investingLive Asia-Pacific market news: Brazil ETF slumps on Lula win

• Brazil ETF tumbles nearly 15% in Tokyo after Lula’s comeback runoff win
• Saudi Arabia to store crude in Singapore caverns from 2027 as Hormuz disruption bites
• Goldman’s 79-tonne central bank gold estimate goes mainstream as reserves shift to London
• BOJ to hold at 1.25%, but Ueda signals further hikes toward neutral
• PBOC sets USD/ CNY reference rate for today at 6.7162 (vs. estimate at 6.6691)
• Gold dips below $4,000 as long liquidation swamps ETF buying, Saxo Bank says
• Musk says SpaceX closed $40 billion GPU debt deal, predicts neocloud shakeout
• ECB set to hold at 2.50% as Morgan Stanley sees December as natural moment for next hike
• Nikkei slips, bounces, as Iran oil fears weigh; ING sees BOJ holding at 1.25%, two hikes in 2027
• Gold dips below $4,000 in worst week in four months as oil fuels Fed hike fears
• Bitcoin ETF inflows fade as price pressure tests ETF buyers’ $81,300 cost basis
• Bank of Canada preview: 81% chance of first hike in a year to 2.50%, economists split
• Standard Chartered sees debt-funded share of AI capex rising to 40% in 2027 from 25%
• BOJ preview: Daiwa sees hold, but 2% inflation call could open door to December hike
• Strategy bitcoin purchases shrink as buybacks take priority ahead of earnings
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• Preview: RBNZ set to lift OCR to 3% ahead of election as oil and weak kiwi fuel inflation
• Weekend - China warns of countermeasures as US Treasury widens tech investment curbs to biotech
• RBA’s Hunter says inflation job not done after four hikes, November rise in view
• Goldman Sachs cuts Kospi target 25% to 9,000, still sees over 60% upside
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Summary:

• Oil gapped lower at the open after a weekend without fresh US escalation of the war, easing from near six-month highs, though continued attacks on Saudi Arabia kept supply concerns in focus
• Reuters sources said senior Saudi, Turkish and Pakistani officials were expected to meet Iranian officials in Tehran on Monday to discuss regional coordination
• Saudi Arabia plans to store crude in caverns on Singapore’s Jurong Island from the second half of 2027 to bolster Asian supply security
• Gold hovered near a three-month low as elevated energy prices supported expectations of higher-for-longer US rates ahead of the Fed decision;
• FX was subdued, with USD/JPY moving from above 157.10 to below 156.75, while China’s onshore yuan hit its strongest since June 2022
• Korea led regional equity losses, with the Kosdaq down 2.8% and the Kospi down 1.6%; the Nikkei fell 0.7% and the Hang Seng edged up 0.2%
• A Tokyo-listed Bovespa ETF fell nearly 15% after Lula won Brazil’s runoff, and Goldman Sachs outlined an extreme scenario of a 10% rise in USD/BRL and a 15% drop in equities; Chicago soybean futures fell to a two-month low after Lula’s presidential win in Brazil raised expectations of closer ties with China
• Serbia’s Aleksandar Vučić conceded defeat to the student-led movement after nearly 12 years in power
• Strategy’s Michael Saylor skipped his usual Sunday bitcoin chart

Oil

Oil prices opened with a gap lower on Monday after a weekend in which the US did not escalate the war with Iran, easing back from the near six-month highs reached late last week. Losses were limited, however, as ongoing attacks on Saudi Arabia kept supply concerns in focus.

Fresh news flow was thin during the session. Later, two sources told Reuters that senior officials from Saudi Arabia, Turkey and Pakistan were expected to meet Iranian officials in Tehran on Monday to discuss regional coordination.

Separately, Saudi Arabia and Singapore said Saudi crude will be stored in underground caverns on Singapore’s Jurong Island from the second half of 2027, aimed at strengthening Asian supply security while Strait of Hormuz flows remain disrupted. Saudi Aramco is due to sign a memorandum of understanding with Singapore’s Energy Market Authority and Jurong Group, with talks targeted to conclude within months.

Gold

Gold hovered near a three-month low as investors awaited this week’s Federal Reserve meeting for signals on the US rate outlook. Elevated energy prices have reinforced expectations that the Fed will keep rates higher for longer, raising the opportunity cost of holding non-yielding bullion. Gold fell about 4% last week and briefly dipped below $4,000. On the structural side, Goldman Sachs estimates central banks bought 79 tonnes in August, more than four times the pre-2022 monthly average, with some reserves shifting from New York to London.

FX

Currency markets were largely subdued, although USD/JPY showed some volatility within a modest range, moving from above 157.10 to below 156.75. China’s onshore yuan strengthened in early trade to its firmest level since June 9, 2022.

Equities

Regional stock markets were mostly lower, with South Korea leading the declines:

• Japan’s Nikkei: down 0.7%
• South Korea’s Kospi: down 1.6%
• South Korea’s Kosdaq: down 2.8%
• China’s Shanghai Composite: down 0.3%
• Hong Kong’s Hang Seng: up 0.2%

In Tokyo, chip and electronics shares led the declines. Earlier, Goldman Sachs cut its 12-month Kospi target to 9,000 from 12,000, though it said the index still has more than 60% upside after a slide of over 35% from its June peak.

Brazil

President Luiz Inacio Lula da Silva won Brazil’s presidential runoff on Sunday, defeating right-wing Senator Flavio Bolsonaro to secure a fourth non-consecutive term after trailing in the first round. A Tokyo-listed exchange-traded fund tracking the Bovespa fell nearly 15% in Asian trade on the result. Goldman Sachs said an extreme scenario on Monday could see USD/BRL rise 10%, long-term government bond yields climb about 200 basis points, credit spreads widen 30 to 40 basis points and Brazilian equities fall around 15%.

Other news

In Serbia, Aleksandar Vučić, who has served as both prime minister and president over nearly 12 years, conceded defeat to the student-led protest movement following Sunday’s snap parliamentary election.

In crypto, Strategy chairman Michael Saylor did not post his usual Sunday bitcoin chart, which has typically preceded the company’s purchase announcements. Some market watchers took this as a possible sign that Strategy, the largest corporate holder of bitcoin, paused its buying last week, though the absence of a chart is not confirmation. Saylor was active on X, describing bitcoin as “the moat” in a reply to Jack Dorsey. The company’s Monday filing should clarify its activity, and its third-quarter results are due on Thursday.

Elsewhere, Elon Musk said SpaceX has closed $40 billion in debt financing for GPUs, and warned that tightening credit could force failures and consolidation among AI-focused neocloud providers. China’s commerce ministry said it reserves the right to take countermeasures against a proposed US Treasury rule widening curbs on American investment in Chinese technology.

Week ahead

It is a heavy week for central banks. The Reserve Bank of New Zealand and the Bank of Canada are both expected to hike on Wednesday, while the Fed, also deciding on Wednesday, is expected to hold. The European Central Bank on Thursday and the Bank of Japan, which meets on Thursday and Friday, are both expected to keep rates unchanged. In Australia, RBA Assistant Governor Sarah Hunter said on Sunday the bank has not yet done enough to tame inflation, ahead of Wednesday’s CPI data and the November 3 policy meeting.

Brazil's Lula.