• APAC stocks were higher across the board as the region took impetus from last Friday's firm gains on Wall St heading closer into month-end
• European equity futures are indicative of a firmer open with Eurostoxx 50 +0.5% after the cash market closed higher by 2.8% on Friday
• US is pushing to discuss a price cap on Russian oil during the G7 summit, also looking to ban imports of Russian gold
• DXY heads into the European session sub-104, JPY leads G10 FX, other majors are relatively contained
• Looking ahead, highlights include US Durable Goods, EIA Update on delayed Weekly DoE Report, ECB Sintra Forum, G7 Summit, Speeches from ECB’s Lagarde & Schnabel, Supply from EU & US

US TRADE

• US stocks rallied on Friday which began at the cash open and then sustained another fresh leg higher on a large buy-side Market on Close order imbalance to lift the S&P above 3.9k. In terms of the sectors, Communications, Materials, and Discretionary lead, while defensives lagged, albeit still firmly in the green, which marked a change of composition to the defensive-led gains earlier in the week.
• SPX +3.09% at 3,912, NDX +3.49% at 12,105, DJIA +2.69% at 31,501, RUT +3.2% at 1,766.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed’s Daly (2024 voter) said on Friday that it looks like they will need a 75bps rate hike in July but could be 50bps if data comes in better than expected although she would not be surprised if they get a couple of unwelcome readings on inflation, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY

• Ukrainian President Zelensky said they will get back all their cities and noted Ukraine was hit by 45 missiles in the past day, while he added they are in a morally and emotionally difficult stage of the war and don’t know how many losses there will be before they sense victory approaching, according to Reuters.
• Ukrainian military intelligence said Russia launched strikes from Belarusian airspace for the first time, according to Washington Post.
• Russian Defence Ministry said Russia carried out a large missile strike on Ukrainian army training centres in the Chernihiv, Zhytomyr and Lviv regions, while the capital of Kyiv was targetted by Russia for the first time in weeks, according to Reuters and Sky News.
• G7 draft vowed to support Ukraine for as long as it takes, while they will keep working on Ukraine's defence supply and advocate tariffs on Russian imports.
• US is planning to announce as soon as this week that it has purchased advanced surface-to-air missile defence systems for Ukraine, according to a source cited by CNN's Bertrand.
• UK PM Johnson said they must protect unity over Ukraine and that the price of allowing Russian President Putin to win in Ukraine would be far greater than the costs now, according to Reuters.

SANCTIONS/ECONOMIC/OTHER

• UK, US, Japan and Canada are to lead the G7 push to ban imports of Russian gold, according to Reuters.
• US is pushing to discuss a price cap on Russian oil during the G7 summit, according to Politico. Furthermore, US Treasury will issue a determination to prohibit imports of new Russian gold into the US, while a senior US official said they will likely announce a ban of imports of new Russian gold on Tuesday, according to Reuters.
• White House official said US President Biden and German Chancellor Scholz discussed China, G7 priorities and the need to promote economic prosperity, while they are committed to continuing sending security assistance to Ukraine. White House official said US is confident NATO’s new strategy document will include strong language on China and US officials are continuing to do all they can to work with all sides to resolve Turkey’s concerns regarding Finland and Sweden joining NATO, according to Reuters.
• German Chancellor Scholz said Germany and the US will always work together regarding Ukraine’s security, while he noted that G7 members are concerned about economic challenges. German government source also noted that G7 leaders are having very constructive discussions on a Russian oil price cap to curve revenue and said that North Korea, Afghanistan, Iran, Syria and Libya are also on the G7 agenda, according to Reuters.
• France said it does not oppose the US proposal for a Russian oil price cap and said they need a maximum price on oil, while discussions need to be held with all producers. France also supports a ban on Russian gold and said the discussions need to take place between the 27 EU members, according to Reuters.
• Russia defaulted on foreign debt for the first time since 1918 after the grace period on two Eurobond coupons expired on Sunday, while the Russian Finance Minister called the default label a farce, according to Bloomberg.

OTHER

• Iran’s Foreign Minister said they agreed to resume talks on reviving the 2015 nuclear deal following a meeting with EU’s Borrell and noted that they had a positive meeting, while EU’s Borrell said that they will break the stalemate on nuclear talks and that talks will resume soon with decisions made in Tehran and Washington. However, it was separately reported that Iran said its nuclear development will continue until the West changes its ‘illegal behaviour’, according to Reuters.
• Iran tested its Zuljanah satellite launcher for the second time on Sunday which was said to be for research purposes, according to Fars.
• Israeli negotiators met with the US mediator in an effort to resolve the maritime border dispute with Lebanon, according to Reuters.
• North Korea on Saturday condemned "aggression moves" by the US and South Korea and vowed to take revenge as it marked the 72nd anniversary of the outbreak of the Korean War, according to CNN

