Asian Stocks Plummet, USD Fails to Rebound

- Summary of trade between 17:00 ET and 23:00 ET: Equity investors continue to worry about the spreading fallout from the credit crunch, and bargain hunters remained on the sidelines as Asian stock markets tracked Wall Street's plunge. S&P futures remained in negative territory despite oil prices drifting lower in Asia. Foreign exchange markets continued to digest comments from a third-tier Chinese official, Cheng Siewei, that led to the dramatic selling of the USD over the last 24 hours. The consensus is that his comments do not reflect official Chinese policy, but senior Chinese officials have so far failed to publicly distance themselves from his comments. Fundamentals continue to weigh on the USD, preventing any meaningful rebound in the currency. A Peoples Bank of China official said that the bank aims to maintain forex stability, adding that the USD has the highest weighting in their forex reserves (suggesting that they want to avoid a rapidly depreciating USD hurting the returns on their reserves). Australian data confirmed the strength of the labor market, while Japanese data showed that July-September machine orders marked the first increase in three quarters.

- Australia's full time employment surges in October: (AU OCT EMPLOYMENT CHANGE: 12.9K V 20K expected, prior revised to 8.3K from 13K; Full time employment +70.6K) Markets ignored the weaker than expected headline reading, instead focusing on the strong rise in full time employment, the main driver behind consumer spending. The data had little impact on the AUD, as investors wait for next week's wage inflation data to decide on the likelihood of a December rate hike.

- September machinery orders data fails to change the outlook on Bank of Japan: (JP SEPT MACHINE ORDERS MOM: -7.6% V -1.5% expected; YOY: -7.0% V -0.9% expected) Looking at the medium term trends, July-September orders marked the first increase in three quarters, a sign that Japanese manufacturing remains robust. However, the BoJ's argument has been that keeping interest rates too low would heat up capex, but today's data raises the question whether a rate hike is necessary in the first place.

- New Zealand's jobless rate falls to a record low: (NZ Q3 UNEMPLOYMENT RATE: 3.5% V 3.6% expected, 3.6% prior) The data adds weight to the consensus that New Zealand rates will remain on hold for the foreseeable future, as RBNZ govern or Bollard last month cited a tight labor market as a source of inflation.

- Equities: At 23:05 ET Japan's Nikkei is -2.52%, Australia's ASX -2.86% and South Korea's KOSPI is lower by more than -2.0%. The Nikkei index collapsed below 16,000 as financials and exporters continue to drag on the broader market. Chinese equities are lower by almost -3.0%, and the Hang Seng is lower by more than -2.5%.

- Commodities: Crude oil prices dropped -0.70% between 18:00 ET and 23:10 ET, last quoted at $95.70. Spot gold continues to benefit from the weak USD / high oil, and is higher by +0.35%, last quoted at $836.40/oz. Shanghai copper is lower and trading near a 2mnth low.

(by Eben Esterhuizen and Gavin Pierce)