• Asia-Pac stocks traded lower across the board after a similar performance on Wall St; Mainland China underperformed
• China has confirmed it will be asking the US to close the Chengdu consulate in response to the closure of the Chinese consulate in US, as speculated
• The head of the Chinese consulate in Houston will not commit to closing the office by the Friday deadline
• US GOP stimulus bill likely will not be released until Monday amid disagreements over jobless benefits and other issues
• In FX, DXY continued to weaken, JPY saw a bout of spontaneous strength, USD/CNY tested 7.0200 to the upside
• Looking ahead, highlights include UK Retail Sales, EZ, UK & US PMIs (Flash), CBR Rate Decision, earnings from Verizon & American Express

CORONAVIRUS UPDATE

US CDC said COVID-19 cases +70,106 (prev. +63,028); deaths +1,078 (prev. +1,047). A newswires tally suggested US COVID-19 cases rose by at least 66,064 (Prev. +69,659), whilst deaths rose by at least 1,112 (Prev. +1,101), according to a major newswires tally. California COVID-19 cases +2.9%/12,040 (prev. +3.2%/+12,807), deaths +157 (prev. +115). Texas COVID-19 cases +9,507 (prev. +9,879); deaths +173 (prev. +197); hospitalisations data is incomplete due to new federal requirements. Houston, Texas ICU Phase 2 surge capacity now at 27% occupancy, seeing Houston ICU occupancy rate rise to 108%. New York COVID-19 cases +811 (prev. +0.2%/+705); hospitalisations 706 (prev. 714), positivity rate 1.16% (prev. 1.04%), deaths +13 (prev. +9). LA County COVID-19 cases increased by 2,014 (Prev. +3,266), deaths rise by 49 (Prev. +64), hospitalisation rose by 3 (Prev. -11), according to the County Health Department. Arizona Governor has extended the closures of gyms, bars, nightclubs, and water parks. (Newswires)

US GOP stimulus bill likely will not be released until Monday as the White House and Senators haggle over jobless benefits and other issues, according to CNN's Raju. (Twitter) US Labour Secretary Scalia said incentives for returning to work should and will be in the next COVID-19 relief bill. (Fox News) US President Trump tweeted the payroll tax cut was not asked for by Republicans as the Democrats are strongly against it. (Twitter) US President Trump reiterated his support for payroll tax cuts. (Newswires)

US HHS assistant secretary said they expect the COVID-19 death rate to come down in the coming weeks; national positivity rate is 9.08%. (Newswires)

US President Trump cancelled the Republican national convention events in Jacksonville, Florida and stated the timing of a big GOP convention is not right given the virus flare-up in Florida; Republican convention delegates will likely get together in North Carolina. (Newswires) Note, the convention was scheduled for August 24-27th. US President Trump has dropped plans to eliminate government drug rebates, according to Politico. (Politico) US President Trump is to deliver remarks and signed executive orders on lowering drug prices on Friday at 15:00ET/20:00BST. (Newswires)

US Commerce Secretary Ross was released from hospital this week and is resting at home, according to sources cited by Fox's Lawrence. (Twitter) Reminder, US Commerce Secretary Ross was admitted into hospital last Friday night for a “minor” unrevealed illness, according to sources.

China reports 21 new COVID-19 cases in Mainland (Prev. 22); 6 new imported cases (Prev. 3) and 43 new asymptomatic cases (Prev. 31). Hong Kong reported 118 (Prev. 113) new confirmed COVID-19 cases on July 23, according to Global Times citing NHC. (Twitter) South Korea reported 41 new COVID-19 cases (Prev. 59); according to KCDC. (Yonhap)

Australia's Victoria state Premier announces 300 (Prev. 403) new coronavirus cases. (Newswires)

Germany COVID-19 cases rose 815 (Prev. +569), whilst deaths rose by 10 (Prev. +6), RKI. (Newswires)

