• APAC stocks gained as regional bourses resumed the risk momentum seen across global peers last week
• Beijing has eased some COVID restrictions, whilst Shanghai moves closer to reopening 
• EU failed to reach an agreement on the Russian oil embargo on Sunday and will conduct more talks on Monday
• European equity futures are indicative of a positive open with Eurostoxx 50 +0.7% after the cash market closed higher by 1.8% on Friday
• DXY is softer, EUR/USD hovers around 1.0750, antipodeans outpace peers
• Looking ahead, highlights include Swiss KOF, EZ Consumer Confidence Final, German CPI (Prelim.), EU Council Special Meeting, US Memorial Day holiday

US TRADE

• US stocks rallied throughout the NY cash trade on Friday in which the SPX posted its first W/W gain since late March and touched levels not seen for a month above 4150 amid month-end stock buying as sell-side models pointed to the strongest stock rebalancing buy signals since the onset of COVID-19.
• SPX +2.47% at 4,158, NDX +3.30% at 12,681, DJI +1.77% at 33,214, RUT +2.70% at 1,888.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• US President Biden is set to meet with Fed Chair Powell on Tuesday, according to the White House.

GEOPOLITICS

RUSSIA-UKRAINE

NEGOTIATIONS/TALKS/ASSISTANCE

• Russian President Putin discussed the situation in Ukraine with French President Macron and German Chancellor Scholz in which he informed them that Russia was ready to find options for unhindered grain exports including from Black Sea ports and that Russia is ready to increase exports of fertilisers and agricultural products if sanctions are lifted. Putin also noted the dangerous nature of western weapons being pumped into Ukraine and said that Russia was ready to resume dialogue with Ukraine, according to IFAX citing the Kremlin.
• Russian President Putin is planning to conduct a telephone call with Turkish President Erdogan on May 30th, while Turkish President Erdogan is also scheduled to speak to Ukrainian President Zelensky on the same day.
• UK PM Johnson spoke with Ukrainian President Zelensky in which he outlined the intensive work taking place with international partners to find ways to resume grain exports from Ukraine and said the UK would work with the G7 to push for urgent progress, according to Reuters.

MILITARY/DEFENSIVE/OTHER

• Ukrainian President Zelensky visited Ukrainian troops in the Kharkiv region which was his first official trip outside of the Kyiv region since the Russian invasion, while several loud explosions were heard in Kharkiv after the visit, according to Reuters.
• Ukrainian President Zelensky said he fired the head of the state security service in Kharkiv for failing to work towards the defence of the city in the first days of the war, while he added that all critical infrastructure in Severodonetsk was destroyed and that taking the city is Russia’s principal aim, according to Reuters.
• Ukrainian armed forces stated that fighting for the Ukrainian city of Severodonetsk is continuing and Russian forces conducted assault operations on Saturday, while it also stated that Russian forces destroyed a large arsenal of the Ukrainian army in the city of Kryvyi Rih in central Ukraine, according to Reuters.
• Russian Foreign Minister Lavrov said liberating the Donetsk and Luhansk regions is an unconditional priority for Russia and other Ukrainian territories should decide their future on their own, according to RIA.
• Russian Kremlin has reportedly been emboldened by Russian advances in Donbas and hopes to make an attempt to take Ukraine’s capital of Kyiv again by autumn, although a general mobilisation is unlikely, according to sources cited by Meduza.
• Russian Defence Ministry said the Ukrainian town of Lyman is under full control of Russian and Russian-backed Donetsk forces, according to Reuters.
• Russian Ambassador to the UK Kelin said he does not believe Russia will use nuclear weapons in Ukraine, citing Russian military rules, according to the BBC.
• Ukrainian Defence Minister Reznikov said Ukraine has started to receive harpoon anti-ship missiles from Denmark and M109 self-propelled howitzers from the US, according to Reuters.
• US President Biden’s administration reportedly approved sending long-range mobile rocket launchers to Ukraine which will likely be announced in the week ahead, according to NYT.
• UK press reported that a Russian intelligence source claimed that Russian President Putin is losing his sight and was given three years to live by doctors due to a severe form of progressing cancer, according to the Mirror.

ENERGY/SANCTIONS/ECONOMIC

• EU failed to reach an agreement on the Russian oil embargo on Sunday and will conduct more talks on Monday, while the proposal under discussion assumes a ban on Russian oil delivered to the EU by sea by end-2022 but foresees an exemption of oil delivered through the Druzhba pipeline which supplies Hungary, Slovenia and the Czech Republic, according to Reuters.
• German Economy Minister Halbeck said that the unity of EU countries regarding sanctions against Russia is beginning to crumble, according to Reuters.
• Russian President Putin spoke with Serbian President Vucic in which they discussed Ukraine and agreed that Russia will continue to supply gas to Serbia, according to RIA citing the Kremlin.

OTHER

• Turkish President Erdogan said talks with Finland and Sweden last week were not at the expected level and that Ankara cannot agree to terrorist-supporting nations to join NATO, according to state broadcaster TRT Haber.
• Turkish President Recep Erdogan said Turkey remains committed to driving Syrian Kurdish militias out of northern Syria and will not wait for permission from the US before launching a new offensive, according to RFERL.
• US State Department said the US, South Korea and Japan strongly condemn North Korea’s recent ballistic missile tests, according to Reuters.
• South Korea referred to the North Korean military as 'our enemy' in troop education materials, according to Yonhap.

