Newsquawk

Euro Market Open: Choppy Wall St. trade capped APAC upside, DXY lost 107.00; ECB mins. ahead

07 Jul 2022, 06:50 by Newsquawk Desk

APAC stocks traded mostly positive but with gains capped following the choppy performance on Wall St.
FOMC Minutes stated that participants recognised the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.
European equity futures are indicative of a higher open with Eurostoxx 50 +1.3% after the cash market closed up by 1.7% yesterday.
DXY eased back beneath 107, EUR/USD is back above 1.02, GBP/USD remains stuck below 1.20.
Looking ahead, highlights include German Industrial Output, US International Trade, ECB Minutes, Speeches from Fed's Waller & Bullard, ECB's Lane & Enria, BoE's Pill, Supply from Spain, France & US Refunding.

US stocks indices were choppy and kept to within tight ranges until ramping higher in the NY afternoon with a lack of an obvious catalyst, while the earlier beat on ISM Services data was less impressive under the hood and the June FOMC minutes proved a damp squib.
SPX +0.36% at 3,845, NDX +0.62% at 11,852, DJIA +0.23% at 31,038, RUT -0.79% at 1,727.
Click here for a detailed summary.

FOMC MINUTES

FOMC Minutes stated that participants judged a rate increase of 50bps or 75bps would likely be appropriate at the July meeting and concurred that the economic outlook warranted moving to a restrictive stance of policy, while they recognised the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.

Russia is preparing to mobilise its economy for a prolonged war in Ukraine in which bills to support the economy will increase control over businesses as Moscow seeks to withstand sanctions pressure, according to FT
Port of Mariupol in southern Ukraine is operating at full capacity, according to TASS citing a director.

Belarusian military said Polish infrastructure is the first target for a retaliatory strike in the case of armed conflict, according to Interfax.
Iran's guards detained several foreigners including the deputy head of the UK mission in Tehran for alleged spying, according to state press. It was later reported that the UK deputy ambassador detained in Iran was released, although the UK Foreign Office said Iranian TV reports that a British official has been arrested for alleged spying are completely false.
US Treasury Department issued sanctions related to Iran oil which were imposed on people and entities accused of helping to deliver and sell products to east Asia, according to Reuters.

APAC stocks traded mostly positive but with gains capped following the choppy performance on Wall St and after an uneventful FOMC Minutes which noted participants judged a rate increase of 50bps or 75bps would likely be appropriate at the July meeting.
ASX 200 was kept afloat alongside strength in the mining and materials sectors, as well as encouraging trade data.
Nikkei 225 was underpinned amid reports the BoJ was said to be completely committed to its easing policy.
Hang Seng and Shanghai Comp. were mixed with Hong Kong pressured by tech weakness, while the mainland was initially subdued after the PBoC drained liquidity and with Beijing to impose China’s first-ever COVID-19 vaccine mandate, although Chinese bourses then pared losses as markets also digested MOFCOM's announcement to rollout measures to support auto consumption.
US equity futures remained rangebound after yesterday's lack of firm direction; +0.3%
European equity futures are indicative of a higher open with Eurostoxx 50 +1.3% after the cash market closed up by 1.7% yesterday.

DXY eased back beneath 107.00 after the prior day’s gains which were spurred by higher yields and widening yield differentials with Europe.
EUR/USD attempted to nurse some of the recent losses with the pair back above 1.02.
GBP/USD edged mild gains but with upside limited and the pair stuck below 1.20 as PM Johnson remains defiant against the increasing calls for him to resign.
USD/JPY softened after it hit resistance around the 136.00 level and as the greenback pared recent advances.
Antipodeans were underpinned amid the mild reprieve in commodities and following strong Australian trade data.

10yr USTs languished after recent declines which were triggered following strong headline ISM and JOLTS Jobs.
Bunds were rangebound following yesterday's fluctuations.
10yr JGBs were initially rebound although found mild support on the back of firmer results at the 30yr auction.

Crude futures rebounded with Brent back above USD 100/bbl although price action was choppy after bearish private inventory data and reports the US and allies are discussing capping Russian oil at USD 40-60/bbl.
US Private Inventory Data: Crude +3.8mln (exp. -1.0mln), Cushing +0.5mln, Gasoline -1.8mln (exp. -0.5mln), Distillate -0.6mln (exp. +1.1mln)
Spot gold was off the prior day's lows as a softer greenback helped nurse some of the recent losses.
Copper gained as risk appetite steadily improved and amid reprieve across the commodities complex.

NOTABLE APAC HEADLINES

PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 77bln net drain.
US counterintelligence officials are reportedly stepping up a campaign to warn state and local government leaders and business executives about what they see as China’s increasing use of overt and covert means to influence policy-making, according to WSJ.
China's MOFCOM announced to rollout measures to expand vehicle consumption and is studying extending tax exemptions for new energy vehicles, while China's MIIT said China will ensure a stable supply of auto chips and raw materials, according to Reuters.
Hong Kong government announced it is to suspend COVID-related flight bans, according to Reuters.
BoJ is reportedly expected to raise its CPI expectations for the current year to above the 2% target and is considering lowering its GDP growth forecast, while it is said to be completely committed to its easing policy, according to Jiji press.
Tokyo's Governor said they will discuss potential COVID curbs, according to FNN.

DATA RECAP

GLOBAL HEADLINES

IMF MD Georgieva said they cannot rule out a possible global recession in 2023 and that the IMF will downgrade the prior forecast for 3.6% growth for the global economy in 2022 and 2023.

NOTABLE HEADLINES

UK 1922 Committee is to hold internal elections next Monday and the new Committee is expected to change rules on confidence votes, according to a lawmaker cited by Reuters.
UK PM Johnson will fight a confidence vote but is clear that if he were to lose that vote he would resign, according to ITV citing sources.
UK PM Johnson and Chancellor Zahawi are set to launch a new economic plan today, according to The Telegraph. There were also comments from PM Johnson’s aide Duddridge that tax cuts will definitely be included in the PM and Chancellor’s speeches next week, according to Reuters.
UK Minister Gove was fired by UK PM Johnson, according to BBC's Mason. In relevant news, UK Secretary of State for Wales Simon Hart resigned, while Attorney General Braverman said PM Johnson should resign and that she would run to replace him, according to ITV.