• APAC stocks were mostly negative with risk appetite sapped by headwinds from the global growth concerns
• DXY was rangebound and took a breather from the prior day’s outperformance, EUR/USD remained lacklustre, and USD/JPY retreated
• 10yr USTs mildly pulled back but held on to most of the prior day’s gains and Bunds stalled overnight but with the downside limited
• Crude futures nursed some of the prior day's near-record slump; WTI traded on both sides of USD 100/bbl overnight
• UK Chancellor Sunak and UK Health Minister Javid announced their resignations; UK PM Johnson reportedly plans to stay on
• Looking ahead, highlights include EZ Retail Sales, US ISM Services PMI, Speeches from Fed's Williams & BoE's Pill, Supply from Germany

As of 06:15BST/01:15EDT

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US TRADE

• US stocks were choppy and finished mixed amid little fresh newsflow with the NDX prospering in the face of global growth woes that pressured cyclicals. Energy was the worst-hit sector after oil prices saw their largest decline since March 9th and suffered a near-record drop in which WTI lost the USD 100/bbl handle as the recession fears catalysed capitulation.
• SPX +0.17% at 3,831, NDX +1.68% at 11,779, DJIA -0.42% at 30,967, RUT +0.63% at 1,738.
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GEOPOLITICS

RUSSIA-UKRAINE

• US State Department spokesperson Price said the time is not right for US Secretary of State Blinken to meet with Russian Foreign Minister Lavrov and the US would like to see Russia be serious about diplomacy but has not seen that yet, according to Reuters.
• US Assistant Secretary of State for Economic and Business Affairs Toloui said G20 countries should hold Russia accountable and insist that it supports the ongoing UN efforts to reopen sea lanes, according to Reuters.
• Turkish President Erdogan said a deal for Ukrainian grain is expected to be done in ten days, according to a press conference.
• China's Vice Foreign Minister Ma said China is willing to strengthen strategic coordination with Russia within multilateral frameworks including the G20, while Russia's Foreign Minister said via a translator that the complicated world situation requires all parties to make efforts to protect international laws, according to Reuters.
• Japanese Deputy Chief Cabinet Secretary Kihara said the actual price cap figure for Russian oil will be discussed as necessary among G7 members, according to Reuters.

OTHER

• US is asking ASML (ASML NA) to stop selling key chipmaking gear to China, according to Bloomberg.
• US State Department spokesperson Price said Iran is making "extraneous demands" in nuclear talks, according to Reuters.
• South Korean President Yoon held his first meeting with top military commanders and ordered the military to promptly and sternly retaliate in case of any North Korean provocation. President Yoon also called for stepped-up measures to deter North Korea's nuclear and missile programmes, as well as reduce the possibility of provocation, according to the Presidential Office.

APAC TRADE

EQUITIES

• APAC stocks were mostly negative with risk appetite sapped by headwinds from the global growth concerns and US recession fears.
• ASX 200 was marginally lower with energy leading the descent in the commodity-related sectors, although the downside in the index was stemmed by tech strength following the duration-sensitive bias stateside and lower yield environment.
• Nikkei 225 weakened alongside a firmer currency and with Japan said to delay the call on the start of the nationwide travel support.
• Hang Seng and Shanghai Comp. conformed to the downbeat mood after the PBoC continued to drain liquidity and with reports noting that US President Biden could lift tariffs on just USD 10bln of Chinese goods, while the US was also said to pressure ASML to stop selling key chipmaking equipment to China. In addition, COVID-19 concerns persisted after China’s Xi’an city entered a 7-day period of ‘temporary control measures’ and with Macau officials locking down the Grand Lisboa hotel and casino due to a cluster of infections.
• US equity futures were rangebound overnight after the choppy mood on Wall Street.
• European equity futures are indicative of a higher open with Eurostoxx 50 +1.8% after the cash market closed down by 2.7% yesterday.

FX

• DXY was rangebound and took a breather from the prior day’s outperformance which was spurred as US participants returned from the holiday weekend to a risk-averse mood, while the focus now shifts to the upcoming FOMC Minutes.
• EUR/USD remained near its lowest level since 2002 owing to the dollar strength and EU growth concerns.
• GBP/USD was constrained after further political tremors with the resignation of high-profile ministers Chancellor Sunak and Health Secretary Javid although PM Johnson dug in and said he was now free to cut taxes.
• USD/JPY retreated with the JPY firming on the recent narrowing of yield differentials and risk-averse mood.
• Antipodeans were kept subdued by the recent commodity-related losses.

FIXED INCOME

• 10yr USTs mildly pulled back but held on to most of the prior day’s gains which were spurred by the recession fears and with the recent slump in oil prices easing some of the inflationary pressure, while the 2yr/10yr yield curve is currently inverted.
• Bunds stalled overnight but with the downside limited by slowdown concerns.
• 10yr JGBs were kept afloat with the BoJ in the market for over JPY 1.2tln of JGBs on top of its fixed-rate buying operations.

COMMODITIES

• Crude futures nursed some of the prior day's near-record slump that coincided with growth concerns in a highly volatile market and was devoid of any major catalysts, while the recovery overnight was limited in which WTI traded on both sides of the psychological USD 100/bbl level.
• Norway oil strike union leader announced an end to the strike with oil and gas workers to return to work as soon as possible and that the government imposed a forced settlement, according to Reuters.
• ICE cut Brent crude oil futures margins by 12.5%.
• Goldman Sachs said oil has overshot as the global deficit is unresolved and it is premature for oil to drop on recession concerns.
• Spot gold was lacklustre after slumping beneath USD 1800/oz yesterday as the greenback reigned supreme.
• Copper extended on losses to 19-month lows amid global growth concerns.

CRYPTO

• Bitcoin was subdued amid the risk-averse mood and retreated beneath 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 97bln net drain.
• Shanghai suspended the operation of KTV venues due to COVID-19 but other entertainment venues can remain open, while the gradual reopening of cinemas and concert venues will go ahead from July 8th, according to Reuters.
• US top diplomat for East Asia Kritenbrink said the top priority for US Secretary of State Blinken's meeting with Chinese Foreign Minister Wang is to underscore US commitment to diplomacy and maintaining open lines of communication, while he expects Blinken to raise human rights in the meeting with China's Foreign Minister, according to Reuters.
• Two US senators called for the FTC to investigate TikTok after the disclosure about Chinese access to US data, according to Reuters.

EU/UK

NOTABLE HEADLINES

• BoE's Tenreyro said she would expect QE unwind to have no material impact on the UK economy and stated that experience so far supports that, according to Reuters.
• BoE's Cunliffe said we will act to ensure the inflation shock does not become imbedded.
• UK Health Minister Javid announced his resignation and UK Chancellor Sunak also resigned in which he stated the public rightly expects the government to be conducted properly, competently and seriously which is the reason he is resigning, via Twitter.
• UK PM Johnson reportedly plans to stay on and appoint new Cabinet ministers, according to Bloomberg sources. It was later reported that UK Education Minister Zahawi was appointed as the new Chancellor and Michelle Donelan was appointed as the Education Minister, while Steve Barclay was appointed as the new Health Minister, according to Reuters citing a government statement.
• UK Foreign Secretary Truss said she is 100% behind PM Johnson and minister Rees-Mogg said PM Johnson is carrying on "business as usual" after the resignations, while it was then reported that PM Johnson loyalist Jonathan Gullis also resigned.
• UK's 1922 Committee rebels plan a rule change to oust PM Johnson and it was suggested that the departures of Chancellor and Health Secretary will "concentrate minds" to allow a second confidence vote, according to The Telegraph