• European bourses feel some reprieve following the bout of selling seen in recent sessions
• US equity futures trade relatively flat with a mild downside bias after trimming earlier losses
• Russian Foreign Minister Lavrov said Russia will continue peace talks with Ukraine; Germany will make an announcement on sending tanks to Ukraine
• Dollar mixed as broad risk appetite returns after Monday’s flight to safety; Euro and Pound flounder as DXY eyes 102.000
• Looking ahead, highlights include US Durable Goods, Private Crude Inventories, NBH Policy Announcement, Supply from US, Earnings from Alphabet, Microsoft, General Motors, Visa, 3M and more

26th April 2022

SNAPSHOT

LOOKING AHEAD

US Durable Goods, Private Crude Inventories, NBH Policy Announcement, Supply from US, Earnings from Alphabet, Microsoft, General Motors, Visa, 3M and more.

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GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS

DEFENCE/MILITARY

• Russian Foreign Minister Lavrov said risks of a nuclear war are serious and real but Russia's position is "inadmissibility" of such war and stated Russia wants to reduce artificial risks of nuclear war. Lavrov also stated that weapons delivered to Ukraine from the west will be legitimate targets for the Russian military, while he added that NATO is essentially engaging into war with Russia through a proxy and is arming that proxy, according to Reuters.
• Russia and Belarus will hold joint military air forces and anti-missile drills in Belarus, according to Ifx; details light
• Germany will make an announcement on sending tanks to Ukraine at an international meeting of defence ministers in Ramstein today, according to AFP sources.
• Donestk pro-Russian separatist leaders says it is necessary to commence the next stage of the military operation after reaching borders of the Donestk region, according to Ria.
• Russia has warned Japan it will retaliate if the scale of the US-Japan naval exercises expand, via Ria citing the Russian Foreign Ministry.

ENERGY/ECONOMIC SANCTIONS & UPDATES

• European Energy Commissioner Simson says a 6th package of EU sanctions against Russia is expected very soon; date unconfirmed, according to Reuters.

OTHER

• Explosions were reported close to a government building in Moldova's breakaway region of Transdniestria, according to TASS.
• North Korean Leader Kim said any forces that seek military confrontation with North Korea will be destroyed and they will continue to take steps to speed up development of their nuclear arsenal. Kim also stated that the nuclear deterrence will not be bound by use and only to prevent war when unwarranted circumstances arise, while they are to be ready to deploy nuclear deterrence anytime, according to KCNA.
• Experts warned that North Korean Leader Kim may have ambitions to use the nation's nuclear weapons programme to assert control over the Korean peninsula, according to FT.

EUROPEAN TRADE

EQUITIES

• European bourses feel some reprieve following the bout of selling seen in recent sessions and following Wall Street's afternoon bounce yesterday.
• Sectors are all in the green but to varying degrees – with Basic Resources rebounding with a vengeance after yesterday’s slide, albeit Energy has failed to hold onto early gains as the underlying commodity price wanes.
• Stateside, US equity futures trade relatively flat with a mild downside bias (ES -0.1%, NQ -0.1%, RYT -0.1%, YM -0.1%), trimming earlier losses.
• United Parcel Service Inc (UPS) Q1 2022 (USD): EPS 3.03 (exp. 2.88), Revenue 24.4bln (exp. 23.79bln), reaffirms guidance; doubles buy-back target to USD 2bln

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FX

• Dollar mixed as broad risk appetite returns after Monday’s flight to safety; USD down vs high betas, but up against most index components.
• Aussie and Kiwi refreshed following long holiday weekend and further rebound in Yuan on the back of China’s RRR reduction effective May 15
• Euro and Pound flounder as DXY eyes 102.000 and conflict contagion weighs heavier in Europe relative to the US
• Yen continues to consolidate off multi year lows after a dip in Japan’s unemployment rate and Government rolls out fiscal relief measures
• Japanese PM Kishida said rapid FX moves are undesirable; no comment on specific JPY levels.

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Major FX option expiries for today's NY cut

• EUR/USD: 1.0750 (1.05BN), 1.0795-05 (2.07BN)
• AUD/USD: 0.7220 (1.22BN)

FIXED INCOME

• Debt futures resume recovery rally or retracement from recent cycle lows with curves a tad flatter ahead of 2 year US auction
• Bunds are just shy of Monday's 155.26 peak, Gilts back above 119.00 and 10 year T-note eyeing 120-00
• BTPs hold firm following Italian issuance, irrespective marginally softer cover ratios
• UK debt lags after larger than forecast PSNB deficit and upwardly revised 2022/32 DMO remit
• UK DMO raises its 2022/23 Gilt issuance remit to GBP 131.5bln from GBP 124.7bln and sees GBP 7bln additional T-bill sales

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COMMODITIES

• WTI and Brent June futures continue drifting lower as the crude complex continues to be dampened by China's COVID situation.
• Spot gold was pressured by the firmer Buck and fell to a current intraday low of USD 1,894/oz in early trade before finding a base and reclaiming a USD 1,900/oz handle
• Base metals, meanwhile, are mostly firmer in what is seemingly a rebound following yesterday's downside.
• Shanghai Futures Exchange raises trading limits and margin requirements for steel rebar, wire rod, and hot rolled coils futures from settlement on April 28.

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NOTABLE EUROPEAN HEADLINES

• ECB's Kazak's said two or three rate hikes priced by markets is quite reasonable; prefers first rate hike after APP ends, leaning towards July; there is no reason why rate hikes should pause at zero.

NOTABLE EUROPEAN HEADLINES

• Maersk (MAERSKB DC) revises downwards outlook for growth of global container demand to -1% to +1% (prev. 2% to 4%)

CRYPTO

• Bitcoin prices are contained above 40k.
• Binance has launched Binance Refugee Crypto Card for all current and new Binance users from Ukraine moving to EEA countries.

APAC TRADE

EQUITIES

• APAC stocks were mostly higher with bourses in the region encouraged after the rebound on Wall Street.
• ASX 200 bucked the trend as the prior day’s rout caught up with markets in Australia and New Zealand on return from the extended weekend, with miners pressured by tepid output from South32 and Woodside Petroleum.
• Nikkei 225 gained after a surprise decline in Unemployment and amid preparations for a relief package.
• Hang Seng and Shanghai Comp were lifted as strength in tech helped the former reclaim the 20k level and after further PBoC policy support pledges gradually offset the initial Beijing COVID-19 jitters in the mainland.

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 6.5590 vs exp. 6.5585 (prev. 6.4909)
• PBoC said it will step up prudent monetary policy's support for the real economy and that monetary policy support will emphasise industries, SMEs and home businesses impacted by COVID, as well as agricultural production and energy, according to Reuters.
• Beijing is to see new COVID infections are screening continues, one area in the city was raised to high-risk area, according to the Beijing Health official.
• Nomura expects the PBoC to reduce RRR on FX deposits by another 100bps to 7% by year-end.
• Japanese Finance Minister Suzuki said there is no truth to the media report that Japan and the US discussed joint FX intervention, while he later said it is important to secure ample forex reserves for FX intervention in the future, according to Reuters.
• Japanese PM Kishida said Japan has compiled a relief package of JPY 12.2tln to cushion the impact from rising raw material costs.

DATA RECAP

• Korea (Republic of) GDP Growth YY Advance (Q1) 3.1% vs. Exp. 2.8% (Prev. 4.2%)
• Korea (Republic of) GDP Growth QQ Advance (Q1) 0.7% vs. Exp. 0.6% (Prev. 1.2%)