Over 50% of the population of England are set to be offered free flu jabs during the winter to help the NHS prepare for a potential COVID-19 second wave. (Telegraph)

US – CHINA UPDATE

China has confirmed it will be asking the US to close the Chengdu consulate in response to the closure of the Chinese consulate in US. (Newswires) This was touted by SCMP sources yesterday, however the requested timeline for the closure is currently unknown. The head of the Chinese consulate in Houston will not commit to closing the office by the Friday deadline. (SCMP) Global Times citing experts, tweeted China can consider targeted strike to retaliate the US on the forced closure of the consulate in Houston – expelling hundreds or even more US diplomats who actually worked for CIA in Chinese mainland and Hong Kong. (Twitter)

US President Trump said the China trade deal means much less to him now. (Newswires) US Secretary of State Pompeo said China is a threat to the economy and added we will keep on talking with China but the conversations are different. Pompeo reiterated that Huawei is a national security threat; Chinese consulate in Houston was a "hub of spying" and IP theft. (Newswires)

ASIA

APAC stocks traded lower across the board as the region took its cue from the losses on Wall Street, where the S&P snapped a four-day winning streak and the Nasdaq underperformed on the back of the sell-off in major tech stocks. Furthermore, Intel shares slumped 10% after-hours despite broadly positive earnings as its advanced 7-nanometre chip product transition faces a further delay, albeit competitor AMD soared 7.5% on the news.  Losses in Asia-Pac came ahead of the anticipated retaliatory announcement from China, where it confirmed it will be asking the US to close its consulate in Chengdu, as touted by sources. ASX 200 (-1.2%) was weighed on by the losses across its heavyweight miners and financials. KOSPI (-0.6%) took a breather from yesterday’s underperformance, and as new cases in South Korea continue to decline in pace. Hang Seng (-1.9%) was pressured by a number of large cap stocks in the red and with fears that the closure of the US consulate in Hong Kong is in China’s arsenal, although this would be akin to a nuclear option. Similarly. Shanghai Comp (-2.3%) underperformed as investors took chips off the table amid China’s retaliatory move, whilst experts cited by Global Times stated that Beijing could also consider a targeting strike such as expelling hundreds or more US diplomats in Mainland and Hong Kong,. As a reminder, Japanese markets were closed in observance of National Sports Day Holiday.

PBoC drained a net CNY 170bln this week via reverse repos vs. an injection of CNY 330bln last week. (Newswires) PBoC set USD/CNY mid-point at 6.9938 vs. Exp. 6.9937 (Prev. 6.9921)

UK/EU

UK Chancellor Sunak is said to be mulling a new infrastructure bank for new funding for capital projects across the UK, no final decisions have been made but the Chancellor is expected to make an announcement on this in his autumn statement. (FT)

UK GfK Consumer Confidence* (Jul) -27 vs. Exp. -26.0 (Prev. -30.0) (Newswires)

FX

DXY held onto losses sub-95.000 throughout the entirety of the session as a results of a trifecta of US stimulus delays, rising jobless claims and the US-China tensions, all against the backdrop of rising State-side COVID-19 cases, whilst spontaneous JPY strength pushed the index briefly below yesterday’s low of 94.588. USD/JPY saw a 30-pip move lower across a few minutes, which prompted the pair to eventually dip below 106.50 and continue trundling lower as risk-aversion intensified despite the absence of fresh fundamental catalysts as liquidity in the region remains low with Japanese players away on a long weekend. EUR/USD traded choppy on either side of 1.1600 after drifting from highs of ~1.1620. The single currency remained underpinned by the Recovery Fund breakthrough made by EU leaders earlier this week, however, MEPs seem less content with the terms of the draft budget as they see room for improvement and will seek to negotiate the internals. Cable traded on Dollar-dynamics with UK-specific news-flow sparse, although the pair briefly advanced above 1.2750 having had seen overnight support at 1.2730 ahead of its 200 DMA which coincides with the 1.2700 psychological figure. Antipodeans gave up earlier gains as risk aversion intensified, as such AUD/USD lost its 0.7100 status whilst the Kiwi moved lower in tandem. Finally, the CNY was jittery ahead of the Chinese retaliatory announcement – with USD/CNY extending gains above 7.000 to test 7.0200 to the upside despite a relatively stable D/D PBoC fixing.

