• APAC stocks traded mostly positive amid a pick-up from the holiday lull although Chinese markets faltered.
• European equity futures are indicative of a higher open with Eurostoxx 50 +0.7% after the cash market closed up by 0.5% yesterday.
• DXY is contained, JPY lags G10 FX with USD/JPY above 136.00, AUD was softer post-RBA rate hike. 
• RBA hiked rates by 50bps, as expected, while it refrained from any hawkish surprises and reiterated its guidance on rates.
• Looking ahead, highlights include EZ/UK Services and Composite Final PMIs, Speech from BoE’s Tenreyro & Supply from the UK.

US TRADE

• US stock markets were closed for the Independence Day holiday

NOTABLE HEADLINES

• A rooftop shooter killed at least 6 people and wounded around two dozen at a July 4th parade in the Chicago suburb, while police later detained the person of interest in the shooting, according to Reuters.
• US President Biden said he was shocked by the parade shooting and vowed to keep fighting gun violence, while he also offered the full support of the federal government to help the Highland Park community following the shooting, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin ordered troops to press deeper into the Donbas region of Ukraine after recently seizing Lysychansk, according to AFP News Agency.

APAC TRADE

EQUITIES

• APAC stocks traded mostly positive amid a pick-up from the holiday lull although Chinese markets faltered.
• ASX 200 was led by the tech and commodity-related sectors with further support from a lack of hawkish surprise from the RBA.
• Nikkei 225 was propelled by a weaker currency but pulled back from early highs after hitting resistance around the 26,500 level and following softer-than-expected wages data.
• Hang Seng and Shanghai Comp. were both initially lifted following reports US President Biden could make a decision on rolling back some China tariffs as soon as this week and with Vice Premier Liu He said to have had a constructive exchange with US Treasury Secretary Yellen on the economy and supply chains. Furthermore, participants also welcomed the strong Caixin Services and Composite PMI data, although the advances in the mainland were then pared as the central bank continued to drain liquidity and amid lingering COVID concerns.
• US equity futures benefitted from the early momentum as futures reopened but pared some of the gains as the mood in China soured; ES +0.5%.
• European equity futures are indicative of a higher open with Eurostoxx 50 +0.7% after the cash market closed up by 0.5% yesterday.

FX

• DXY was rangebound after the prior day’s holiday-constricted trade and despite firmer yields. DXY hovers just above the 105 mark.
• EUR/USD lacked direction with the recent slew of ECB rhetoric providing little to spur the single currency.
• GBP/USD was stuck near 1.2100 with upside limited as cabinet ministers were said to be getting tired of defending PM Johnson and with the UK facing its first national train drivers' strike in 25 years.
• USD/JPY extended on Monday’s rebound to above 136.00 following softer than expected wage data.
• Antipodeans were initially kept afloat by the mostly constructive mood although AUD was then pressured in the aftermath of the RBA rate decision in which the central bank hiked rates by 50bps, as expected, while it refrained from any hawkish surprises and reiterated its guidance on rates.

FIXED INCOME

• 10yr USTs were lower amid bear flattening in yields with the 2yr/10yr yield curve nearing inversion.
• Bunds remained subdued after recent selling pressure in which prices briefly dipped beneath 149.00.
• 10yr JGBs conformed to the lacklustre mood amongst global counterparts amid a mixed 10yr auction.

COMMODITIES

• Crude futures were choppy but held on to the prior day's gains on supply factors after Kazakhstan's June oil output fell 22% M/M and Norway's Lederne union announced that strike action had begun.
• UAE’s ADNOC set Murban crude OSP for August at USD 117.53/bbl vs prev. USD 109.68/bbl in July, according to Reuters.
• Norway's Lederne union said the strike in the Norwegian oil sector had begun, according to Reuters.
• Spot gold was stuck in a tight range alongside an uneventful greenback.
• Copper traded choppy in tandem with the similar mood in its largest purchaser China.
• Chile’s Codelco copper output fell 6.3% Y/Y in May to 142.9k tonnes, while Chile’s Collahuasi mine copper output fell 15.4% to 49k tonnes and Chile’s Escondida copper output rose 26% to 106.9k tonnes, according to Cochilco cited by Reuters.

CRYPTO

• Bitcoin traded indecisively overnight although remained above the 20,000 level.

NOTABLE APAC HEADLINES

• PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 107bln net drain.
• China is to set up a CNY 500bln state infrastructure investment fund and will issue 2023 advance local government special bonds quota in Q4, according to Reuters sources.
• Chinese Premier Liu He spoke with US Treasury Secretary Yellen regarding the economy and supply chains, while the exchange was said to be constructive and both sides believed in the need to strengthen communication and coordination of macro policies between China and the US, according to Reuters.
• US Treasury Department confirmed Treasury Secretary Yellen held a virtual meeting with China's Vice Premier Liu He as part of efforts to maintain open lines of communication, while they discussed macroeconomic and financial developments in both China and US, as well as the global economic outlook and food security challenge. Furthermore, Yellen raised issues of concern including the impact of Russia's war against Ukraine on the global economy and "unfair, non-market PRC economic practices", according to Reuters.
• RBA hiked the Cash rate Target by 50bps to 1.35%, as expected, while it reiterated that the board expects to take further steps in the process of normalising monetary conditions with the size and timing of future interest rate increases will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market. Furthermore, the central bank noted that Australian inflation was high but was not as high as in other countries and it forecast inflation to peak this year before declining back towards the 2-3% range next year.

DATA RECAP

• Chinese Caixin Services PMI (Jun) 54.5 vs Exp. 49.7 (Prev. 41.4)
• Chinese Caixin Composite PMI (Jun) 55.3 (Prev. 42.2)
• Japanese Average Cash Earnings YY (May) 1.0% vs Exp. 1.5% (Prev. 1.7%, Rev. 1.3%)
• South Korean CPI YY (Jun) 6.0% vs. Exp. 5.9% (Prev. 5.4%)

EU/UK

NOTABLE HEADLINES

• UK faces its first national train drivers' strike in 25 years with the head of the UK train drivers' union warning of 'massive' disruption as members vote on their first strike since 1995, according to FT