• APAC stocks traded lower across the board following the losses on Wall Street; S&P 500 -1.2%, Nasdaq -2.2%.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future -0.4% after the cash market closed lower by 0.8% yesterday.
• DXY remains firm above 99.50 (fresh YTD highs), JPY lags with USD/JPY above 124 at one stage, EUR/USD hovers around 1.09.
• ECB's Wunsch said the ECB's inflation target is essentially met and expects the deposit rate to be raised to zero by year end.
• Looking ahead, highlights include FOMC Minutes, ECB's Lane, Schnabel, Panetta, de Guindos, Fed's Harker.

US TRADE

• US stocks trundled lower throughout the US session with the tech-heavy Nasdaq hit the hardest amid the surge in yields.
• SPX -1.19% at 4,528, NDX -2.24% at 14,820, DJIA -0.80% at 34,641, R2K -2.22% at 2,045.

Click here for a detailed summary.

NOTABLE US HEADLINES

• EU Commission wants large online platforms to pay an annual supervisory fee of up to 0.1% of their global net income under new tech rules, according to an EU document, according to Reuters.
• JetBlue (JBLU) reportedly bids USD 3.6bln or USD 33/shr to acquire Spirit Airlines (SAVE), according to NYT.
• US Democratic Senator Sinema has told donors a path to revival for Build Back Better is unlikely, according to Axios.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

• Russia's Foreign Minister Lavrov said the West is trying to derail talks between Russia and Ukraine by fuelling hysteria over Bucha, according to Ria. He added that agreements with Ukraine should completely rule out NATO's expansion to the east, according to Interfax.

DEFENCE/MILITARY

• The US will send an additional USD 100mln in Javelin anti-tank missiles to Ukraine, according to NBC sources. The amount was confirmed by Secretary of State Blinken.
• Military sources cited by The Times suggested the UK plans to develop its own hypersonic missile, the plan would be accelerated by the AUKUS pact.
• Russian Defence Ministry said its forces will "liberate" Mariupol from Ukrainian nationalists, according to Ria.
• China's Ambassador to the UN said the reports and images of civilian deaths in Bucha are very disturbing, relevant circumstances and specific causes of the events must be verified and established, according to Reuters.

ENERGY/ECONOMIC SANCTIONS

• White House said sanctions expected to be announced on Wednesday related to Russia; aim is to make Russia choose between default and drain remaining Dollar reserves, according to Reuters.
• Russia's Sberbank is among banks being considered for tightened sanctions by US President Biden's administration, according to Reuters.

OTHER

• China's UN Envoy, in response to US/UK/Aus hypersonic weapons deal, warned against "things which may lead other parts of world into crisis" like Ukraine, via Reuters.
• EU's Foreign Affairs Chief Borrell said last week's EU-China summit was a "dialogue of the deaf", according to SCMP.

CENTRAL BANKS

• Fed's Daly (2024 voter) said the labour market is extremely tight and Fed is on a path to raise interest rates. She does not expect a big slowdown in US economy due to high oil prices. She said the Fed can begin balance sheet reduction as early as May meeting and will use balance sheet reductions as well as rate hikes to reduce policy accommodation. "We'll be able to get inflation moving down by end of year, but no recession", according to Reuters.
• ECB's Lane said maybe by mid-year we will see the peak on inflation, but it depends on the war. The momentum of inflation will slow down, so thinks that in the second half of the year the inflation rate will come down. "We do think it will be a lot lower next year and the year after." Lane expects to see a slowdown in the economy, but economy will still grow this year, via ECB.
• ECB's Wunsch said the inflation target is essentially met and expects the deposit rate to be raised to zero by year end. He said the ECB's rate could rise to 1.5-2% in the longer term, but caveat that even within the ECB there has been no discussion about raising interest rates, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded lower across the board following the losses on Wall Street; Mainland China returned from its long-weekend.
• ASX 200 conformed to the downbeat tone which isn’t helped by the RBA’s hawkish hold yesterday
• Nikkei 225 saw most of its construction and machinery-related names with losses.
• KOSPI was pressured by its large tech exposure.
• Hang Seng was also weighed on by its tech exposure as yields continued to rise overnight.
• Shanghai Comp returned for the first time this week following its domestic holiday and saw less pronounced losses, with the Real Estate sector feeling relief from reports that over 60 Chinese cities ease policies on housing purchases to support the market.
• US equity futures held a downside bias and the NQ narrowly underperformed.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future -0.4% after the cash market closed lower by 0.8% yesterday.

FX

• DXY remained over 99.50 as yields continued rising, with the index hitting an overnight high of 99.640.
• EUR/USD briefly dipped under 1.0900 ahead of the YTD low of 1.0804.
• GBP/USD traded relatively flat after finding support around 1.3050
• Antipodeans were lacklustre throughout the session as upside remained capped by the soured APAC mood.
• JPY continued to weaken due to yield differentials with the US; USD/JPY briefly topped 124.00, whilst some desks noted of Japanese exporter offers around the psychological level.

FIXED INCOME

• 10yr UST futures edged lower in a continuation of the US action, whilst the corresponding cash yield rose to an APAC high of exactly 2.62%
• APAC yields rose in tandem, with the 10yr JGB yield hitting a high of 0.23% vs the BoJ’s 0.25% cap.
• Bund futures conformed to the selling across the debt complex.

COMMODITIES

• Crude clambered off worst levels despite the surprised build in the weekly Private Inventories.
• US Private Energy Inventory Data (bbls): Crude +1.08mln (exp. -2.1mln), Cushing +1.791mln, Gasoline -0.543mln (exp. +0.1mln), Distillate +0.593mln (exp. -0.8mln).
• Gas flows via Yamal-Europe pipeline resume eastward, according to Gascade data, according to Reuters.
• Spot gold remained caged in a tight range overnight.
• LME 3M copper fell amid the soured risk tone and prices receded further below USD 10.5k/t.

CRYPTO

• Crypto markets experienced sudden selling and thereafter a recovery in which Bitcoin briefly fell under USD 45k.
• US Treasury Secretary Yellen to deliver speech on digital assets on Thursday, according to Reuters.

NOTABLE APAC HEADLINES

• China's Shanghai City says it will remain in lockdown until city-wide mass COVID testing (due to start Apr 6) is complete; results will be used to assess whether an extension to the lockdown is needed.
• China's Shanghai city reports 16,766 new asymptomatic COVID cases for April 4th (vs 13,086 for April 4th).
• Over 60 Chinese cities ease policies on housing purchases to support market, according to Global Times.
• PBoC set USD/CNY mid-point at 6.3799 vs exp. 6.3793 (prev. 6.3509 on Friday).
• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 440bln net drain

DATA RECAP

• Chinese Caixin Services PMI (Mar) 42 (Exp. 49.7, Prev. 50.2); Composite 43.9 (Prev. 50.1).