• US equity futures were lifted after the bell as Alphabet’s advertising topped forecasts, whilst Microsoft initially fell on downbeat metrics but reversed course on guidance
• APAC stocks eventually traded mixed following a mostly subdued session. Eurostoxx 50 future is up 0.3% after the cash market closed lower by 0.8% yesterday.
• DXY took a breather from yesterday's run, EUR/USD posted mild gains, AUD/USD fell on Aussie CPI
• US President Biden will speak to Chinese President Xi on Thursday; Biden has not yet made a decision regarding the removal of Chinese tariffs, according to White House’s Kirby
• Looking ahead, highlights include German GfK Consumer Sentiment, EZ M3, US Durable Goods, FOMC announcement and Chair Powell's press conference, supply from the UK, and Germany
• Earnings from Airbus, BASF, Deutsche Bank, Equinor, BATS, GSK, Lloyds, Rio Tinto, Credit Suisse, Meta, T-Mobile, Boeing, and more.

US TRADE

• US stocks tumbled on the eve of the Fed and the looming month-end.
• After the bell, US equity futures were lifted as Alphabet soared after advertising topped forecasts, whilst Microsoft initially fell on downbeat metrics but reversed course as markets welcomed its FY23 revenue guidance during the conference call.
• SPX -1.15% at 3,921, NDX -1.96% at 12,086, DJIA -0.71% at 31,761, RUT -0.70 % at 1,805.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Alphabet Inc (GOOGL) Q2 2022 (USD): EPS 1.21 (exp. 1.29), Revenue 69.70bln (exp. 70.04bln).Google advertising 56.29bln, (exp. 55.91bln). CFO said FX impact to be even greater in the current Q, according to CNBC.Shares rose 5% after-hours.
• Microsoft Corp (MSFT) Q4 2022 (USD): EPS 2.23 (exp. 2.29/2.29 GAAP), Revenue 51.9bln (exp. 52.45bln). Intelligent Cloud revenue 20.91bln (exp. 21.07bln). Guides FY23 revenue double digits sales growth, FY23 FX impact of 4-points decrease in revenue growth, via its conference call. Shares initially fell 3% on the earnings, before rising over 6% on guidance.
• Twitter (TWTR) said it significantly slowed hiring in Q2 2022; in 2021 and H1 2022, macro factors had a negative impact on, and may negative impact in future periods, such as advertising revenue. Twitter is to hold shareholder vote on Musk deal on September 13th at 18:00BEST/13:00EDT, according to CNBC.
• Visa Inc (V) Q3 2022 (USD): Adj. EPS 1.98 (exp. 1.74/1.73 GAAP), Revenue 7.3bln (exp. 7.06bln). Co. seeing no evidence of a pullback in consumer spending. Shares fell 0.2% after-hours.
• CHIPS-plus legislation moved forward in the Senate by a vote of 64-32, CNN reported, adding "it's in very good shape to pass".

GEOPOLITICS

RUSSIA-UKRAINE

OTHER

• US President Biden will speak to Chinese President Xi on Thursday, according to Bloomberg.
• White House national security spokesman Kirby said the expected call between US President Biden and China President Xi will cover a range of issues, including Taiwan, Ukraine and managing US-China competition. Kirby doubts tariffs will be a big topic for the Biden-Xi call. Biden has not yet made a decision regarding removal of tariffs on Chinese goods, via Reuters.

CENTRAL BANKS

• ECB's de Cos said risks to the inflation outlook in the Eurozone remain on the upside and have intensified, particularly in the short-term, risks include lasting deterioration of the economy in the Eurozone and persistently high energy and food prices. ECB's de Cos added that future interest rate policy will be taken at each meeting, and ECB stands ready to adjust all of its instruments to ensure inflation stabilises at the bank's 2% medium-term target, via Reuters.
• Deutsche Bank and Goldman Sachs have revised their August RBA calls to a 50bps hike (prev. 75bps hike) following the Australian Q2 CPI metrics.