GLOBAL NEWS

• WHO stopped short of declaring monkeypox a global emergency amid a surge in cases and instead called it an evolving health threat, according to Reuters.
• US aims to raise USD 200bln in funding over 5 years to close the infrastructure gap for developing countries and said G7’s ‘Partnership for Global Infrastructure and Investment’ is aimed at countering China’s Belt and Road Initiative, while US and G7 partners will seek hundreds of billions of dollars in additional funds from multilateral development banks and others. Furthermore, US President Biden said they collectively aim to mobilise almost USD 600bln by 2027 and EU’s von der Leyen said “Team Europe” is mobilising USD 300bln through to 2027 to fund infrastructure in developing countries, according to Reuters.
• Bank for International Settlements said timely and decisive action by central banks is needed to restore low and stable inflation, while it added that the risk of stagflation looms over the global economy as the threat of a new inflation era coincides with weaker growth, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were higher across the board as the region took impetus from last Friday's firm gains on Wall St heading closer into month-end.
• ASX 200 enjoyed broad gains across its sectors although gold miners lagged as Evolution Mining shares dropped by more than 20% due to a cut in its FY output guidance.
• Nikkei 225 was lifted after the BoJ’s Summary of Opinions reiterated that they must maintain easy policy and with Tepco among the biggest gainers on tight electricity supply amid the hot weather.
• Hang Seng and Shanghai Comp. conformed to the upbeat mood as Hong Kong benefitted from a rampant tech sector and with the mainland encouraged by further easing of restrictions in Shanghai and Beijing, while the PBoC also upped its liquidity efforts with a CNY 100bln injection.
• US equity futures initially extended on Friday's advances amid the constructive mood in Asia before moving towards the unchanged mark ahead of the European entrance to market; ES +0.2%
• European equity futures are indicative of a firmer open with Eurostoxx 50 +0.5% after the cash market closed higher by 2.8% on Friday.

FX

• DXY traded rangebound and breached the 104.00 level to the downside amid the risk-on mood but with tailwinds offset as yields were kept afloat.
• EUR/USD eked minimal gains with price action quiet as participants look ahead to the ECB's Sintra Forum.
• GBP/USD was uneventful with PM Johnson unfazed by calls to step down and is seeking to remain in power to the mid-2030s.
• USD/JPY retreated beneath 135.00 following the BoJ Summary of Opinions which noted that a sharp Yen fall would hurt the economy and heighten uncertainty.
• Antipodeans were lacklustre with AUD the underperformer after the AUD/NZD cross pulled back from resistance at the 1.1000 level.

FIXED INCOME

• 10yr USTs remained subdued after last Friday’s bear-steepening and amid the heightened risk appetite.
• Bunds futures lacked demand and continued their retreat from resistance at 148.00.
• 10yr JGBs declined with the BoJ only in the market today under its fixed-rate operations although it did offer to purchase commercial paper from June 30th.

COMMODITIES

• Crude futures were choppy as early selling from a US' push to discuss a price cap for Russian oil at the G7 and an agreement between EU and Iran to resume nuclear talks, was reversed amid the risk-on mood and with encouragement from the further loosening of COVID-19 restrictions in Beijing and Shanghai.
• Italian PM Draghi said it is clear that short-term needs will require a larger investment in gas infrastructure in developing countries and elsewhere, according to Reuters.
• Spot gold was marginally higher with early strength seen as G7 nations seek to ban importing Russian gold.
• Copper prices gained overnight in tandem with the constructive mood and upside in stocks.
• Chilean state-owned copper miner Codelco said it sees very firm copper prices ahead despite the recent drop and will maintain its annual copper production target at 1.7mln tonnes, according to Reuters.

CRYPTO

• Bitcoin notched marginal gains following a relatively stable weekend with prices above the 21,000 level.

NOTABLE APAC HEADLINES

• Beijing will permit schools to resume in-class teaching as soon as Monday, ending one of the last major curbs in the capital, according to Bloomberg.
• Shanghai is to gradually resume dining-in at restaurants from June 29th, according to an official cited by Reuters.
• PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.10% for a CNY 90bln net injection, according to Reuters.
• China requested that banks make preparations for longer trading hours for the CNY, with trading in the onshore CNY potentially to extend until 03:00 local time the following day (20:00BST/15:00CDT), according to Bloomberg.
• BoJ Summary of Opinions from the June meeting stated the BoJ must maintain easy policy and keep a close eye out on the market and FX impact on the economy and prices. It also noted the number of goods seeing prices rise is increasing due to higher raw material costs and a weak yen but it is appropriate to keep easy policy as inflation is not driven by a positive economic cycle. Furthermore, it said maintaining ultra-easy policy is effective in sustaining a rise in wages and that a sharp fall in Yen would hurt the economy and heighten uncertainty.

DATA RECAP

• Chinese Industrial Profits YY (May) -6.5% (-8.5%)
• Chinese Industrial Profits YTD YY (May) 1.0% (3.5%)

EU/UK

NOTABLE HEADLINES

• UK PM Johnson said his government is getting on with delivering for the people and that they must reduce the burden of taxation, according to Reuters. It was separately reported that Tory MPs voiced concern regarding UK PM Johnson’s comments that he is actively thinking about a third term and wants to carry on as PM into the 2030s, according to FT.
• One 1922 Committee member has predicted a vote of no confidence against UK PM Johnson before July recess (subject to a rule change), according to The Telegraph. The article suggests PM Johnson has been hit by a fresh wave of no-confidence letters following the two recent by-election losses.
• UK PM Johnson said the BoE has done an overall outstanding job managing inflation during the past 25 years, while he said the government cannot fix every problem and that global inflation problems are tough. Furthermore, PM Johnson urged for restraint on public-sector pay because it would fuel a further rise in inflation and said they cannot allow increases in pay to be wiped out by more price increases, according to Reuters.
• UK PM Johnson has pushed back against lifting steel tariffs on developing nations. UK’s International Trade Secretary Trevelyan warned countries including South Korea, India, and Turkey could retaliate, according to The Times.
• KPMG warned the UK economy is at significant risk of entering a mild recession in 2023 as inflation takes its toll, according to The Times.