Newsquawk

Euro Market Open: Mixed APAC trade following a firmer US close pre-CPI

10 Feb 2022, 06:54 by Newsquawk Desk

US stocks closed higher with the Nasdaq leading the advances amid a tech/growth bias; S&P 500 +1.43%, Nasdaq 100 +2.10%
Asian stocks traded mixed as participants digested another deluge of earnings and US-China frictions
European futures are indicative of a slightly higher open with the Eurostoxx 50 future up by 0.2% after the cash market closed higher by 1.8% yesterday
DXY traded flat above 95.50 and lacked firm direction ahead of today’s CPI data
EUR unfazed by reports suggesting that ECB officials are said to distrust inflation forecasts
Looking ahead, highlights include US CPI, Initial Jobless Claims, Chinese M2, Banxico & Riksbank Policy Announcements, Speeches from BoE's Bailey, ECB's Lane, Elderson and de Guindos, Fed's Barkin, US supply
Earnings from PepsiCo, Coca-Cola, Phillip Morris, Kellogg, Twitter, Credit Agricole, Delivery Hero, Nexi, AstraZeneca, Unilever, Credit Suisse and Zurich Insurance

Click here for the Week Ahead preview

CLOSES: S&P 500 +1.43% at 4,586, Nasdaq 100 +2.10% at 15,057, Dow Jones +0.86% at 35,768, Russell 2000 +1.57% at 2,080.
US stocks closed higher with the Nasdaq leading the advances amid a tech/growth bias and as some of the recent bond selling pressure eased.

NOTABLE US HEADLINES

Fed's Mester (2022, 2024 voter) does not see a compelling case to start with a 50bps rate hike and expects inflation to moderate but remain above 2% this year and next. Mester added that high levels of inflation and tightness in labour markets make a compelling case to begin recalibrating the stance of monetary policy and that conditions warrant that the Fed start balance-sheet reductions soon and go at a faster pace, while she would support selling some mortgage-backed securities at some point during the balance sheet reduction, according to Reuters.
Boston Fed named University of Michigan's Susan Collins as President who will be a 2022 FOMC voter starting in July, according to Reuters.
White House Economic Adviser Deese sees reason to think factors boosting inflation will moderate over time, while he said the US is seeing a strong labour market recovery and have recovered about 60% of the decline from the pandemic, according to Reuters.
US Senator Shelby said an agreement has been reached on a spending bill, according to Reuters.

Asian stocks traded mixed as participants digested another deluge of earnings and US-China frictions.
ASX 200 (+0.3%) was supported by tech and with financials boosted after AMP and NAB reported higher H1 profits.
Nikkei 225 (+0.5%) finished off highs with the index swayed by a choppy currency and numerous earnings.
Hang Seng (-0.2%) and Shanghai Comp. (-0.3%) were subdued after Hong Kong reported its first COVID death in five months, while Biden administration is said to mull trade actions on China.
Nifty 50 (+0.7%) was initially choppy heading into the RBI decision but was then lifted after the central bank kept the Repurchase Rate at 4.00% and unexpectedly maintained the Reverse Repo Rate at 3.35%.
US equity futures faded some of the prior session's gains; E-mini S&P -0.2%, E-mini Nasdaq 100 -0.3%.
European futures are indicative of a slightly higher open with the Eurostoxx 50 future up by 0.2% after the cash market closed higher by 1.8% yesterday.

DXY traded flat above 95.50 and lacked firm direction ahead of today’s CPI data.
EUR/USD was contained after a recent pullback from resistance near 1.1450 and despite reports of an increasing number of ECB officials losing trust regarding inflation forecasts which is emboldening their transition towards hiking.
GBP/USD languished at the prior day’s lows following the recent less hawkish tone from BoE’s Chief Economist Pill.
USD/JPY was choppy amid the mixed risk appetite overnight.
Antipodeans were uneventful amid a lack of tier 1 data releases and mixed risk appetite.

10-year USTs remained lacklustre after fading some of yesterday’s gains from a solid 10yr offering, with price action quiet overnight as participants look ahead to the highly-awaited US CPI data.
10-year JGBs were subdued as the 10yr yield sat around 6-year highs and with pressure seen following an uninspiring enhanced liquidity auction for longer-dated JGBs.
Bund traded steadily after its recent rebound was stalled by resistance at 166.00

WTI and Brent were rangebound amid the mixed risk tone and after WTI failed to retain USD 90/bbl level.
White House said President Biden and Saudi King spoke about commitment to ensure stability of global energy supplies, while Energy Intel noted that Saudi's King Salman stressed importance of maintaining balance and stability in oil markets, highlighting importance of maintaining the OPEC+ agreement.
Iraq said talks are ongoing with Qatar to import gas, according to Reuters.
Spot gold traded sideways amid an uneventful dollar ahead of US CPI data.
Copper remained afloat after the prior day's rally.

CRYPTO

NOTABLE APAC HEADLINES

PBoC injected CNY 20bln via 7-day reverse repos with the rate at 2.10% for a CNY 180bln net drain
PBoC set USD/CNY mid-point at 6.3599 vs exp. 6.3618 (prev. 6.3653)
RBI kept the Repurchase Rate unchanged at 4.00% and maintained accommodative policy stance, as expected, but also surprisingly held the Reverse Repo Rate at 3.35% (exp. 20bps increase). RBI Governor Das said the MPC flagged potential downside risks to activity from Omicron and they are seeing some loss of momentum for economic activity, while the MPC was of the view that continued policy support is warranted for a durable and broad-based recovery.

More ECB officials are said to distrust inflation forecasts which is emboldening their transition towards hiking this year, according to Bloomberg sources.
EU draft outlook sees EU GDP at 4% in 2022 and 2.7% in 2023, while it sees CPI at 3.5% in 2022 and 1.7% in 2023, according to Reuters.

DATA RECAP

UK ordered 1000 troops to be in a state of readiness to provide humanitarian support if a crisis is caused by Russian aggression against Ukraine, according to Reuters.
US Pentagon said it has seen additional Russian military capabilities on the Russia-Ukraine border within the last 24 hours, according to Reuters.
White House said talks with Iran have reached an urgent point and it will be impossible to return to Iran nuclear talks, if deal not reached in coming weeks, according to Reuters.
Saudi King Salman told US President Biden the kingdom supports efforts to prevent Iran from acquiring nuclear weapons and stressed importance of strengthening joint security cooperation in combating and financing terrorism, according to Reuters.
South Korea President Moon said new North Korean nuclear and long range missile tests would instantly cause a crisis, while he added that summit between US President Biden and North Korean Leader Kim is only a matter of time if tensions are to be averted and is open to a virtual inter-Korean summit, according to Reuters and Yonhap.