Asia-Pacific markets: Yen declines on BOJ outlook, Nikkei surges

A summary of the main market developments:

• Axios reported that US Secretary of State Rubio ordered Iran's UN team, which included Foreign Minister Araghchi, to leave New York after talks broke down, while Qatari mediators continue working on a compromise.
• Oil prices were little changed in quiet trade, with no visible progress on US-Iran negotiations.
• Gold prices climbed from lows near $4,140.
• The BOJ's September Summary of Opinions showed a hawkish tilt, with some members open to faster hikes, while a couple favored holding as CPI stayed below 2%. Full minutes are due on November 5.
• The yen weakened sharply, as analysts said the opinions largely confirmed what the market already expected.
• The tankan survey showed big manufacturers at +24 (forecast +25, June +22) and big non-manufacturers at +35 (forecast +36).
• Fed's Kashkari said inflation is still too high at around 3% and has penciled in one more hike this year and another in 2027.
• Australia's manufacturing PMI fell to 49.6 from 52.0, with output falling at the sharpest pace in 21 months.
• The Nikkei 225 rose 2.5% and the KOSPI 0.9% after Micron's results and Trump's plan for South Korea to invest $200 billion in US energy projects.

In quiet trading, oil prices saw little change amid a continued lack of progress in US-Iran discussions. Axios reported that Secretary of State Rubio instructed Iran's UN mission, including Foreign Minister Araghchi, to leave New York following stalled talks, a move described by the outlet as highly unusual. Qatari mediators reportedly continued to pursue a compromise. Gold edged higher from levels around 4,140.

The Bank of Japan's September Summary of Opinions indicated a phase shift in policy. Some participants suggested that rate increases might need to accelerate if prices exceed 2%, and that the policy rate should approach its target relatively soon. Conversely, a few members advocated for holding rates as CPI stayed under 2%. Oil and import costs were flagged as upside inflation risks. The government has requested the Bank to review the cumulative impact of previous hikes. The opinions are anonymous and represent individual perspectives, not official decisions. The complete minutes are scheduled for release on November 5.

The yen depreciated sharply. According to analysts, the BOJ summary largely validated market expectations that the central bank discussed additional rate increases and the potential for a faster timeline after September. Some analysts noted that Japan's uneven business climate lessens the urgency for an immediate hike. The September tankan recorded big manufacturers' sentiment at +24, compared to a +25 forecast and +22 in June, while big non-manufacturers stood at +35 against a forecast of +36. Firms anticipate consumer prices will rise by an average of 2.6% over the next year, down from 2.7% in the previous survey.

US Fed's Kashkari stated that inflation remains too elevated at roughly 3%, and that the economy shows resilience with ongoing consumer spending. He suggested the neutral rate might be higher than previously believed and has penciled in one additional rate hike for this year and another for 2027.

Australia's S&P Global manufacturing PMI dropped to 49.6 in September, down from 52.0 in August. The pace of output decline was the sharpest in 21 months, new orders contracted for the first time since June, and headcounts fell for the first time in five months. Costs for oil, raw materials, and freight stayed high, while supplier delays increased as the Middle East conflict impacted shipping.

Asian stocks traded higher. The Nikkei 225 advanced 2.5%, driven by chip-related shares following robust results from Micron. The KOSPI rose 0.9% on tech-linked purchasing. Trump also announced plans for South Korea to invest $200 billion in US energy projects. Micron posted fourth-quarter revenue around $54 billion and adjusted EPS near $33, both topping estimates, and guided first-quarter revenue to $60 billion to $63 billion, significantly above expectations, though its gross margin guide was below consensus.