Newsquawk

US Market Open: Modest risk-on price action has ebbed amid China ADS updates

12 Aug 2022, 11:40 by Newsquawk Desk

European bourses are firmer, but action has been relatively contained with newsflow slim, Euro Stoxx 50 +0.2%; however, benchmarks waned alongside US futures following China ADS updates.
Currently, ES +0.4% but similarly off best levels amid Chinese stocks announcing intentions to delist their ADSs and reports via BBG that Germany is being looked at as a banking base.
DXY continues to recover to the modest detriment of peers, though non-US Dollars are relatively resilient.
Core benchmarks are little changed overall on the session and particularly when compared to price action seen earlier in the week
WTI and Brent hold an upside bias in Europe amid the broader risk tone, while gold is uneventful and base metals trade mixed
Looking ahead, highlights include US Import/Export Prices, Uni. of Michigan (Prelim.).

As of 11:15BST/06:15ET

A European bank has agreed to process the Russian payment for the Druzhba oil transit through Ukraine, via Reuters citing sources.

Transneft says payment for oil transit to Czech has reached the bank, confirmation from Ukraine is expected, via Ria.

European bourses are firmer, but action has been relatively contained with newsflow slim, Euro Stoxx 50 +0.2%; however, benchmarks waned alongside US futures following China ADS updates.
Currently, ES +0.4% but similarly off best levels amid Chinese stocks announcing intentions to delist their ADSs and reports that Germany is being looked at as a banking base.
China Life (2628 HK), PetroChina (857 HK), Sinopec (386 HK) plan to delist ADSs from NYSE; last trading day for China Life expected to be on or after 1st September. Subsequently, China's Securities Regulator says it is normal within capital markets for companies to list and delist.
Chinese brokers are reportedly looking at Germany as a banking base amid tensions with the US, via Bloomberg citing sources.
SMIC (0981 HK) CEO says increasing geopolitical tensions, elevated inflation and a cyclical downturn in demand for chips has resulted in "some panic" within the industry, via FT.
Huawei - H1 2022 (CNY): Revenue -5.9% Y/Y to 301.6bln. Net Profit 15.08bln (prev. 31.39bln Y/Y). Device Business Revenue -25.3% Y/Y. 2022 will probably be the most challenging year historically for our devices business
Chinese and Hong Kong regulators are to announce adjustments to the trading calendar for the stock connect.
Click here for more detail.

DXY attempts to recover from its post-CPI lows as it eyes yesterday’s 105.46 high.
EUR, JPY, and GBP are under pressure from the firmer Dollar; EUR/USD eyes some notable OpEx for the NY cut.
The non-US Dollars are resilient this morning on the back of the general risk tone across stocks and the rise in commodities.
Fleeting SEK upside was seen in wake of inflation data, with the metrics being in-line/below expectations.
Click herefor more detail.

Notable FX Expiries, NY Cut:

Core benchmarks are little changed overall on the session and particularly when compared to price action seen earlier in the week.
Further pressure seen following the Gilt open in wake of UK GDP metrics.
USTs in-fitting with peers and the yield curve, currently, does not exhibit any overt bias.
Click here for more detail.

WTI and Brent hold an upside bias in Europe amid the broader risk tone.
Spot gold is relatively uneventful as the firming Dollar keeps the yellow metal capped under USD 1,800/oz.
Base metals markets are relatively mixed with the market breadth shallow, although LME copper extends on gains above USD 8k/t.
Click here for more detail.

NOTABLE HEADLINES

The Rhine River, Germany is on track to breach its critical level for navigability today and potentially trigger disruptions to trade of fuels across the continent, according to German government data cited by Bloomberg. However, reports via Faz indicate that Germany does not expect low levels to halt ship traffic.
Italy’s Centre-right coalition, which is set to win the 25th September election, is to abandon anti-EU policies but will look to change the terms of the EU-COVID recovery deal, due to inflation/Ukraine altering the circumstances, via Politico citing a draft pledge.
German Economy Ministry report says there is a considerably worse outlook for the German economy in H2 amid lower gas deliveries and increasing energy prices, ongoing supply-chains issues and general uncertainty.

NOTABLE DATA

UK GDP Estimate MM (Jun) -0.6% vs. Exp. -1.3% (Prev. 0.5%); YY (Jun) 1.9% vs. Exp. 1.2% (Prev. 3.5%); 3M/3M (Jun) -0.1% vs. Exp. -0.3% (Prev. 0.4%)
Swedish CPIF Ex Energy YY (Jul) 6.6% vs. Exp. 6.6% (Prev. 6.1%); CPIF YY (Jul) 8.0% vs. Exp. 8.2% (Prev. 8.5%)
Turkish EndYear CPI Fcst/Cb Svy* (Aug) 70.60% (Prev. 69.94%).

NOTABLE US HEADLINES

Fed's Daly (2024 voter) said inflation is too high and must be brought down, while she said inflation is showing progress but is not a victory and doesn't want to be head faked by the inflation improvement. Daly noted her baseline is for a 50bps hike in September and has an open mind if a 75bps hike will be needed in September in which the decision on 50bps vs 75bps will depend on a lot of data not just one data point. Furthermore, Daly expects the policy rate to be at 3.4% by year-end and it is her opinion that rates will become more restrictive next year, according to a Bloomberg TV interview.

APAC stocks were mixed following a similar indecisive lead from Wall Street where stocks and treasuries faded the initial gains from the softer-than-expected PPI data, although Japan outperformed on return from holiday.
ASX 200 was dragged lower by losses across nearly all sectors including the top-weighted financial industry despite the confirmation of a return to profit for IAG, while energy bucked the trend after a recent rebound in oil.
Nikkei 225 notched firm gains as it played catch-up to global peers and took its first opportunity to react to the softer inflationary signals from the US, while Softbank was among the top performers as it expects to gain USD 34bln from reducing its stake in Alibaba.
Hang Seng and Shanghai Comp were both subdued in early trade amid weakness in property stocks and ongoing COVID-related headwinds, although the Hong Kong benchmark gradually recovered with earnings releases also in the limelight.

NOTABLE APAC HEADLINES

Japanese PM Kishida plans to hold a meeting on August 15th to address rising goods prices, wages and daily life, while he called for additional measures on dealing with rising food and energy prices, according to Reuters.

DATA RECAP