APAC TRADE

EQUITIES

• APAC stocks gained as regional bourses resumed the risk momentum seen across global peers last week.
• ASX 200 was led higher by strength in tech, mining and consumer-related stocks although the energy sector lags with AGL Energy pressured after the Co. decided to abandon its demerger plans.
• Nikkei 225 climbed back above the 27,000 level with the index helped by the mostly weaker currency.
• Hang Seng and Shanghai Comp were positive with Hong Kong outperforming amid strength in tech and consumer stocks, while the mainland also reacted to support measures in Shanghai but with property names subdued by default concerns and after developer Fantasia Holdings was served with a winding-up petition.
• US equity futures extended on last Friday's gains after having snapped their streak of weekly losses; ES +0.6%
• European equity futures are indicative of a positive open with Eurostoxx 50 +0.7% after the cash market closed higher by 1.8% on Friday.

FX

• DXY softened amid the positive risk tone and gains in the dollar’s major counterparts.
• EUR/USD traded marginally higher and tested 1.0750 to the upside but with upside limited by quiet newsflow aside from the headlines related to Ukraine including the failure so far by EU officials to agree on the 6th round of Russian sanctions.
• GBP/USD slightly benefitted from the subdued greenback but stalled shy of Friday’s monthly high.
• USD/JPY was lacklustre after BoJ Governor Kuroda echoed the undesirability of rapid currency moves.
• Antipodeans were kept afloat by the positive risk tone and after the firmer PBoC reference rate setting.
• Czech Central Bank’s Holub said he will likely support a further hike in interest rates for June of roughly 75bps, according to Reuters.

FIXED INCOME

• 10yr UST futures lacked demand with US cash markets closed on Monday for Memorial Day.
• Bunds futures remained subdued after pulling back from resistance at 154.00 late last week
• 10yr JGBs stalled around the 150.00 level with demand hampered by the positive risk sentiment.

COMMODITIES

• Crude futures gradually edged higher amid the positive risk tone and improving COVID situation in China.
• Egypt and UAE are in talks regarding a partnership in the gas sector, according to Sky News.
• National Grid (NG/ LN) is set to hold emergency discussions with energy companies to increase gas pipeline capacity after it was forced to turn away crucial LNG shipments, according to the Telegraph.
• Spot gold mildly benefitted from the softer dollar and after support near USD 1850/oz held.
• Copper was underpinned amid the positive risk tone across stocks and Shanghai's support measures.
• Goldman Sachs said the bull market in cobalt, lithium and nickel is over, according to Bloomberg.

CRYPTO

• Bitcoin traded higher overnight and reclaimed the 30,000 level.

NOTABLE HEADLINES

• Beijing city health official said the city’s COVID-19 outbreak is under control but a risk of a rebound exists, while the city will adopt dynamic control measures that will ease curbs in some areas and two districts can switch from work-from-home to normal mode, although Shanghai will hold off business resumption for tutoring institutions, internet café, KTV and underground business areas, according to Reuters.
• Shanghai city official said people entering public venues from June 1st will require a negative PCR test taken within the last 72 hours vs prev. 48 hours requirement and those that want to leave the city will still need to show a PCR test taken within 48 hours and an antigen test within 24 hours, while the time adjustments are being made to encourage work resumption and a return to normal life, according to Reuters.
• Shanghai will cancel most of the conditions for businesses to resume work from June 1st including ‘white lists’, while it will add 40k licence plates and reduce some car purchase taxes. Shanghai will accelerate the issuance of local government special bonds which it aims to use by end-August and will establish a green channel for approving real estate projects to shorten the time from land acquisition to sales. Shanghai will ask banks to renew SME loans and support more eligible asset management institutions to participate in QFLP and QDLP pilots, while the latest measures alongside those rolled out at end-March are expected to lower the financial burden for market players by more than CNY 300bln in the year, according to Reuters.
• Some Chinese provinces began resuming inter-provincial group tours ahead of the Dragon Boat Festival with a 70% growth in booking on domestic online travel platform Trip.com, according to Global Times.
• UN Human Rights chief Bachelet said arrests of activists, lawyers and journalists in Hong Kong are deeply worrying and the UN Human Rights office will have an annual senior strategic meeting with the Chinese government, while Bachelet added that she appealed to Chinese authorities to prioritise the provision of information to families that lost contact to loved ones in Xinjiang, according to Reuters.

UK/EU

NOTABLE HEADLINES

• UK ministers were warned that 6mln homes could face power rationing under government modelling for a "reasonable" worst-case scenario which sees Russia cutting off more supplies to the EU, according to the Times.
• Living Wage Foundation is urging UK employers which committed to paying the voluntary ‘living wage’ to bring forward their increase to September amid the ‘unprecedented’ rate of price increases, according to FT.
• Italy is considering seeking EU approval to extend the GACS state guarantee scheme for bad bank loan sales by more than 12 months and is considering increasing the minimum rating for state-guaranteed senior tranches in bad loan securitisation by one notch or more, according to sources cited by Reuters.