APAC TRADE

EQUITIES

• APAC stocks eventually traded mixed following a mostly subdued session, but within narrow intraday ranges.
• ASX 200 moved between gains and losses with the Healthcare sector leading the gains whilst Metals & Mining lagged.
• Nikkei 225 was similarly contained whilst Canon shares fell as much as 3% post-earnings.
• KOSPI declined with Apple-supplier SK Hynix warning of a slowing in memory chip demand in H2.
• Hang Seng underperformed with Alibaba retracing yesterday's gains whilst the property sector was also hit.
• Shanghai Comp was caged following another modest net liquidity drain by the PBoC, whilst multiple sources suggested the Biden-Xi call is to take place on Thursday.
• US equity futures held onto gains with the tech-laden NQ outperforming following Alphabet's advertising numbers and Microsoft's guidance.
• European equity futures are indicative of a slightly firmer open with the Euro Stoxx 50 future +0.1% after the cash market closed lower by 0.8% yesterday.

FX

• DXY took a breather from yesterday's run and tested 107.00 to the downside after hitting a high of 107.29 yesterday.
• EUR/USD posted mild gains but remained under 1.0150 throughout the APAC session.
• GBP/USD traded on either side of 1.2050 with EUR/GBP steady above 0.8400.
• AUD fell around 40 pips over the course of 50 minutes after Aussie Q2 CPI missed expectations in the headline metrics, while the AUD/NZD cross failed to sustain a breach under 1.1100.
• USD/JPY was steady and oscillated around 137.00.

FIXED INCOME

• 10yr UST futures remained heavy following the prior day's slide and ahead of the FOMC.
• Bund futures were similarly soft and remained under 156.00
• 10yr JGB yields were steady around 0.20%, whilst Aussie yields fell following the Australian CPI.

COMMODITIES

• Crude futures consolidated overnight and held onto the prior day's losses.
• NEC Director Deese said there are no plans to continue SPR releases beyond the originally set out 6mth period, according to Reuters.
• US Private Inventory Data (bbls): Crude -4.0mln (exp. -1mln), Distillates -0.6mln (exp. +0.5mln), Gasoline -1.1mln (exp. -0.9mln), Cushing +1.1mln
• Spot gold was uneventful but encountered some overnight resistance at USD 1,720/oz.
• Copper prices were contained whilst Chinese iron ore futures rose in early trade.
• Ukraine Central Bank Governor said Ukraine grain exports under Russia deal expected to hit 5mln tonnes/mth in 2023.

CRYPTO

• Bitcoin traded sideways above USD 21k.

NOTABLE APAC HEADLINES

• Hong Kong will have no choice but to raise interest rates, although the pace or scale need not follow US hikes and it is unlikely to trigger the kind of property market crisis seen in 1998, according to SCMP citing the Hong Kong Financial Secretary.
• Magnitude 7.2 earthquake hits Philippines region of Luzon, according to ESMC; no tsunami warnings issue, according to Reuters.
• China overnight rate fell below 1% for the first time since last year, according to Bloomberg.
• PBoC injected CNY 2bln via 7-day reverse repos with the maintained rate of 2.10% for a net drain of CNY 1bln.
• PBoC set USD/CNY mid-point at 6.6.7731 vs exp. 6.7680 (prev. 6. 7483); weakest fix since May 17th.
• China locked down almost 1 million residents Wuhan city's Jiangxia district, according to Bloomberg.

DATA RECAP:

• Chinese Industrial profit YY (Jun) +3.9% (Prev. -6.50%)
• Chinese Industrial profit YTD (Jun) 1.00% (Prev. 1.00%)
• Australian CPI QQ (Q2) 1.8% vs. Exp. 1.9% (Prev. 2.1%)
• Australian CPI YY (Q2) 6.1% vs. Exp. 6.2% (Prev. 5.1%)
• Australian RBA Weightd Medn CPI QQ (Q2) 1.4% vs. Exp. 1.4% (Prev. 1.0%)
• Australian RBA Weightd Medn CPI YY (Q2) 4.2% vs. Exp. 4.3% (Prev. 3.2%)
• Australian RBA Trimmed Mean CPI QQ (Q2) 1.5% vs. Exp. 1.5% (Prev. 1.4%)
• Australian RBA Trimmed Mean CPI YY (Q2) 4.9% vs. Exp. 4.7% (Prev. 3.7%)

EUROPE-SPECIFIC HEADLINES

• Germany is reportedly rethinking its plan to exit nuclear power by year-end on concerns Russia's move to cut gas supply could start a winter electricity crunch, according to FT.
• UK PM-candidate Sunak has pledged to cut VAT on energy bills in a change of strategy, according to The Times.

DATA RECAP:

• UK BRC Shop Price Index YY (Jul) 4.4% (Prev. 3.1%).