Newsquawk

US Market Open: Stocks attempt to claw back recent losses as H2 gets underway; bonds flip-flop on first day of new month

01 Jul 2022, 11:56 by Newsquawk Desk

European bourses are now mostly in the green to varying degrees after nursing opening losses
US equity futures remain in negative territory but off worst levels as the contracts coat-tail on some of Europe's upside
In FX, Dollar regroups after a late month-end fade amidst broad gain, JPY outperforms whilst high-beta G10s lag
Debt futures rack up more safe-haven gains before a recovery in risk sentiment and sharp reversal
Crude futures retrace some of yesterday's losses but base metals tumble with LME copper dipping under USD 8,000/t
Looking ahead, highlights include US ISM Manufacturing PMI and ECB’s de Cos

1st July 2022

Russia President Putin spoke with Indian PM Modi whereby they exchanged ideas on bilateral trade in Agriculture, fertilizers, pharma products, stating that these could be encouraged, according to a statement cited by Reuters.
Russian President Putin said western political pressure is pushing us towards accelerating integration with Belarus, via Reuters.

Iran's ambassador to the United Nations said Iran will be in contact with the European Union coordinator for the next round of talks, via Al Jazeera.

European bourses are now mostly in the green to varying degrees after nursing opening losses.
Sectors are mixed with no clear theme - Tech is the laggard and Utilities the outperformer
Chip stocks are after sources said TSMC has seen its major clients adjust downward their chip orders for the rest of 2022, whilst Micron's guidance was underwhelming
Stateside, US equity futures remain in negative territory but off worst levels as the contracts coat-tail on some of Europe’s upside.
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Dollar regroups after late month end fade amidst broad gains ahead of US manufacturing ISM and construction spending - DXY retests 105.000+ levels from 104.640 low yesterday.
Yen bucks trend, but off recovery peaks as yields firm up and risk aversion wanes - Usd/Jpy around 135.500 vs 134.74 overnight base.
Aussie underperforms and hits fresh 2022 trough sub-6800 and Kiwi under 0.6200 after decline in ANZ consumer sentiment.
Pound undermined by downward revision to UK manufacturing PMI with Cable below 1.2100 and prone to test of Fib support if 1.2050 breached.
Euro back on 1.0400 handle and propped by better than forecast Eurozone manufacturing PMIs and stronger than expected inflation metrics.
Rand extends declines alongside Gold as SA power and pay issues rumble on - Usd/Zar above 16.3400, spot bullion below Usd 1800/oz.
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Debt futures rack up more safe haven gains before recovery in risk sentiment and sharp reversal.
Bunds recoil from 149.46 to 148.24, Gilts retreat to 113.79 from 114.52 and 10 year T-note pulls back from 118-29+ to 118-06 as benchmark yield retests 3% briefly.
Bonds subsequently bounce off lows awaiting US manufacturing ISM and construction spending ahead of long Independence Day holiday weekend.
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WTI and Brent front-month futures retrace some of yesterday’s losses with upside also spurred the recovery across the stock markets
Libya's NOC announced a force majeure over Es Sider, Ras Lanuf Ports and the El Feel oilfield, while it noted that oil production decreased as daily exports ranged between 365-408k BPD which is a decline of 865k BPD, according to Reuters.
Spot gold is under pressure after the yellow metal breached USD 1,800/oz to the downside – with the next level to the downside at USD 1,786/oz, the May 16th low.
Base metals are softer across the board as recession woes grapple with the risk-correlated market. LME 3M copper briefly fell beneath the USD 8,000/t for the first time since January.
India raised the basic import tax on gold to 12.5% from 7.5%, according to BQ Prime citing a Gazette notification.
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NOTABLE EUROPEAN HEADLINES

French government spokesperson said a possible cabinet reshuffle could take place Monday or Tuesday, according to Reuters.

NOTABLE EUROPEAN DATA

EU HICP Flash YY (Jun) 8.6% vs. Exp. 8.4% (Prev. 8.1%)
EU HICP-X F&E Flash YY (Jun) 4.6% vs. Exp. 4.5% (Prev. 4.4%)
EU HICP-X F,E,A&T Flash YY (Jun) 3.70% vs. Exp. 3.90% (Prev. 3.80%)
EZ S&P Global Manufacturing Final PMI (Jun) 52.1 vs. Exp. 52 (Prev. 52)
UK S&P GLBL/CIPS Manufacturing PMI FNL (Jun) 52.8 vs. Exp. 53.4 (Prev. 53.4)

APAC stocks began the new trading month mostly in the red as the region digested a slew of data releases and amid headwinds from the US where Consumer Spending data disappointed and Atlanta Fed's GDPnow model alluded to a recession.
ASX 200 was just about kept afloat by resilience in nearly all industries aside from the commodity-related sectors.
Nikkei 225 fell beneath the 26,000 level after the latest Tankan survey mostly disappointed.
Shanghai Comp. traded indecisively despite the stronger than expected Caixin Manufacturing PMI data which rose to its highest since May 2021 as sentiment in the mainland was constrained by falling commodity prices, as well as the absence of Hong Kong participants and Stock Connect flows.

NOTABLE APAC HEADLINES

Chinese President Xi said "one country, two systems" has been successful for Hong Kong over the past 25 years and said Hong Kong is a window and a bridge connecting the mainland to the world, while he added that Hong Kong has to defend against interference and focus on development, according to Bloomberg and Reuters.
Hong Kong's new Chief Executive Lee was sworn in and stated the National Security Law brought stability after chaos, while he added the government will strive to control and manage COVID-19 through scientific methods, according to Reuters.
UK PM Johnson said China has been failing to comply with its commitments on Hong Kong and the UK intends to do all it can to hold China to account, according to Reuters.
PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a CNY 50bln net daily drain, according to Reuters.

DATA RECAP

Chinese Caixin Manufacturing PMI (Jun) 51.7 vs. Exp. 50.1 (Prev. 48.1)
Japanese Tankan Large Manufacturing Index (Q2) 9 vs. Exp. 13 (Prev. 14)
Japanese Tankan Large Manufacturing Outlook (Q2) 10 vs. Exp. 14 (Prev. 9)
Japanese Tankan All Big Capex Est (Q2) 18.6% vs. Exp. 8.9% (Prev. 2.2%)
Tokyo CPI YY (Jun) 2.3% vs. Exp. 2.5% (Prev. 2.4%)
Tokyo CPI Ex. Fresh Food YY (Jun) 2.1% vs. Exp. 2.1% (Prev. 1.9%)
Tokyo CPI Ex. Fresh Food & Energy YY (Jun) 1.0% vs. Exp. 1.0% (Prev. 0.9%)