Newsquawk

Euro Market Open: Chinese CPI below exp., region subdued after similar Wall St. action; US CPI ahead

10 Aug 2022, 06:50 by Newsquawk Desk

APAC stocks were mostly subdued following the weak handover from the US where tech stocks were pressured; SPX -0.40%, NDX -1.15%.
Chinese inflation metrics fell short of expectations with Y/Y PPI hitting a 17-month low.
European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 future -0.2% after the cash market closed lower by 1.0% yesterday.
G10 FX was rangebound ahead of US CPI, EUR/USD sits on a 1.02 handle, USD/JPY hovers around 135.
Looking ahead, highlights include US CPI, German CPI (Final), Chinese M2, Speeches from BoE's Pill, Fed's Evans & Kashkari, Supply from Germany & US, Earnings from Disney, Honda, Fox, Aviva, Evonik & E.ON.

Stocks were sold on the eve of the pivotal US CPI report while the downside was led by big tech names and semiconductors after another earnings warning in the sector, where Micron (MU) noted its revenue would be at the low end or below its guidance, adding to concerns after the NVDA revenue warning on Monday.
SPX -0.40% at 4,123, NDX -1.15% at 13,008, DJIA -0.18% at 32,774, RUT -1.70% at 1,909.
Click here for a detailed summary.

NOTABLE US HEADLINES

US HHS Secretary said they took action to allow the FDA to grant EUA for monkeypox vaccines.
US SEC is to propose rules to boost hedge fund and private fund leverage disclosures and will require funds to provide more information as part of confidential "Form-PF" disclosures, according to Reuters sources.
Tesla (TSLA) CEO Musk sold around USD 6.9bln of shares in the automaker and said that in the hopefully unlikely event that Twitter forces the deal to close and some equity partners don't come through, it is important to avoid an emergency sale of Tesla stock, while he responded 'yes' when asked if he would buy Tesla stock again in case the Twitter deal doesn't close.

Ukraine is not taking responsibility for the explosions at the Russian airbase in Crimea, according to Ukrainian President Zelensky's adviser cited by Reuters.

APAC stocks were mostly subdued following the weak handover from the US where tech stocks were pressured after Micron’s warnings and with markets also cautious ahead of US CPI data.
ASX 200 was lacklustre amid a spooked tech industry although the losses in the index were stemmed by strength in utilities, energy and the top-weighted financials sector which benefitted after Australia’s largest lender CBA posted higher profits.
Nikkei 225 was pressured after it recently fell back beneath the 28,000 level and as the biggest movers remained influenced by earnings releases.
Hang Seng and Shanghai Comp were subdued with underperformance in Hong Kong amid the tech woes, while the mainland was somewhat choppy after softer than expected Chinese inflation data.
US equity futures were little changed with a non-committal tone ahead of the inflation data. ES unch.
European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 future -0.2% after the cash market closed lower by 1.0% yesterday.

DXY marginally softened overnight although price action was muted with FX markets calm ahead of US inflation data.
EUR/USD lacked firm direction but was kept afloat by support around the 1.0200 level.
GBP/USD was contained after yesterday’s choppy mood and comments by BoE’s Ramsden.
USD/JPY slipped back beneath the 135.00 level amid the cautious risk tone.
Antipodeans were rangebound alongside the uninspired mood and uneventful commodities complex.

10yr UST futures were off the prior day’s lows but with the rebound contained amid relatively stable yields.
Bund futures remained afloat amid the subdued risk tone but stalled just shy of 156.50
10yr JGBs were pressured and failed to benefit from the risk aversion or the BoJ’s presence in the market for nearly JPY 1.5tln of JGBs on top of its regular fixed-rate operations.

Crude lacked demand as bearish inventory data offset the mild tailwinds from the lower output growth forecasts in the latest EIA STEO, but with downside limited by support near the USD 90/bbl level for WTI.
US Private Inventory (bbls): Crude +2.2mln (exp. +0.1mln), Cushing +0.9mln, Distillates +1.4mln (exp. -0.7mln) and Gasoline -0.6mln (exp. -0.6mln).
EIA STEO (August) stated that US 2022 crude output is seen rising 610k BPD to 11.86mln BPD (prev. +720k BPD forecast in June) and US 2023 crude output is seen rising 840k BPD to 12.7mln BPD (prev. +860k BPD).
Spot gold lacked direction as markets looked ahead to upcoming US CPI data.
Copper wiped out its early gains amid the subdued risk appetite.

Bitcoin traded lower amid the cautious overnight mood and slipped below the 23,000 level.

NOTABLE APAC HEADLINES

Around 20 Chinese and Taiwanese warships stayed close to the Taiwan Strait median line on Wednesday morning and some Chinese ships continued to conduct missions off Taiwan's eastern coast, according to a source briefed on the matter cited by Reuters.
China's Global Times tweeted that a white paper said they make no commitment to renounce the use of force and reserve the option of taking all necessary measures, while this is aimed at external interference and Taiwan secessionists but not Taiwan compatriots, while it added that a non-peaceful means will be the last choice. Chinese state TV also noted that China reiterated not ruling out the use of force and its policy of one country, two systems for Taiwan.
China and South Korea agreed to maintain supply-chain stability and their foreign ministers discussed THAAD in a meeting on Tuesday.
China's ambassador to Australia said they have not yet reached the stage to talk about how to solve the trade issue, according to Reuters.
Urumqi city in China's Xinjiang will implement a partial lockdown due to COVID, according to state TV.
Japanese Chief Cabinet Secretary Matsuno, Finance Minister Suzuki and Economy Minister Yamagiwa will remain in their roles following the cabinet reshuffle, while ex-Economy Minister Nishimura will become the new Trade Minister and ex-Defence Minister Hamada will become the new Defence Minister.

DATA RECAP

NOTABLE HEADLINES

UK Tory leadership frontrunner Truss has rejected calls from the CBI to meet with PM Johnson and former Chancellor Sunak to agree on a common pledge to tackle the cost of living crisis, according to FT.
German Finance Ministry wants to raise all income tax bracket thresholds apart from tax on the rich, which still kicks in at EUR 277,826 and expects the tax take to drop by EUR 10.1bln in 2023, according to Reuters sources.