Newsquawk

Euro Market Open: Wall St. strength reverberated into APAC trade; USD/JPY above 133.00

08 Jun 2022, 06:50 by Newsquawk Desk

APAC stocks were mostly higher following the gains on Wall St and optimism of China easing its tech crackdown
DXY was rangebound near 102.50, USD/JPY printed fresh 20-year highs above 133.00, and Antipodeans saw late pressure
RBI hiked by 50bps to 4.90% (exp. 40bps hike) via unanimous decision and dropped mention of "staying accommodative"
Elon Musk's effort to arrange new Twitter (TWTR) deal financing is on hold amid uncertainty, according to Reuters sources
Looking ahead highlights include Swiss Unemployment, German Industrial Output, EZ Employment (Final), EZ GDP (Revised), and Supply from UK, Germany & US
Click here for the Week Ahead preview

US stocks shrugged off the initial cautiousness brought on by the weak lead from Europe and guidance cuts from Target (TGT) and Union Pacific (UNP), in which all major indices finished in the green with the upside facilitated by a weaker dollar and as yields eased.
SPX +0.95% at 4,160, NDX +0.89% at 12,711, DJIA +0.80% at 33,179, RUT +1.69% at 1,918.
Click here for a detailed summary.

NOTABLE US HEADLINES

White House Economic Adviser Rouse reiterated that tariff relief is on the table to fight inflation, while the US is in a position of strength for 2022 and the trade gap is closing, according to Reuters.
Elon Musk's effort to arrange new Twitter (TWTR) deal financing is on hold amid uncertainty, according to Reuters sources.

Ukraine said there is no deal yet to unblock the Black Sea, while talks between the Russian and Turkish Foreign Ministers are set for Wednesday, according to Politico.
Over 1,000 Ukrainian soldiers who surrendered in Mariupol have been transferred to Russia for investigation, according to TASS citing a Russian law enforcement source and more Ukrainian prisoners are to be transferred later on.
IAEA said radiation detectors from the area around Chernobyl are transmitting data to the IAEA for the first time since February 24th and implied levels are in line with those before the Russia/Ukraine war.
US Treasury Secretary Yellen said the Treasury made it clear that gold-related transactions involving Russia may be sanctioned and that they are closely monitoring any efforts to circumvent US sanctions through the use of gold, according to Reuters.

US special representative for North Korea said North Korean officials had used rhetoric that could suggest a plan to use tactical nuclear weapons and the US believes North Korea is preparing to conduct a seventh nuclear test which could happen any time, according to Reutters.
South Korea, US and Japan said North Korea's recent missile tests were serious provocations and they reaffirmed the shared goal of North Korea's denuclearisation, while they added the door for dialogue with North Korea is always open and the US reaffirmed extended deterrence to defend South Korea and Japan, according to Reuters.

APAC stocks were mostly higher following the gains on Wall St and optimism of China easing its tech crackdown.
ASX 200 recovered from the prior day’s RBA-induced selling with nearly all sectors in the green, although financials underperformed.
Nikkei 225 extended further above the 28k level on currency weakness and with Q1 GDP data revised upwards to a narrower contraction.
Hang Seng and Shanghai Comp. traded mixed with tech fuelling the gains in Hong Kong after China’s NPPA approved the publishing licences for 60 games this month, while sentiment in the mainland gradually soured despite support efforts as an official also warned that China's foreign trade stabilisation faces uncertainties and large pressure.
US equity futures took a breather after yesterday's advances but with the pullback only marginal.
European equity futures are indicative of a firmer open with Eurostoxx 50 +0.4% after the cash market closed lower by 0.8% yesterday.

DXY was rangebound near 102.50 after the prior day’s marginal softening with price action driven by yields.
EUR/USD failed to hold on to the 1.0700 level, while the focus shifts to upcoming data and tomorrow's ECB.
GBP/USD pulled back from yesterday's highs after hitting resistance just shy of the 1.2600 handle.
USD/JPY printed fresh 20-year highs above 133.00, which spurred some expectations for verbal intervention.
Antipodeans saw late pressure as commodities softened and sentiment in mainland China soured.

10yr UST futures unwound yesterday's bull flattening amid the positive risk tone and after a weak US 3yr auction.
Bunds were uneventful with price action rangebound ahead of EZ data later and tomorrow's ECB policy meeting.
10yr JGBs remained afloat with the BoJ in the market for nearly JPY 1.6tln of JGBs on top of its fixed-rate operations.

Crude futures were choppy with price action hampered after bearish inventories and higher EIA output forecasts.
US Energy Inventory Data (bbls): Crude +1.8mln (exp. -1.9mln), Cushing -1.8mln, Gasoline +1.8mln (exp. +1.1mln), Distillates +3.4mln (exp. +1.1mln)
EIA STEO (June) sees US 2022 crude output rising 730k BPD to 11.92mln BPD (prev. +720k BPD forecast) and US 2023 crude output is seen rising by 1.05mln BPD to 12.97mln BPD (prev. +940k BPD), while it raised global 2022 production forecast to 100.08mln BPD (prev. 99.89mln BPD) and raised 2023 forecast to 102.10mln BPD (prev. 101.60mln BPD).
Brazilian government is considering measures to monitor fuel prices at distributors, according to Reuters sources.
Spot gold was constrained by the lack of haven demand and a relatively steady greenback.
Copper faded some of the prior day's gains but with the pullback limited by the constructive mood in Asia.

NOTABLE APAC HEADLINES

PBoC international department official Zhou said the PBoC will keep guiding financing costs lower, while the PBoC also announced that China will extend the trading hours of the interbank FX market, according to Reuters.
China Vice Commerce Minister Wang said China's foreign trade stabilisation faces uncertainties and a large pressure from domestic and external factors. Furthermore, he sees global demand growth as low, while he added that China will accelerate export tax rebates and MOFCOM will assist foreign trade companies in securing orders, according to Reuters.
RBI hiked the Repurchase Rate by 50bps to 4.90% (exp. 40bps hike) via unanimous decision and dropped mention of "staying accommodative", while RBI Governor Das noted that inflation has increased above upper tolerance levels and they remain focused on bringing down inflation. Das added they will control inflation without losing sight of growth and that further monetary policy measures are necessary to anchor inflation, as well as noted that upside risk to inflation had intensified and materialised sooner than expected.

DATA RECAP

Japanese GDP Revised QQ (Q1) -0.1% vs. Exp. -0.3% (Prev. -0.2%); Revised Annualised (Q1) -0.5% vs. Exp. -1.0% (Prev. -1.0%)
South Korean GDP Growth QQ Revised (Q1) 0.6% (Prev. 0.7%); YY Revised (Q1) 3.0% (Prev. 3.1%)

EU/UK

NOTABLE HEADLINES

UK government will introduce a bill that will allow future ministers to fundamentally override the Northern Ireland Protocol by emphasising the UK internal market over the EU single market, according to RTE News.