in November,” BofA Securities analysts said in a note.

They said the measures included in this budget will likely reflect a transition from income support to more traditional forms of spending to boost employment creation.

“As expansive fiscal policy takes time to flow through the economy we think the RBA will step up and increase monetary support as well to lower borrowing costs for businesses and households through a 15bps interest rate cut and a further increase of its balance sheet, most likely in November once the Budget has been delivered,” BofA Securities said.

The US dollar surrendered some of its recent gains but is still above the 94 level against a basket of currencies and that weakness propelled the price of gold, with the yellow metal jumping 0.25% to $1,884 per ounce.

US Treasuries caught some of the safe haven bids with the 10-year yield declining 2 basis points to 0.65%.

ATF China Bond 50 Index: Coupon payments weigh on Chinese bond indexes

Also on Asia Times Financial:

Chinese investment in 3rd generation semiconductors to soar

China accelerates launch of real estate investment trusts

US must face up to China if Biden wins, Krugman says

Huawei 'swept up' memory chips before sanctions deadline

Asia Stocks

· Japan’s Nikkei 225 index adds 0.12%

· Australia’s S&P ASX 200 down marginally 

· Hong Kong’s Hang Seng index slid 0.85%

· China’s CSI300 0.22%

· The MSCI Asia Pacific index inched down slightly

Stock of the day

Sri Lanka bonds tumbled by 4-5 points with the 5.75% bonds due in 2023 falling 4 points to 75 cents on the dollar. The sovereign bonds retreated after Moody's downgraded its rating to Caa1, blaming its “fragile funding and external positions”.