EQUITIES: Asian Equities Mixed, Japanese Equities Outperform

Asian markets are mixed today as investors exercised caution ahead of key US events, including next week’s presidential election and the Federal Reserve’s rate decision. Japan’s Topix Index gained around 1%, led by tech stocks following a strong performance from the Nasdaq. Mainland China, Hong Kong, and Australia saw declines. Chinese stocks faced pressure amid economic concerns, though property developers gained on reports of potential government stimulus.

• Japanese stocks are higher with the Topix Index rising about 1%, supported by gains in the tech sector after a strong performance from the Nasdaq in the U.S. Investors were also optimistic ahead of earnings from Hitachi, the 2nd largest component of the TOPIX. Financial stocks contributed to the gains, marking a third consecutive day of advances for the sector. Looking at index options, traders are positioned for further upside in both the Nikkei & Topix but see more upside in the TOPIX with the $2,900 strike calls having the most open interest for the Nov. 8 maturity, a 7% upside from current levels.
• Taiwan's TAIEX is slightly higher today, with TSMC up 0.50% contributing to the majority of the index's gains today, this follows an almost 4% drop in their shares after reports surfaced that the company may have violated US trade restrictions with China. TSMC reportedly suspended shipments to China's chip designer Sophgo after a chip it made was found in a Huawei AI processor, which is subject to U.S. export controls. South Korea's KOSPI is 0.70% lower today, the largest weighting in hte KOSPI is Samsung, the company has struggled since June, dropping over 30% from highs vs Apple which is trading little changed.
• Australian equities are lower, with the ASX 200 falling 0.70%, despite a decline in inflation to 2.8%, which brought headline inflation back within the RBA's target range. Investors were not impressed by the inflation drop as core inflation remained elevated at 3.5%, suggesting continued price pressures in areas like recreation, food, and insurance. Mining stocks saw gains supported by a climb in iron ore prices. However, financials and retail sectors were weaker. Supermarket giant Woolworths fell sharply by 5.8% after issuing a profit warning for FY25. Star Entertainment shares plunged 11.3% following a reported $1.6 billion loss for FY24 due to challenging trading conditions and regulatory issues. New Zealand's NZX50 is 0.40% lower, with the three largest weighting (WBC, ANZ, Fisher & Paykel) dropping roughly 1% each.