Newsquawk

Euro Market Open: Mixed trade amid similar data, month-end and no US lead; crude bid amid an EU deal

31 May 2022, 06:50 by Newsquawk Desk

APAC stocks were mixed as most indices lacked firm direction following the lack of a US lead, month-end and mixed data.
The EU has agreed to ban seaborne exports of Russian oil to the EU which covers more than two-thirds of Russian oil imports.
European equity futures are indicative of a softer open with Eurostoxx 50 -0.2% after the cash market closed higher by 0.9% yesterday.
DXY trades on a firmer footing, EUR/USD hovers around 1.0750, JPY lags in G10 FX.
Looking ahead, highlights include EZ CPI (Flash), US Consumer Confidence, Supply from Italy & Germany.

NOTABLE US HEADLINES

Fed's Waller (voter, hawk) said the Fed needs to raise rates while the economy is strong and needs to front-load rate rises, while he reiterated that 50bps rate rises should be on the table for every meeting until inflation has seen substantial reductions, according to Reuters.

EU Council President Michel said the EU agreed to ban seaborne exports of Russian oil to the EU which covers more than two-thirds of Russian oil imports and said the EU agreed to 'de-Swifting' the largest Russian bank Sberbank. EU also agreed to banning three more Russian state-owned broadcasters and sanctioning individuals responsible for war crimes in Ukraine, while an EU diplomat said the EU agreed to ban 90% of Russian oil imports by year-end, according to Reuters.
Ukrainian President Zelensky said Russia stole half a million tons of grain and its blockade of Ukraine's ports prevents the country from exporting about 22mln tons of grain, creating a threat of famine in countries dependent on the grain, according to Kyiv Independent.

Georgian breakaway region of South Ossetia suspended a previously announced referendum on whether to join Russia which had been set for July 17th, according to Reuters.
Tunisia’s President called for the suspension of the country’s membership in the Venice Commission and expel its representatives in the country following a report that criticised conducting a referendum on a new constitution, according to Reuters.
UN nuclear watchdog said Iran’s stockpile of enriched uranium is more than 18 times larger than the agreed limit in the 2015 nuclear deal, according to AFP News.
Twitter sources reported a missile attack on the Ain al Asad Airbase in Iraq which hosts US and other international forces.

APAC stocks were mixed as most indices lacked firm direction amid month-end and mixed data.
ASX 200 was subdued by tech underperformance and after a deluge of data releases.
Nikkei 225 traded rangebound with the index restricted after Industrial Production data missed forecasts.
Hang Seng and Shanghai Comp were initially indecisive following the Chinese PMI data which printed above estimates but remained at a contraction, although risk appetite gradually picked amid further support measures and improved COVID situation in China.
US equity futures were rangebound overnight but remained in the green ahead of the return of US participants; ES +0.2%.
European equity futures are indicative of a softer open with Eurostoxx 50 -0.2% after the cash market closed higher by 0.9% yesterday.

DXY rebounded from its Memorial Day losses as US yields gained on the resumption of trade and following recent hawkish rhetoric from Fed’s Waller who supports 50bps hikes for the several meetings and is not taking 50bps off the table until inflation comes down closer to the 2% target.
EUR/USD faded the prior day’s advances which were helped following the record-high German inflation, with attention now turning to the bloc’s price data due later today, while the EU also reached an agreement in principle on a new sanctions package against Russia including banning 90% of Russian oil imports by year-end.
GBP/USD softened and tested support at 1.2600 amid a firmer greenback and with senior Tory MPs warning that PM Johnson is likely to face a no-confidence vote if they lose two parliamentary by-elections next month.
USD/JPY climbed back above 128.00 on widening yield differentials and after weak industrial production data
Antipodeans gave ground to the recovering dollar after mixed Australian data and a deterioration in New Zealand business surveys.

10yr UST futures extended on their retreat beneath 120.00 as yields climbed at the resumption of trade.
Bunds languished near the prior day’s lows after the recent record-high harmonised inflation from Germany.
10yr JGBs were subdued and failed to benefit from the mostly-improved 2yr auction results.

Crude futures gained ahead of Shanghai's reopening and after the EU agreed to a Russian oil embargo.
Spot gold was subdued overnight as the greenback clawed back recent losses.
Copper prices were underpinned amid better than expected Chinese PMI data and China's support measures.

Bitcoin was rangebound overnight and took a breather from recent gains with prices kept afloat by support at the 31,500 level.

NOTABLE HEADLINES

China's Cabinet issued a series of policies to stabilise the economy, according to a Cabinet document cited by Reuters. China is to accelerate the issuance of local government special bonds and add new types of infrastructure and energy projects to the project pool eligible for fundraising, while it is to step up VAT credit rebates, boost fiscal spending and will guide actual lending rates lower.
China reported 97 new COVID-19 cases on May 30th which was the first time infections were below 100 since March 2nd, according to Bloomberg.
Shanghai official said the city is moving into a normalised epidemic control phase and looks to resume normal life. The official added that malls and shops will be able to reopen with capacity capped at 75% although the reopening of high-density venues such as gyms will be slower, while all workers in low-risk areas should be able to return to work from June 1st, according to Reuters.
Hong Kong Chief Executive Lam said they will likely begin the third stage of easing COVID-19 restrictions in late June, according to Bloomberg.
RBNZ Deputy Governor Hawkesby said the central bank needs to keep decreasing stimulus and tighten conditions beyond the neutral of 2.0%.

DATA RECAP

Chinese NBS Manufacturing PMI (May) 49.6 vs Exp. 48.9 (Prev. 47.4)
Chinese NBS Non-Manufacturing PMI (May) 47.8 vs Exp. 45.0 (Prev. 41.9)
Chinese NBS Composite PMI (May) 48.4 (Prev. 42.7)
Japanese Industrial O/P Prelim MM SA* (Apr) -1.3% vs. Exp. -0.2% (Prev. 0.3%)
Japanese Retail Sales YY (Apr) 2.9% vs. Exp. 2.6% (Prev. 0.9%, Rev. 0.7%)
Japanese Unemployment Rate* (Apr) 2.5% vs. Exp. 2.6% (Prev. 2.6%)
Australian Building Approvals (Apr) -2.4% vs. Exp. 2.0% (Prev. -18.5%, Rev. -19.2%)
Australian Net Exports Contribution (Q1) -1.7% vs. Exp. -1.4% (Prev. -0.2%)
Australian Business Inventories (Q1) 3.2% vs. Exp. 1.0% (Prev. 1.1%, Rev. 1.5%)
Australian Gross Company Profits (Q1) 10.2% vs. Exp. 4.0% (Prev. 2.0%, Rev. 4.6%)
New Zealand NBNZ Business Outlook* (May) -55.6% (Prev. -42.0%)
New Zealand NBNZ Own Activity* (May) -4.7% (Prev. 8.0%)

NOTABLE HEADLINES

Senior Tory MPs said UK PM Johnson is likely to face a no-confidence vote as leader of the Conservative Party if they lose two parliamentary by-elections next month, according to FT.
Pressure is increasing for the ECB to hike rates after German CPI rose to its highest in half a century, according to The Times.

DATA RECAP