• APAC stocks traded cautiously after a soft close on Wall St. which saw the S&P 500 finish the session lower by 1.3%.
• The US will announce a package of sanctions designations on Russian political figures and oligarchs on Thursday.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 future up 0.2% after the cash market closed lower by 1.5% yesterday.
• DXY remains underpinned but sub-99.00, EUR/USD slipped below 1.10 and USD/JPY notched a fresh recent high at 121.48.
• Looking ahead, highlights include EZ, UK & US Flash PMIs, US IJC & Durable Goods, Policy Announcements from Norges Bank, SNB & SARB, Extraordinary NATO Summit & EU Council Meeting, Speeches from Fed's Waller, Evans, Bostic & Kashkari, ECB's Elderson.

US TRADE

• US stocks declined with broader market risk-aversion, accentuated by the latest rally in oil prices and further hawkish Fed rhetoric.
• S&P 500 -1.3% at 4,455, Nasdaq 100 -1.4% at 14,448, Dow Jones -1.3% at 34,359, Russell 2000 -1.7% at 2,052.

NOTABLE US HEADLINES

• Fed's Bullard (2022 voter, 50bp dissenter) said direct macroeconomic effects on the US economy from Russia's invasion are not that large and it could easily be that Europe is pulled into recession as a result of the war. Bullard also said they can run down the balance sheet faster than last time and could look at selling assets later if they have to.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• UK PM Johnson told Ukrainian President Zelenskiy that he intends to use Thursday's G7 and NATO meetings to increase pressure on Putin's regime and work with partners to substantively increase lethal aid to Ukraine.

DEFENCE/MILITARY

• UK is to supply 6,000 missiles to Ukraine and GBP 25mln to help pay salaries of Ukrainian soldiers and pilots, while Sputnik found documents on the UK training Ukrainian soldiers for fighting in Donbass.
• The mayor of Mariupol, Ukraine has left the city, according to RIA. There were separate comments from a US official that Mariupol remains contested with Russia digging in and taking defensive positions.
• US senior defence official said there is no indication that the Belarusian military is preparing to join the war in Ukraine, according to VOA News.
• US senior Pentagon official said the Defense Secretary does not rule out the possibility of sending additional troops to reinforce NATO, according to Al Jazeera.
• Russian Foreign Ministry told the US that any hostile actions against Russia will provoke a decisive response, according to Interfax.
• Japan's government is considering announcing additional humanitarian aid of USD 100mln to Ukraine at the G7 and is considering doubling emergency loans to Ukraine to USD 200mln, while Japan is also looking into dispatching self-defence force medical officers to support Ukraine refugees, according to NHK.

ENERGY/ECONOMIC SANCTIONS

• US National Security Adviser Sullivan said the US will announce a package of sanctions designations on political figures and oligarchs on Thursday, while the US assesses that members of Russian forces have committed war crimes in Ukraine. Sullivan added that sanctions and China will be discussed in Biden's meeting with the European Council.
• The White House held off from sanctioning Russian Oligarch Abramovich as Ukraine President Zelenskiy advised President Biden to wait as he might be an important go-between with Russia in helping to negotiate peace, according to WSJ.
• Russian Deputy PM Novak said Europe not buying gas won't cause an apocalypse, according to Tass.
• US Senator Cornyn met with Treasury Secretary Yellen to discuss Russian gold sanctions.

OTHER NEWS/REMARKS

• Russian President Putin's risk of a coup by Russian security services is increasing every week, according to a whistleblower cited in The Times, who noted discontent in the FSB since the "botched" Ukraine invasion.
• US Embassy in Russia received a list of diplomats declared persona non grata from the Russian Foreign Ministry, while the US called on Russia to end the expulsion of US diplomats and staff.
• Australian PM Morrison said he raised concerns about the possibility of Russian President Putin attending the G20 meeting in Indonesia in November.
• Anonymous collective tweeted it hacked the Central Bank of Russia and that files will be released within 48 hours with secret agreements.

