RBA's Hauser hints at November hike, Goldman Sachs revises forecast

The session in brief:

• RBA Deputy Governor Andrew Hauser's remarks pointed to a bleaker inflation outlook than the central bank had predicted, with the quarterly trimmed mean set to come in above forecasts and capacity pressures running higher than previously estimated.
• Following Hauser's comments, Goldman Sachs changed its stance and now anticipates a 25-basis-point rate increase to 4.85% on 3 November, having earlier forecast no change.
• The Australian dollar briefly gained on Hauser's comments but later surrendered the advance, ending the session little changed.
• Data centre operator NEXTDC saw its shares dive 44% after it reduced its FY27 guidance, citing delays in grid power.
• According to a Reuters poll, a majority of economists expect the Bank of Japan to raise its rate to 1.50% in December. Japan's September exports advanced 16.7%, falling short of the 20.1% forecast.
• South Korea's KOSPI surged over 5%, triggering a buy-side sidecar, while other regional indexes showed mixed results: Japan's Nikkei 225 gained 1.1%, the Shanghai Composite shed 0.4% and the Hang Seng lost 0.3%.
• The youth jobless rate in China dropped to 18% in September from 18.9% in August.
• The FAA certified Boeing's 737 MAX 10. SpaceX and Netflix issued their quarterly results, and Super Micro Computer surprised the market with a preliminary upgrade.

The most significant news of the Asian session was delivered by Reserve Bank of Australia Deputy Governor Andrew Hauser, who indicated the RBA Board could deliver a fifth rate rise of the year when it meets on 3 November.

At a fireside chat during Citi's Australia and New Zealand Investment Conference in Sydney, Hauser told the audience that the inflation picture has darkened relative to the RBA's own forecasts. The quarterly trimmed mean, the RBA's closely watched gauge of underlying inflation, now looks set to land above initial expectations. Capacity constraints in the economy are proving more persistent than forecast, and businesses consistently identify cost pressures as their biggest concern.

Hauser emphasised that elevated inflation has persisted for an extended period and that the central bank must prevent inflation expectations from becoming unmoored from its target. The RBA, he argued, must act on supply shocks to keep expectations in check; although policy is not aimed solely at current inflation, ongoing high readings cannot be dismissed.

Offsetting factors were mentioned, however. The September labour market report arrived slightly softer than anticipated; joblessness remains low but the market is loosening. Housing metrics have also decelerated, and in his view monetary policy is having an effect. Still, Hauser cautioned that internal forecasts are being finalised and the Board's final decision is not yet determined.

Following Hauser's remarks, Goldman Sachs shifted its position. The bank now predicts the RBA will lift the cash rate by 25 basis points to 4.85% in November; it had previously pencilled in no move. The rate currently sits at 4.60% following the 29 September increase, the fourth of 2026. Third-quarter CPI figures are scheduled for release on 28 October, with the rate call set for 2:30pm Sydney time on 3 November.

The Australian dollar climbed when Hauser spoke but could not sustain the momentum, finishing the session largely where it began.

Over in equities, NEXTDC shares crashed 44% when the data centre firm revised down its FY27 underlying EBITDA outlook to a range of A$245 million to A$265 million, down sharply from A$385 million to A$410 million. Construction work on its Melbourne M3 site was halted amid community pushback, delaying extra power capacity to FY28. The company has also placed new development projects on ice.

Japan's economic indicators and BOJ outlook

A Reuters survey found 69% of economists anticipate a Bank of Japan rate increase to 1.50% by the end of the current quarter. Among those picking a month, roughly 80% pointed to December rather than the October 30 meeting. A majority of respondents cautioned that ongoing public disagreements from government-appointed board members could put downward pressure on the yen.

Finance Minister Satsuki Katayama stated that Japan is approaching a phase of lasting inflation fuelled by rising wages and finds no disconnect between government thinking and the BOJ's stance. The comment came after a lawmaker questioned whether the government's planned tax reductions could conflict with rate increases.

September exports climbed 16.7% year on year, extending a winning streak to 13 months on the back of demand for AI and semiconductors, though the reading fell below the 20.1% forecast. Imports increased 18.9%, with energy costs eased by delayed crude shipments, narrowing the trade deficit to ¥536.6 billion — a figure notably above the ¥181 billion the market had expected.

China and South Korea data points

China's jobless rate for 16 to 24-year-olds in urban areas, a measure that excludes students, fell to 18% in September from 18.9% a month earlier, according to National Bureau of Statistics data. August's reading had been the highest in a year.

The KOSPI index in South Korea jumped more than 5%, with KOSPI 200 futures also up 5%, setting off a buy-side sidecar that halted program trading for five minutes. This was the first such event in two months and was fuelled by heavy net buying from overseas investors.

Regional equity and commodity markets

Equities across Asia presented a mixed picture. Japan's Nikkei 225 added 1.1%, in contrast to a 0.4% loss for the Shanghai Composite and a 0.3% decline for Hong Kong's Hang Seng. Oil prices edged slightly higher while gold remained broadly stable.

Corporate earnings and developments: Boeing, SpaceX, Netflix, and Super Micro

The 737 MAX 10, the largest variant of Boeing's top-selling jet, received final certification from the US Federal Aviation Administration. This milestone, achieved after close to seven years of delays, paves the way for deliveries and unlocks roughly 1,500 pending orders.

SpaceX posted third-quarter revenue of roughly $14.6 billion, a figure that significantly surpassed analyst estimates, with its AI operations alone accounting for over half the total. During the earnings call, CEO Elon Musk described a potential merger with Tesla as a good idea, though it remains highly uncertain, and predicted that demand for AI computing power will continue at a strong clip.

Netflix exceeded profit expectations in the third quarter but guided fourth-quarter earnings at a level below consensus, also trimming its full-year free cash flow forecast to roughly $12 billion.

Super Micro Computer issued an unexpected preliminary update, raising its September-quarter revenue outlook to a range of $18.5 billion to $19.5 billion. This guidance, well ahead of its earlier estimate, propelled the stock 14% higher in after-hours trading.

In other corporate news, Nvidia is reported by The Information to be in discussions to back Australian AI cloud operator Firmus Grid, following the latter's decision to abandon its IPO. Meanwhile, Citadel founder Ken Griffin commented that AI is almost certainly existing inside a bubble. Meta Platforms is scheduled to report its earnings after the US market close on Wednesday, kicking off a round of mega-cap technology results.