Newsquawk

Euro Market Open: Futures are firmer after a similar APAC handover, ECB & earnings ahead

14 Apr 2022, 06:50 by Newsquawk Desk

APAC stocks were mostly positive after the gains on Wall St which saw the NQ outpace peers with gains of 2%.
Bank of Korea unexpectedly raised its Base Rate by 25bps to 1.50% with the decision unanimous.
European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed lower by 0.1% yesterday.
DXY remains sub-99, EUR/USD reclaimed 1.09, NZD leads in the G10 FX space.
Looking ahead, highlights include US IJC, Retail Sales, Business Inventories & Uni. of Michigan (Prelim.), ECB & CBRT Policy Announcements, ECB’s Lagarde, Fed’s Harker & Mester, Earnings from Morgan Stanley, Goldman Sachs and UnitedHealth.

US TRADE

US stocks gained on Wednesday to snap a three-day losing streak with Nasdaq rallying 2% led by advances in Tech as large caps were supported by lower yields across the curve, which led to outperformance in growth vs value.
SPX +1.13% at 4,447, NDX +1.99% at 14,217, DJIA +1.01% at 34,564, R2K +1.86% at 2,023.

Click here for a detailed summary.

NOTABLE US HEADLINES

Fed's Waller (voter, hawk) said high inflation in CPI report was not surprising and is pretty much the peak, while he said the Fed will continue with its plan for rate hikes and reducing accommodation to get inflation under control. Waller reiterated that data supports 50bps and he prefers a 50bps rate hike in May with possibly more in June and July, while he wants to get above neutral by the latter half of this year and said they can get prices down without causing a recession, according to Reuters and CNBC.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

US tried to reach US Defence Secretary Austin's Russian counterpart although there was no interest from Russia to talk, according to Reuters.
US is said to be mulling sending a high-level official to Kyiv, Ukraine to meet with President Zelensky, according to Politico.

DEFENCE/MILITARY

Ukrainian President Zelensky's Chief of Staff said Russia is talking about possible missile strikes on Kyiv and that Ukraine is ready, according to Al Jazeera.
Ukraine's armed forces command stated that Russian forces are ready to attack in Donetsk and Kherson regions, according to Reuters.
Russia said if attacks on Russian territory continue, then Russian forces will strike at the places where such decisions are made including Kyiv, according to RIA.
Russia said its Moskva missile cruise ship was seriously damaged following an ammunition explosion while the crew were evacuated and the cause of the fire that prompted the explosion is being investigated, according to Interfax. It was earlier claimed that Ukrainian forces hit the ship with missile strikes, according to AFP.
US President Biden said the US is authorising an additional USD 800mln in weapons, ammunition and other security assistance to Ukraine, while the military package will contain many of the weapon systems the US has already provided as well as new capabilities. It was also reported that the White House said the legal process determining genocide in Ukraine will be undertaken, according to Reuters.
US is moving to "significantly" expand the intelligence it is providing to Ukraine’s forces so they can target Moscow’s military units in Donbas and Crimea and potentially take back territory, according to WSJ citing officials.

ENERGY/SANCTIONS

Russia is imposing sanctions on 398 members of the US House of Representatives and 87 Canadian Senators, according to Reuters.
White House said secondary sanctions and targeting of additional financial firms are among the range of potential sanctions that remain aimed at Russia, according to Reuters.
Top oil traders are to cut oil purchases from Russia's Rosneft from May 15th due to EU and Swiss financial sanctions forbidding purchases for non-critical European needs, according to Reuters sources.

FUND/OTHER

Russia's government will conduct discussions on Thursday regarding subsidies for airlines and airports to help them cope with western sanctions, according to Reuters.