New Zealand Trade Balance (Jun) 426M (Prev. 1253.0M, Rev. 1286M) (Newswires) New Zealand Exports (Jun) 5.07B (Prev. 5.39B, Rev. 5.40B) New Zealand Imports (Jun) 4.64B (Prev. 4.14B, Rev. 4.11B)

COMMODITIES

WTI and Brent front month futures eked mild gains throughout the session, albeit price action was contained amid quiet news-flow and with low volumes. Traders will be keeping tabs on the National Hurricane Centre updates after Tropical Depression Eight evolved into Tropical Storm Hanna, with a warning extended Southwards. According to NHC, the Tropical Storm is expected to produce heavy rain across portions of Louisiana, Southern Texas and Norther Mexico, with oil producers on watch for Hurricane warnings. Elsewhere, spot gold and spot silver traded sideways as news-flow remained light, whilst the former came a whisker away from a 1900/oz print as the end of the European session yesterday. Furthermore, as speculated CME raised COMEX 5000 Silver Futures margins by 12.5% to USD 9k/contract from USD 8k/contract amid the recent rally in the precious metal. Copper prices failed to benefit from the weaker Dollar as the red metal tracker losses across stocks amid the Chinese retaliatory move against the US.

CME raised COMEX 5000 Silver Futures margins by 12.5% to USD 9k/contract from USD 8k/contract. CME lowered crude oil futures NYMEX maintenance margins by 8.8%. (Newswires)

NHC said the Gulf Depression has strengthened into Tropical Storm Hanna. Tropical storm warning has been extended Southward

GEOPOLITICAL

US President Trump and Russia President Putin held a call, according to Russian press; both discussed strategic stability, arms control, and Iran's nuclear programme. (Newswires)

US

POLL: Fox News Poll shows Biden tops Trump in Michigan, Minnesota, Pennsylvania - Michigan: Biden 49% vs. Trump 40%. Minnesota: Biden 51% vs. Trump 38%. Pennsylvania Biden 50% vs. Trump 39%. All three polls were conducted between July 18-20th with an error margins of +/- 3.5 ppts.. (Fox News) Quinnipiac Presidential Poll of Florida: Biden 51% vs. Trump 38%. The poll was conducted between July 16-20th with an error margin of +/- 3.2 ppts. (Quinnipiac)

Trump administration is sending agents to Seattle and expanding on controversial Portland deployment. (NYT)

Apple (AAPL) is reportedly facing a multi-state consumer protection probe, according to Axios. (Axios). House antitrust panel is to eye big tech such as Amazon (AMZN), Apple (AAPL), Facebook (FB) and Google (GOOG). Congressional hearing for CEOs of Amazon (AMZN), Apple (AAPL), Facebook (FB) and Google (GOOG) is poised to be delayed, sources state. (Newswires)

Intel (INTC) Q2 2020 (USD): Adj. EPS 1.23 (exp. 1.11/1.04 reported); Revenue (exp. 18.55bln); 7 nanometer chip process is now trending around 12 months behind target. Client computing group: 9.5bln (exp. 8.91bln) Data center group (DCG): 7.1bln (exp. 6.77bln). Q3 guidance: EPS 1.10 (exp. 1.14/1.07 reported); Revenue 18.2bln (exp. 17.90bln). FY guidance: EPS 4.85 (exp. 4.81/4.48 reported); Revenue 75bln (exp. 73.86bln). Co. shares fell as much as 10% after-market.