• Equities are subdued going into month-end with attention on AMZN (-6.1%) following a disappointing earnings report and guidance; ES -0.6%
• USD has been choppy and pressured for much of the session, though has staged a modest recovery with peers mixed/flat
• US SEC has stopped processing the IPO registrations of Chinese companies, according to sources; while China has cautioned on ride-hailing Cos
• Looking ahead, highlights include US Personal Income, PCE, Canadian GDP, Fed's Bullard
• Earnings from Exxon, Caterpillar, P&G

CORONAVIRUS UPDATE

US President Biden said it is possible a booster will be required in the future although it is not currently needed and the Biden administration said they are open to returning to lockdowns if the CDC advises it. (Newswires)

British holidaymakers in Spain are set to evade quarantine next week after ministers were shown data that revealed there are no beta variant COVID cases in the nation's main tourist areas. (Telegraph)

Japanese PM Suga has announced a state of emergency for four additional prefectures; as expected following Economic Minister Nishimura proposing this. Nishimura also stated it is likely that COVID-19 infections are not at a peak yet and responded that they will take macro-policy steps without hesitation when asked about need for additional stimulus. (Newswires/Nikkei)

Philippines President Duterte is to place capital region under lockdown measures from August 6th-20th to prevent the spread of the Delta variant, while the country extends travel ban on 10 countries including India, Thailand and Indonesia to August 15th. (Newswires)

ASIA

Asia-Pac stocks mostly weakened at month-end with the region occupied by a slew of earnings and data releases, while US equity futures also pulled back after the prior day’s fresh record levels on Wall St. following earnings from Amazon which disappointed on revenue and guidance. ASX 200 (-0.3%) was subdued by underperformance in the defensive sectors and with Origin Energy the worst performer after it flagged significant impairments, although the losses for the index were cushioned by resilience in mining names after further production updates. Nikkei 225 (-1.8%) retreated to its lowest level since early January with the government likely to add four prefectures to the state of emergency and extend the emergency status in Tokyo and Okinawa to August 31st. In addition, the list of worst-performing stocks was heavily dominated by Co.s that recently announced earnings despite some actually reporting improved results, while the mostly better than expected data from Japan including the fastest pace of growth in Industrial Production since July last year, failed to spur risk appetite. Hang Seng (-1.4%) and Shanghai Comp. (-0.4%) were negative as the recent aggressive tech-rebound lost steam which saw yesterday’s best performers in Hong Kong languish at the other end of the spectrum and as Chinese money market rates increase heading into month-end with the PBoC opting again for another tepid increase in its liquidity operations. Notable weakness was also seen in the likes of Sinochem and Sinofert after reports China's state planner summoned key fertilizers firms and warned them regarding hoarding and speculation. Finally, 10yr JGBs failed to benefit from the weakness in stocks and traded flat with demand sapped amid the recent indecisive mood in T-notes and firm Japanese data, as well as the lack of BoJ purchases in the market today.

PBoC injected CNY 30bln via 7-day reverse repos with the rate at 2.20% for a net daily injection of CNY 20bln PBoC set USD/CNY mid-point at 6.4602 vs exp. 6.4596 (prev. 6.4942)

China's NDRC summoned key fertilizers firms for talks and warned them regarding hoarding and speculation, while key fertilizer companies said they are to suspend exports of fertilizer. In other news, China's CBIRC issued rules to clean up non-finance units and businesses of trust firms. (Newswires)

China's housing ministry urged five cities to stabilise their housing markets. (Twitter)

China's Politburo says they will keep economic operations within a reasonable range and maintain stability/continuity. (Newswires)

US is deeply concerned regarding increasingly tough surveillance, harassment and intimidation of American and other foreign journalists in China, according to the State Department. It was also reported that US Republican Senators urged transparency for US-listed Chinese companies and said the SEC needs to act after the DiDi (DIDI) IPO "debacle". (Newswires)

• Japanese Industrial Production MM (Jun P) 6.2% vs. Exp. 5.0% (Prev. -6.5%)
• Japanese Industrial Production YY (Jun P) 22.6% vs Exp. 20.7% (Prev. 21.1%)
• Japanese Retail Sales MM (Jun) 3.1% vs Exp. 2.7% (Prev. -0.4%)
• Japanese Retail Sales YY (Jun) 0.1% vs. Exp. 0.2% (Prev. 8.2%, Rev. 8.3%)
• Japanese Unemployment Rate (Jun) 2.9% vs. Exp. 3.0% (Prev. 3.0%)

US

US Republican Senator Scott said that they need to see the infrastructure bill text and are not going to raise debt. (Newswires)