FUND/SOVEREIGN ACTION

• Fitch announced it is to withdraw ratings on Russian entities.
• Morningstar Indexes said it will reclassify Belarus from emerging market status to unclassified and will remove Belarusian securities at the price of zero at March 31st rebalancing. Furthermore, Russian and Belarusian securities will remain ineligible for all Morningstar fixed income indexes until further notice and that Russian securities will be removed at a price of zero on March 31st for all fixed income indexes.

OTHER

• North Korea fired an unidentified projectile off the east coast, according to the South Korean military, while Japan's coast guard suggested it may be a ballistic missile.

APAC TRADE

EQUITIES

• APAC stocks traded cautiously after the losses in global peers as rising oil prices stoked growth concerns and with sentiment not helped by further hawkish Fed rhetoric.
• ASX 200 recouped early losses as energy the sector and mining stocks cheered recent commodity gains.
• Nikkei 225 initially retreated below 28k but then saw a late rebound to keep its winning streak intact.
• Hang Seng and Shanghai Comp. conformed to the risk-averse mood after the PBoC drained liquidity and amid weakness in tech, with the worst-performing stocks in Hong Kong dragged lower by recent earnings.
• US equity futures nursed some of the prior day's losses; ES +0.4%
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 future up 0.2% after the cash market closed lower by 1.5% yesterday.

FX

• DXY was underpinned by the risk aversion and after continued hawkish Fed rhetoric.
• EUR/USD gave up the 1.1000 handle again amid a firmer greenback and the rate differential dynamic.
• GBP/USD trades on the backfoot below 1.32 following yesterday's Spring Statement.
• USD/JPY was kept afloat above 121.00 despite the cautious risk tone and outdated BoJ minutes.
• Antipodeans were lacklustre amid the subdued overnight sentiment and as commodities slightly eased.

FIXED INCOME

• 10yr USTs pulled back after yesterday’s bull flattening and strong 20yr bond auction.
• Bunds faded some of yesterday's gains and dipped beneath 160.00
• 10yr JGBs were subdued amid slightly softer demand at the enhanced liquidity auction for up to 20yr JGBs.

COMMODITIES

• WTI and Brent took a breather from the recent rally spurred by the CPC pipeline damage.
• Eastbound gas flows via Yamal-Europe pipeline from Germany to Poland declined, according to Gascade.
• Spot gold was restricted amid a firmer dollar.
• Copper traded sideways near yesterday's best levels.

CRYPTO

• Bitcoin was indecisive overnight with price action choppy around the USD 43,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 20bln via 7-day reverse repos with the rate at 2.10% for a CNY 60bln net drain
• PBoC set USD/CNY mid-point at 6.3640 vs exp. 6.3635 (prev. 6.3558)
• USTR determined to reinstate 352 of 549 eligible product exclusions under consideration from China section 301 tariffs and will be effective retroactively from Oct 12th, 2021 through Dec 31st, 2022.
• US Commerce Secretary Raimondo said the US is absolutely prepared to enforce US export controls if Chinese semiconductor makers send chips with US tech to Russia and enforcement tools could cause severe consequences to Chinese firms and essentially shut them down.
• Singapore PM Lee announced to double group sizes to 10 and that wearing masks outdoors will now be optional, while they will lift most restrictions for fully vaccinated visitors entering Singapore and the Transport Minister said that all fully vaccinated travellers will be permitted to enter quarantine-free from April 1st.
• BoJ minutes from the January meeting noted that members said they will not hesitate to add easing if necessary and a member noted that easing was still needed as inflation expectations are not anchored yet

DATA RECAP

• Japanese Manufacturing PMI (Mar P) 53.2 (Prev. 52.7)
• Japanese Services PMI (Mar P) 48.7 (Prev. 44.2)
• Japanese Composite PMI (Mar P) 49.3 (Prev. 45.8)
• Australian Manufacturing PMI Flash (Mar) 57.3 (Prev. 57.0)
• Australian Services PMI Flash (Mar) 57.9 (Prev. 57.4)
• Australian Composite PMI Flash (Mar) 57.1 (Prev. 56.6)