• APAC stocks were firmer as the positive momentum rolled over from global peers (S&P 500 +1.56%, NDX +2.73%)
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.2% after the cash market closed up 1.3% yesterday.
• FX markets are relatively contained with the DXY marginally softer, antipodeans outpace peers, GBP steady ahead of BoE. 
• Looking ahead, highlights include EZ & UK Construction PMI, US Challenger Layoffs, IJC, International Trade & Canadian Trade Balance, BoE Policy Announcement, Speeches from ECB's Elderson & Fed's Mester, Supply from Spain & France.
• Earnings from Cigna, Alibaba, Conoco-Phillips, Amgen, Eli Lilly, Glencore, Rolls-Royce, Adidas, Credit Agricole, Bayer, Lufthansa & Telecom Italia.

US TRADE

• US stocks rallied with sentiment underpinned by firm data in which ISM Services and Factory Orders topped forecasts, while some of the geopolitical risks unwound after Pelosi's Taiwan trip concluded.
• SPX +1.56% at 4,155, NDX +2.73% at 13,253, DJIA +1.29% at 32,812, RUT +1.41% at 1,909.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Kashkari (2023 voter) said it's a very unlikely scenario that the Fed cuts rates next year and is more likely to raise rates then sit there, while he is not sure what markets are looking at.
• Fed's Barkin (2024 voter) said the Fed is committed to getting inflation under control and returning it to the 2% target, while it has made it clear that it will "do what it takes".
• US Democrat Senator Sinema wants to remove carried interest loophole provision from the Manchin/Schumer reconciliation bill and wants USD 5bln in drought resiliency funding, according to Politico.
• US CBO estimates that enacting the reconciliation bill would result in a net decrease in the deficit totalling USD 102bln over the 2022-31 period.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky is seeking direct talks with Chinese President Xi to help end Russia's invasion of Ukraine, according to SCMP.
• Gazprom said western sanctions make the return of the Nord Stream 1 turbine impossible.
• Belarusian special operations forces are conducting a combat readiness check on the border to Ukraine, reports the General Staff of the Armed Forces of Ukraine cited by NEXTA

OTHER

• US Senate voted 95-1 to approve Finland and Sweden joining NATO, according to C-SPAN.
• Iran has started enriching uranium with two extra first-generation IR-1 centrifuge cascades to up to 5% purity at the underground Natanz plant, according to an IAEA report cited by Reuters.
• Russia's envoy to Iran nuclear talks said the Vienna talks on restoring the 2015 nuclear pact will resume shortly and Russian negotiators stand ready for constructive talks in order to finalise the agreement.
• Russian Defence Ministry noted a ceasefire violation by Azeri armed forces in one part of the Nagorno-Karabakh region, according to Interfax. It was also reported that Azerbaijan said a complete withdrawal of Armenian troops and the disarmament of illegal Armenian formations around the Nagorno-Karabakh are "absolutely necessary".

APAC TRADE

EQUITIES

• APAC stocks were firmer as the positive momentum rolled over from global peers.
• ASX 200 was kept afloat by tech after similar outperformance of the sector stateside.
• Nikkei 225 briefly reclaimed the 28k level amid recent JPY weakness and as the earnings deluge continued.
• Hang Seng and Shanghai Comp conformed to the heightened risk appetite with firm gains in tech including Alibaba ahead of its earnings and with Hong Kong set to provide HKD 2k in consumption vouchers from Sunday.
• US equity futures traded sideways after the prior day's rally which lifted Wall St to its best level since early June. ES -0.1%.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +0.2% after the cash market closed up 1.3% yesterday.

FX

• DXY remained subdued after its choppy performance during the US session where price action was at the whim of yields and initial gains were unwound despite continued hawkish Fed rhetoric.
• EUR/USD was lacklustre after recently failing to sustain the 1.0200 handle and recent mixed data from the bloc, while Morgan Stanley remains bearish on the single currency which it sees slipping to 0.97.
• GBP/USD traded rangebound ahead of the BoE policy meeting and expected 50bps hike.
• USD/JPY lacked firm direction and traded both sides of the 134.00 level.
• Antipodeans marginally benefitted amid the positive risk tone and their high-beta statuses.
• Brazil Central Bank hiked the Selic Rate by 50bps to 13.75% as expected, with the decision was unanimous, while it will evaluate the need for another hike of a smaller magnitude at the next meeting and said future policy steps could be adjusted to ensure inflation converges toward its target.

FIXED INCOME

• 10yr UST futures were firmer after rebounding back above the 120.00 level as yields slightly eased and despite another bout of hawkish rhetoric from Fed officials.
• Bund futures remained positive but with upside capped by the risk appetite and after hitting resistance at 157.50.
• 10yr JGBs were contained amid the softer results at the 10yr inflation-indexed JGB auction, while senior government official Saito a.k.a. 'Mr. JGB' said investors should start preparing for a return to normal Japanese bond trading as the central bank will one day step back from its debt purchases.

COMMODITIES

• Crude remained lacklustre after yesterday's selling pressure amid the OPEC+ agreement for a small output hike, bearish inventory data and the recommencement of Iranian nuclear talks.
• Caspian Pipeline Consortium (CPC) said due to maintenance, the Kashagan oil field in Kazakhstan suspended production and oil offtake to CPC has been further lowered, while supplies are significantly down and the oil offtake from the Tengiz oil field is also reduced.
• Spot gold marginally gained amid a softer greenback.
• Copper was subdued despite the constructive risk tone, as China's drills around Taiwan threaten delays for global shipping in one of the world's busiest straits.

CRYPTO

• Bitcoin prices notched mild gains overnight amid the improved risk appetite and reclaimed the 23,000 level.

NOTABLE APAC HEADLINES

• China conducted joint Navy, Air Force and Rocket Force drills, according to Xinhua.
• China's Taiwan Affairs Office said the Taiwan issue is not a regional issue but is a China internal affairs issue, while it added that punishment of pro-Taiwan independence diehards and external forces is reasonable and lawful.
• Taiwan's Defence Ministry said unidentified aircraft which were likely drones, flew above Kinmen Islands on Wednesday night, while the military fired flares to drive away the aircraft, according to Reuters.
• Taiwan's Defence Ministry said troops will continue to reinforce alertness level and are carrying out daily training as usual, while the military will react appropriately to an enemy situation and safeguard national security and sovereignty, according to Reuters.
• ASEAN Foreign Ministers are concerned about international and regional volatility and are concerned volatility could lead to a miscalculation, serious confrontation, open conflicts, and unpredictable consequences among major powers, according to Reuters.
• US House Speaker Pelosi plans to visit an inter-Korean border area jointly controlled by the American-led UN Command and North Korea, according to a South Korean official cited by Reuters.
• China’s Yiwu city will conduct mass testing and China's Sanya city is on lockdown amid a COVID flare-up, according to state media.

DATA RECAP

• Australian Trade Balance (AUD)(Jun) 17.7B vs Exp. 14.0B (Prev. 16.0B)
• Australian Goods/Services Exports (Jun) 5% (Prev. 9%)
• Australian Goods/Services Imports (Jun) 1% (Prev. 6%)

EU/UK

NOTABLE HEADLINES

• UK Foreign Secretary Truss (PM candidate) argues that inflation has been caused by supply side shocks following COVID and Ukraine, as such wants to review the BoE’s mandate to ensure it matches peers in keeping inflation under control. (FT)