UK/EU

Optimism is increasing amongst UK government officials regarding prospects for a firm recovery in the economy during H2 with Chancellor Sunak praising data that showed the number of people that received furlough money last month declined by 560k to a total of 1.9mln. In other news, press reports noted that speculation is increasing that Chancellor Sunak will delay the budget until next year after he instructed the spending watchdog to publish new forecasts but refrained from announcing a date for the budget. (FT/The Times)

EU HICP Flash YY (Jul) 2.2% vs. Exp. 2.0% (Prev. 1.9%); X F&E Flash YY (Jul) 0.9% vs. Exp. 0.7% (Prev. 0.9%)

• X F, E, A & T Flash YY (Jul) 0.7% vs. Exp. 0.8% (Prev. 0.9%)

EU GDP Flash Prelim QQ (Q2) 2.0% vs. Exp. 1.5% (Prev. -0.3%); YY (Q2) 13.7% vs. Exp. 13.2% (Prev. -1.3%)

• German GDP Flash QQ SA* (Q2) 1.5% vs. Exp. 2.0% (Prev. -1.8%)
• French GDP Preliminary QQ (Q2) 0.9% vs. Exp. 0.8% (Prev. -0.1%)
• Italian GDP Prelim QQ (Q2) 2.7% vs. Exp. 1.3% (Prev. 0.1%, Rev. 0.2%)

GEOPOLITICAL

Chinese President Xi reportedly vowed efforts to defend, consolidate and develop ties with North Korea, according to reports in Yonhap citing North Korean state media. (Yonhap)

United Kingdom Marine Trade Operations said it received reports of a vessel being attacked off the coast of Oman which it is investigating and described the attack as non-piracy. (Newswires)

EQUITIES

The downside pressure across European bourses and futures has lessened in intensity, albeit the region remains largely in the red (Stoxx 500 -0.5%) as the negative APAC sentiment seeped into Europe as traders tee up for month-end. The mood was also hit by Amazon (-6% pre-market) slumping some 7.5% after earnings as the behemoth (accounting for around 5% and 10% of the SPX and NDX respectively) warned of headwinds as COVID restrictions are lifted. US equity futures trade with varying degrees of losses, with the YM (-0.3%) performing better than its ES (-0.7%), RTY (-0.5%) and NQ (-1.1%) peers. Back to Europe, earnings have remained in focus, with varying degrees of losses are seen across the bourses, with the CAC 40 (-0.4%) losses cushioned by earnings-related gains in EssilorLuxottica (+3%), L’Oreal (+0.4%) and BNP Paribas (+0.3%). Sectors are predominantly in the red, although Banks outperform as UniCredit (+5.1%) and BBVA (-0.1%) reported alongside BNP, with the former also entering exclusive talks to purchase some parts of BMPS (+7.5%) with the two sides have agreed on a framework for a potential deal. However, terms have not been agreed. Elsewhere, Deutsche Telekom (-0.7%) gave up the opening gains seen on the back of T-Mobile’s metrics, with Deutsch Telekom a 43% stakeholder of the latter. For full details of the pre-market earnings, please refer to the European Equity Opening News and Additional Equity Stories. Finally, Iliad (+60%) shares spiked higher at the open and held onto gains as Xavier Niel, the controlling shareholder with a stake of 70.65%, is launching a simplified public tender offer for the Co. at EUR 182/shr, representing a 61% premium from Thursday’s close. The offer has been unanimously favourably received by the board.

Amazon (AMZN) - Q2 2021 (USD) EPS 15.12 (exp. 12.30), Revenue 113.10bln (exp. 115.20bln). Q3 guidance beneath expectations. AWS net sales USD 14.81bln (exp. 14.18bln). Online stores net sales USD 53.16bln (exp. 56.71bln). Q3 2021 Revenue View: 106bln-112bln (exp. 118.89bln). Q3 2021 Operating Income View 2.5-6.0bln (exp. 8.1bln). CFO said the Co. sees a step down in revenue growth continuing for the next few quarters due to lapping growth from pandemic and additional mobility among customers (businesswire/Newswires) -6.2% in premarket trade. [4.9% SPX weight, 10.1% NDX weight]

Chevron Corp (CVX) Q2 2021 (USD): Adj. EPS 1.71 (exp. 1.59), Revenue 37.6bln (exp. 35.94bln); Co. resumes its share buyback.

