Newsquawk

Euro Market Open: APAC trade buoyed on a firmer US handover

16 Feb 2022, 06:55 by Newsquawk Desk

US stocks finished with firm gains across the board; Russell 2000 and Nasdaq led the gains
APAC stocks traded higher following the optimism seen in European and US peers
Chinese PPI and CPI Y/Y printed below expectations and both cooled from the prior
US President Biden said an invasion of Ukraine is still a possibility; the US has not yet verified the Russian troop withdrawal
ECB's Villeroy said APP could end in Q3; ECB’s Schnabel said house prices cannot be ignored when assessing inflation
Looking ahead, highlights include Canadian & UK CPI; EZ Industrial Production, US Retail Sales, Export/Import Prices, Japanese Trade Balance, FOMC Minutes, ECJ Rule of Law Judgement, Fed’s Kashkari, supply from Germany and US; Earnings from Heineken, Swedish Match, Carrefour; Barrick Gold, Garmin, Shopify, NVIDIA

US stocks finished with firm gains across the board as the easing of geopolitical fears resulted in a relief rally.
CLOSES: S&P 500 +1.6% at 4,471, Nasdaq 100 +2.5% at 14,620, Dow Jones +1.2% at 34,988, Russell 2000 +2.7% at 2,073.

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NOTABLE US HEADLINES

US Senate Banking Committee Chair Brown confirmed they will delay votes on Fed nominees yesterday, according to Reuters.
US President Biden said he is working to bring down the cost of food and gasoline prices, according to the White House.
US CDC lowered its COVID alert level for cruise ships to "High" from "Very High", according to Reuters.

APAC stocks traded higher following the optimism seen in European and US peers yesterday.
ASX 200 was kept afloat by its Healthcare sector, although gains were capped by losses in Energy and Metal names.
Nikkei 225 and KOSPI both benefitted from a strong tech sector, whilst the former also benefits from favourable Yen dynamics.
Hang Seng and Shanghai Comp. conformed to the regional gains, although the latter lacks momentum after a daily PBoC drain and following yesterday’s maintained MLF rate – which likely means the February LPRs will also be held.
US equity futures were subdued overnight with mild broad-based losses seen across the contracts heading into the European open.
European equity futures are indicative of a modestly firmer open with the Eurostoxx 50 future +0.2% after the cash market closed high by 2.0% yesterday.

DXY edged towards the top end of a tight range during APAC hours and reclaimed a footing above 96.000.
EUR/USD and GBP/USD saw a mild divergence but both pairs remained contained.
USD/JPY held above 115.50 with some also mentioning several option expiries across the 115-handle.
AUD and NZD were lacklustre as another decline in iron ore prices kept the Aussie grounded.
EM FX pairs were relatively uneventful, with the CNH also unfazed by below-forecast Chinese inflation.

10yr UST and Bund futures drifted marginally higher overnight following the prior session’s bear-steepening on the back of diminishing heaven demand.
JGB futures played catch-up to yesterday’s western bond action.

WTI and Brent consolidated following yesterday's losses; the former traded on either side of USD 92/bbl and the latter on both sides of USD 93/bbl.
Spot gold traded sideways just above USD 1,850/oz after falling from a 1,879/oz high yesterday. Dalian iron ore futures opened lower by some 3% as China’s crackdown kept the industrial metal under pressure.
US Private Inventory Data (bbls): Crude -1.1mln (exp. -1.6mln), Cushing -2.4mln, Gasoline -0.9mln (exp. +0.6mln), Distillates -0.5mln (exp. -1.5mln).

Bitcoin pulled back from highs and fell back into yesterday's range.
US SEC reportedly opened an investigation into the relationship between the US arm of Binance and two trading firms with links to Binance's founder, according to WSJ citing people familiar with the probe.

NOTABLE APAC HEADLINES

PBoC injected CNY 10bln via 7-day reverse repos at a maintained rate of 2.10% for a daily drain of CNY 10bln
PBoC set USD/CNY mid-point at 6.3463 vs exp. 6.3492 (prev. 6.3605)

DATA RECAP

ECB's Villeroy said keeping net asset purchases open-ended from October would not be appropriate and APP purchases could end in Q3 and a decision on hikes is not needed before the June meeting. Past the horizon of a few months, state-contingent forward guidance is more preferable than ever. Villeroy said another way to enhance optionality could be to remove the word "shortly" from the forward guidance on asset purchases, and optionality would mean that lift-off could possibly take more time if warranted, via Reuters.
ECB's Schnabel said the ECB cannot ignore the surge in house prices when assessing inflation. She said including the rise in costs of home ownership in the EZ benchmark pricing figure would've added 0.6ppt to Q3 core inflation of 1.4% - taking it to the ECB's target, according to the FT.
PBOC Governor Yi Gang expects China's economic growth to return to potential this year; China will keep accommodative monetary policy flexible, according to Reuters.
Chinese press suggests the PBoC LPR will be maintained in February.

US President Biden said a Russian attack on Ukraine is still a possibility, Biden and Putin both agree they should engage in negotiations; have not yet verified whether some Russian troops are pulling back. There are now more than 150,000 Russian troops encircling Ukraine and Belarus. Washington will not send US Troops to fight in Ukraine. If Russia attacks through cyber attacks or other asymmetrical means, US and allies will respond, according to the White House.
US ambassador to UN said has not seen evidence yet of any Russian troop pullback near Ukraine, adds Russian pullback of troops would be welcome news if legitimate, according to Reuters.
Russia does not plan to move its embassy in Ukraine from Kiev, a source told Sputnik.
Russian President Putin said Russia has been told Ukraine will not become a NATO member in the near future but that assurance does not satisfy him, wants the issue to be settled now or in the near future through a negotiating process, according to WaPo.
NATO frigates tried to conduct electronic reconnaissance of Russian ships in the Mediterranean, according to Sputnik
French President Macron is to speak with Chinese President Xi on Wednesday, according to an Elysee official.
G7 finance ministers' meeting delayed to March 1st, according to Reuters sources.
Iranian Foreign Minister said the US failed to address Iran's demands regarding guarantees that no party will be able to abandon the nuclear deal, according to FT.