Newsquawk

US Market Open: European bourses coat-tail on the positivity seen on Wall Street yesterday; DXY is contained, and bonds recoil

24 Jun 2022, 11:50 by Newsquawk Desk

European bourses have coat-tailed on the positivity seen on Wall Street yesterday; sectors overall project a modest defensive bias
US equity futures are firmer across the board – with the NQ narrowly leading the pack, whilst the ES topped resistance at 3,800
DXY resides towards the bottom of a relatively contained intraday range, still above 104.00; NZD outperforms
Debt recoils after stretching recovery limits further, with trading volumes picking up on the reversal
WTI and Brent August futures are extending their modest gains in recent trade despite a lack of news flow, but base metals remain mostly weak
Looking ahead, highlights include US New Home Sales, Speeches from Fed's Bullard & Daly, ECB's de Cos, BoE's Pill

24th June 2022

European bourses have coat-tailed on the positivity seen on Wall Street yesterday and across APAC overnight, with European indices firmer to varying degrees.
Sectors overall project a modest defensive bias as Healthcare, Media, Consumer Products, and Food & Beverages reside among the winners, although Tech is also buoyed by the pullback in bond yields.
Europe's largest online retailer Zalando (-12%) slumped following a profit warning, and in turn dragged the European Retail sector to the lowest level since March 2020.
Stateside, US equity futures are firmer across the board – with the NQ narrowly leading the pack – participants also flagged the ES overcoming resistance at 3,800.
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Kiwi elevated amidst favourable crosswinds on NZ market holiday - Nzd/Usd probes 0.6300 as Aud/Nzd retreats towards 1.0950.
Euro encouraged by elements of German Ifo survey and Pound shrugs off mixed UK consumption data, all time low consumer sentiment and more pain for PM Johnson on risk factors and gravitating Greenback - Eur/Usd firm on 1.0500 handle, Cable tests 1.2300 and DXY close to base of 104.120-510 range.
Aussie, Loonie and Franc all bounce within ranges as Buck backs off, but Yen continues to encounter resistance after decent retracement - Aud/Usd back over 0.6900, Usd/Cad fades from pop above 1.3000 and Usd/Chf reverses through 0.9600 pivot.
Scandi Crowns claw back lost ground, Yuan underpinned by PBoC liquidity injection and Peso by hawkish Banxico guidance to supplement 75 bp hike - Eur/Sek sub-10.7000, Eur/Nok near 10.4500, Usd/Cnh under 6.7000 and Usd/Mxn beneath 20.0000.
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Notable FX Expiries, NY Cut:

Debt recoils after stretching recovery limits further - Bunds top out at 149.00, Gilts at 114.55 and 10 year T-note 118-00
Trading volumes pick-up on the way back down towards or to intraday lows of 147.21, 113.54 and 117-10+, as risk appetite steadily improves and focus turns to pm agenda
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WTI and Brent August futures are extending their modest gains in recent trade despite a lack of news flow.
EIA said a status update on the weekly DOE oil inventories report will be provided on Monday.
Spot gold remains uneventful under USD 1,850/oz – with the Dollar similarly contained intraday thus far.
Focus has turned to base metals, with nickel, zinc, and tin among the biggest losers amid demand woes and surplus concerns.
Chile state copper miner Codelco reached an agreement with workers to end the strike, according to Reuters.
China is to auction 500k tonnes of imported soybeans from state reserves on July 1st, according to the trade centre cited by Reuters.
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NOTABLE EUROPEAN HEADLINES

UK PM Johnson's Conservatives lost the parliamentary seat in the Wakefield by-election to the Labour Party and lost the by-election in Tiverton and Honiton to the Liberal Democrats, according to Reuters. Subsequently, PM Johnson has been warned to "watch out for a coup", according to reporting in The Telegraph. Furthermore, Conservative Party Chairman Dowden has resigned following the by-elections.
1922 Committee treasurer Sir Geoffrey Clifton-Brown hints that Tory leadership rules could be changed to allow rebels another shot at the PM, according to Mail's Grove.

NOTABLE EUROPEAN DATA

German Ifo Business Climate New (Jun) 92.3 vs. Exp. 92.9 (Prev. 93.0)
German Ifo Expectations New (Jun) 85.8 vs. Exp. 87.4 (Prev. 86.9)
German Ifo Current Conditions New (Jun) 99.3 vs. Exp. 99.1 (Prev. 99.5, Rev. 99.6)
UK Retail Sales MM* (May) -0.5% vs. Exp. -0.7% (Prev. 1.4%, Rev. 0.4%)
UK Retail Sales YY* (May) -4.7% vs. Exp. -4.5% (Prev. -4.9%, Rev. -5.7%)

NOTABLE US HEADLINES

Fedex (FDX) shares +3.5% pre-market after EPS guidance topped expectations, alongside an additional USD 1.5bln share buyback. Fedex plans to raise package prices above rate of inflation.

North Korea will boost frontline military units' action plan and vowed to strengthen war deterrent, while leader Kim said they will bolster powerful self-defence capabilities to overwhelm hostile forces, according to KCNA.
German Chancellor Scholz is to hold bilateral talks with US President Biden before the G7 meeting (June 26-28th), according to Reuters.
"Russia and China will continue to increase the share of settlements in national currencies, but a complete rejection of the dollar is impossible", according to Interfax citing the Russian Ambassador to China.

APAC stocks ultimately followed suit to the gains on Wall St where a decline in yields and lower commodity prices helped the major indices claw back from the opening losses which were triggered by disappointing PMI data.
ASX 200 was positive with tech stocks encouraged by US counterparts which benefitted from the lower yield environment although gains in the index were capped by weakness in the commodity-related sectors after the recent pressure in energy and metal prices.
Nikkei 225 found early momentum alongside currency flows and held on to gains despite the JPY reversal.
Hang Seng and Shanghai Comp. were positive after officials recently suggested ample policy space to sustain a steady economic performance and with the PBoC upping its liquidity efforts.

NOTABLE APAC HEADLINES

PBoC injected CNY 60bln via 7-day reverse repos with the rate at 2.10% for a CNY 50bln net daily injection, according to Reuters.

DATA RECAP

Japanese National CPI YY (May) 2.5% vs. Exp. 2.5% (Prev. 2.5%)
Japanese National CPI Ex. Fresh Food YY (May) 2.1% vs. Exp. 2.1% (Prev. 2.1%)
Japanese National CPI Ex. Fresh Food & Energy YY (May) 0.8% vs. Exp. 0.8% (Prev. 0.8%)