US SEC has stopped processing the IPO registrations of Chinese companies, according to sources; as it generates new guidance for disclosing to investors the risk of a new regulatory crackdown by Beijing. (Newswires)

China is to increase its anti-monopoly supervision of ride hailing companies; follows the Transport Ministry saying that some online ride hailing companies are infringing the rights of drivers. (Newswires)

Binance says it is going to wind down its futures and derivatives product offerings across Europe. Users in Germany, Netherlands and Italy will not be able to open new futures or derivatives product accounts; effective immediately. (Newswires)

FX

USD - Aside from mild selling for month end via Citi’s rebalancing model, the signs are looking more and more ominous for the Greenback, technically if not fundamentally beyond the dovish leanings of this week’s FOMC relative to market expectations. Indeed, after a pretty tame bounce to barely above the 92.000 mark, the DXY has retreated even further to register a new low for the week and July, at 91.775, and bears will now be eyeing 91.699 from June 29 ahead of 91.500. However, the Dollar may yet get a late reprieve via PCE data as the Fed’s preferred measure of inflation, comments from known hawk Bullard and/or the Chicago PMI as a proxy for the manufacturing ISM.

GBP/EUR/NZD/AUD/CAD - Sterling is among those setting the pace in the race to extract most from the Buck’s demise, but could remain capped into 1.4000 having stalled just shy of the 50 DMA not far under the round number yesterday, while the Euro has now absorbed offers standing in the way of 1.1900, though could be hampered by multi-billion option expiries stretching from 1.1850 to 1.1920. Elsewhere, the Kiwi and Aussie are back above 0.7000 and around 0.7400 respectively after reversing overnight amidst broader risk aversion, with the former drawing encouragement from a solid recovery in NZ building consents and latter piggy-backing the Yuan’s ongoing revival to best levels seen since late last month. Similarly, the Loonie has rebounded through 1.2450 alongside WTI recouping losses from sub-Usd 73/brl, and is now looking towards Canadian GDP, PPI and budget balances for some independent impetus.

CHF/JPY - The Franc is probing 0.9050 and poised to gather more momentum if sentiment really deteriorates, while the Yen has breached 100 DMA resistance at 109.60 in wake of mostly better than expected Japanese data in the form of ip, retail sales and unemployment, but is holding beneath 109.50 following Japanese PM Suga declaring a state of emergency for four additional prefectures, in line with earlier reports.

SCANDI/EM - No change in Norges Bank daily currency purchases planned for August, but the Nok has come unstuck regardless of Brent’s bounce on the back of a surprise rise in Norway’s registered jobless rate. Conversely, the Try has been bolstered by a narrower Turkish trade deficit and the Zar is firmer against the backdrop of Gold forming a base above the 200 DMA and staying on track to record its best week in over two months.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1850 (1.5BLN), 1.1865-75 (1.2 BN), 1.1900 (1.3BLN), 1.1910-20 (700M)

FIXED

Notwithstanding the firm and flatter line that persists in US Treasuries, Bunds and Gilts have flattered to deceive once more following initial and early upside flurries to set a fresh week and month best in the case of the 10 year German benchmark. Indeed, after peaking at 176.73 it has been largely one-way price evolution on Eurex to a 176.29 trough, thus far, while the equivalent UK debt future has recoiled from 129.86 to 129.69 in the run up to a busy pm agenda including PCE inflation metrics and remarks from Fed hawk Bullard in the first official post-FOMC speech.

COMMODITIES

WTI and Brent front month futures are choppy, after earlier trimming their APAC losses and briefly breached USD 73.50/bbl and USD 75/bbl respectively to the upside from overnight bases of USD 72.93/bbl and USD 74.39/bbl. New flow for the complex has remained light heading into month-end and with most of the risk events out of the way barring today’s PCE. On the geopolitical front, it’s worth keeping on the radar reports of an oil tanker linked to an Israeli billionaire reportedly coming under attack off the coast of Oman – although details remain light and motives unknown. Alongside sentiment, participants will likely home in on demand-side developments in the absence of notable supply-side events until around the second week of August. Iranian nuclear talks are expected to resume after Raisi is sworn in as Iran’s President on August 5th, whilst OPEC+ will keep an eye on the macro environment in the run-up to its September 1st decision-making meeting – with the JTC. Next week’s focus will fall on the inventory data for expected drawdowns ahead of the US labour market report. Elsewhere, spot gold and silver trade sideways as traders keep some powder dry for today’s US PCE metrics – with the former meandering around its 50 DMA around 1,828/oz. LME copper meanwhile remains subdued amid the sullied risk tone, albeit the red metal trades north of USD 9,750/oz.

Workers at Codelco's Andina copper mine in Chile voted to strike. (Newswires)