A Manic Monday on Asian Stockmarkets

- Summary of trade between 17:00 ET and 23:00 ET: As was widely expected, Citigroup's CEO, Charles Prince, stepped down on Sunday. The bank also announced that it may have to suffer between $8B and $11B in writedowns (before tax) because of the ongoing subprime mortgage crisis. This was a much larger writedown than the street expected, and the announcement set the stage for a session that was dominated by reduced risk appetite, and bargain hunters refused to step in (instead choosing to wait for Wall Street's reaction to Citi's news). Asian stock markets came under heavy selling pressure, with financials and resource-related shares leading the downside. Asian currencies continue to move higher (more as a result of the weakening USD), inspiring investors to sell exporters despite Friday's solid U.S. jobs data. The increase in risk aversion led to familiar price action: carry trades were reversed, and selling on the JPY crosses (AUD/JPY, EUR/JPY etc.) dragged down the majors against the USD. Easing geopolitical tensions caused some profit-taking on crude, with some analysts suggesting we'll see $100/bbl oil this week.

- New Zealand wage inflation accelerates: (NZ Q3 LABOR COST ALL WAGES PRIVATE QOQ: 0.9% V 0.8% expected, 0.8% prior; Private Sector QoQ: 0.9% v 0.8% expected, 0.7% prior) The data won't surprise central bank governor Bollard, who said last week that a shortage of workers may lead to sustained inflationary pressures. The data confirms the market consensus that New Zealand rates will remain on hold for a few months.

- The minutes from the Bank of Japan's (BoJ) September meeting didn't offer any surprises, with the central bank reiterating that it aims to raise rates gradually. A few of the members said that "it was appropriate that the Bank of Japan maintain the stance of adjusting the level of interest rates...in order to prevent a misallocation of resources in the long-run."

- Equities: At 22:46 ET Japan's Nikkei is down -1.56%, Australia's ASX is lower by -1.77% and South Korea's KOSPI is -0.50%. Japan's main opposition leader offered his resignation yesterday, and the political instability, combined with credit concerns, kept bargain hunters on the sidelines. Shares of BHP moved sharply lower, dragging the ASX index below 6,600. Chinese equity prices are under pressure after China's securities regulator told asset managers to restrain the growth in the size of their funds. Despite the broad-based selling of Chinese equities, shares of PetroChina more than doubled in its Shanghai debut. The Hang Seng is lower by more than -2.40%, trading below 30,000, after China's Premier Wen said that China is not ready to allow mainland investors to trade Hong Kong stocks.

- Commodities: Crude oil lost -1.31% between 18:00 ET and 22:59 ET, last quoted at $94.67/bbl, as tensions between Iraqi Kurds and Turkey eased over the weekend. Kurdish rebels on Sunday released eight Turkish soldiers in northern Iraq two weeks after capturing them in an ambush inside Turkey. Spot gold tracked crude prices lower, as the commodity lost -0.45%, last trading at $804.80/oz. Shanghai Copper is lower on declines in equities and rises in global copper inventories.

(by Eben Esterhuizen and Gavin Pierce)