APAC TRADE

EQUITIES

APAC stocks were mostly positive after the gains on Wall St where risk appetite was supported by lower yields, although some bourses lagged on policy tightening.
ASX 200 traded higher but with gains capped by cautiousness in the top-weighted financials sector after Bank of Queensland's shares failed to benefit post-earnings.
Nikkei 225 outperformed and reclaimed the 27,000 level with Japan's ruling coalition parties unveiling their draft relief proposals.
KOSPI and Straits Times Index lagged after the BoK unexpectedly hiked rates by 25bps points and the MAS tightened FX-based policy, respectively.
Hang Seng and Shanghai Comp were kept afloat with speculation rife that the PBoC will lower rates tomorrow via an MLF rate cut, while Citi also sees the possibility for a RRR cut on Friday to free up around CNY 1.2tln cash.
US equity futures marginally extended on the prior day's gains as yields remained softer.
European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.6% after the cash market closed lower by 0.1% yesterday.

FX

DXY was lacklustre beneath the 100 level after falling from near its May 2020 highs with pressure from softer yields and the improved risk tone.
EUR/USD reclaimed the 1.0900 status at the greenback’s expense with the focus turning to today’s ECB meeting.
GBP/USD marginally extended on the prior day’s gains in the aftermath of the firmer than expected UK CPI.
USD/JPY faded some of the recent advances after it pulled back from a 20-year high.
USD/SGD retreated after the Monetary Authority of Singapore conducted a two-pronged tightening of its FX-based policy.
Antipodeans diverged with NZD the best performer in the G10 FX space, whilst AUD traded rangebound with AUD/USD contained following the miss on the latest key jobs data.

FIXED INCOME

10yr UST futures remained afloat after yesterday's gains despite firm PPI data and an average 30yr bond auction, amid touted short-covering in the front end.
Bund futures were choppy and traded on both sides of the 155.00 level heading to today’s ECB meeting.
10yr JGBs eventually found support following the 20yr auction results which showed firmer demand and higher accepted prices.

COMMODITIES

Crude futures took a breather following a two-day rally with the prior day's gains helped by IEA forecasts for large Russian production cuts.
Libyan National Unity Government adopted a plan to develop the oil sector to raise output to 1.4mln bpd, according to Reuters.
Spot gold was rangebound but remained near a monthly high amid a lacklustre greenback.
Copper edged mild gains overnight amid the mostly constructive risk tone and increased speculation for China to cut rates.

CRYPTO

Bitcoin prices were marginally above the USD 41,000 level overnight.

NOTABLE APAC HEADLINES

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a net neutral daily position.
PBoC set USD/CNY mid-point at 6.3540 vs exp. 6.3543 (prev. 6.3752)
Japan's ruling LDP draft proposal stated the government should prioritise compiling a relief package swiftly by tapping special reserves to fund spending and urged for increased aid to soften the blow from rising fuel prices but did not mention the desired spending size, according to Reuters.
Japan's ruling coalition partner Komeito party draft called for establishing funds to support businesses impacted by sanctions against Russia and strongly demanded the government to deliver an extra budget urgently, according to Reuters.
Bank of Korea unexpectedly raised its Base Rate by 25bps to 1.50% with the decision unanimous, while the BoK MPC chief said they couldn't wait for the formal appointment of a Governor to resume the fight against inflation and that the views among BoK board members are seen diverging. BoK said South Korea's growth is to sustain a recovery but will be lower than previously projected and inflation will run higher than earlier estimated, according to Reuters.
Monetary Authority of Singapore tightened its FX-based policy, as expected, by slightly raising the rate of appreciation of the policy band and re-centred the mid-point of the band at the prevailing level of the SGD NEER., while it noted that tighter monetary policy stance will slow the inflation momentum and help ensure medium-term price stability, according to Reuters.

DATA RECAP

Singapore GDP QQ (Q1 A) 0.4% vs Exp. 0.9% (Prev. 10.7%)
Singapore GDP YY (Q1 A) 3.4% vs Exp. 3.8% (Prev. 6.1%)
Australian Employment Change (Mar) 17.9k vs. Exp. 40.0k (Prev. 77.4k)
Australian Unemployment Rate (Mar) 4.0% vs. Exp. 3.9% (Prev. 4.0%)

EUROPE

NOTABLE EUROPEAN HEADLINES

French President Macron said he wants to increase pensions by 4% from summer if re-elected, according to Reuters.