• APAC stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 future +0.5% after the cash market closed higher by 0.4% yesterday.
• DXY is contained, EUR/USD lost steam ahead of 1.02, NZD is firmer post-RBNZ.
• RBNZ delivered a hawkish 50bps (as expected) rate hike in which it upped its OCR projections and signalled further policy tightening.
• Looking ahead, highlights include UK CPI, EZ Employment Flash, GDP, US Retail Sales, Business Inventories, FOMC Minutes, Supply from the US, Earnings from Carlsberg, Uniper, Target & Cisco.

US TRADE

• Stocks were little changed In what was a choppy and light trading session amid mixed data releases and with technicals in focus as the E-mini S&P 500 briefly eclipsed its 200DMA (4317) for the first time since April although failed to hold above the key level and saw a rejection lower into the close. Participants also digested earnings releases with notable outperformance in the Consumer sectors after better-than-expected reports from retailers Walmart and Home Depot.
• SPX +0.19% at 4,305, NDX -0.23% at 13,635, DJIA +0.71% at 34,152, RUT -0.11% at 2,018.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• US President Biden signed the USD 750bln health care, tax and climate bill known as the Inflation Reduction Act into law, according to CNN.
• US President Biden’s administration appears headed toward extending the COVID emergency for another three months past the current October 13th deadline which would allow special powers and programmes to continue past the midterm election, according to Axios.
• White House received a report from the presidential emergency board tasked with recommending how to resolve the US railroad labour dispute, while the board recommended general rail worker wage increases of up to 7% and service bonuses, as well as removing the cap on monthly employee healthcare contributions until they equal 15% of the overall cost of providing covered benefits, according to Reuters.
• US Federal Reserve issued further guidance for banks considering activities involving cryptocurrencies in which it emphasised that firms must notify the Fed beforehand and make sure whatever they do is legally permitted.
• US federal government is expected to announce water cuts to states that rely on the Colorado River amid projections that water levels could become dangerously low.

GEOPOLITICS

RUSSIA-UKRAINE

• Turkish President Erdogan is to visit Lviv to meet Ukrainian President Zelenskiy and discuss bilateral relations, while he plans to meet UN Secretary-General Guterres in Ukraine, according to Ragip Soylu.
• The ship carrying the first Ukraine grain cargo docked in Syria's Tartous, after it turned its transponder off for a few days, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings, but with gains capped overnight ahead of the FOMC Minutes and as participants digested another 50bps rate hike by the RBNZ.
• ASX 200 swung between gains and losses with the index indecisive amid a slew of earnings and with strength in the consumer sectors offset by underperformance in tech, energy and healthcare.
• Nikkei 225 climbed above the 29,000 level with the index unfazed by mixed data releases in which Machinery Orders disappointed although both Exports and Imports topped forecasts.
• Hang Seng and Shanghai Comp were somewhat varied with Hong Kong led higher by tech amid plenty of attention on Meituan after reports its largest shareholder Tencent could reduce all or the bulk of its shares in the Co. which a Tencent executive later refuted, while the mainland was less decisive amid headwinds from the ongoing COVID situation and with power restrictions disrupting activity in Sichuan, although reports also noted that Chinese Premier Li told top provincial officials that they must have a sense of urgency to consolidate the economic recovery and reiterated to step up macro policies.
• US equity futures were little changed with the E-mini S&P (+0.1%) eyeing another attempt at its 200DMA.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 future +0.5% after the cash market closed higher by 0.4% yesterday.

FX

• DXY traded rangebound following recent mixed data releases and with participants looking ahead to today’s Retail Sales and FOMC Minutes release.
• EUR/USD steadied after losing steam on approach to the 1.0200 level.
• GBP/USD eked marginal gains and reclaimed the 1.2100 handle.
• USD/JPY marginally pulled back but with trade muted after mixed data.
• Antipodeans were mixed with AUD/USD subdued by softer than expected Wage Price Index data from Australia, while NZD/USD was briefly supported after the RBNZ delivered a hawkish 50bps rate hike in which it upped its OCR projections and signalled further policy tightening.

FIXED INCOME

• 10yr UST futures remained lacklustre after mixed data releases and corporate issuances, with price action contained overnight ahead of the upcoming FOMC Minutes.
• Bund futures were steady with the attempted rebound limited beneath the 156.00 level.
• 10yr JGBs futures marginally softened amid gains in Japanese stocks and despite the BoJ’s presence in the market for over JPY 1tln of JGBs on top of its regular fixed-rate operations.

COMMODITIES

• Crude moved off its post-Ukraine invasion lows but with the recovery limited following the somewhat inconclusive inventory data and as markets eye the latest developments in the Iran nuclear deliberations with Iran's reply to the draft nuclear deal said to be "constructive".
• US Private Inventory Data (bbls): Crude -0.4mln (exp. -0.3mln), Cushing +0.3mln, Gasoline -4.5mln (exp. -1.1mln), Distillates -0.8mln (exp. +0.4mln).
• Shell (SHEL LN) announced it is to shut its Gulf of Mexico Odyssey and Delta crude pipelines for two weeks in September for maintenance, according to Reuters.
• Spot gold traded sideways amid an uneventful dollar as markets await the FOMC Minutes.
• Copper was rangebound after mixed data from the US and the ongoing COVID woes in China.

CRYPTO

• Bitcoin was choppy and continuously tested the 24,000 level throughout the session.

NOTABLE APAC HEADLINES

• RBNZ hiked the OCR by 50bps to 3.00%, as expected, while it stated that conditions need to continue to tighten and they agreed that maintaining the current pace of tightening remains the best means. RBNZ also agreed that further increases in the OCR were required to meet the remit objective and that domestic inflationary pressures had increased since May. Furthermore, the RBNZ raised its projections for the OCR and inflation with the OCR seen at 3.69% in Dec. 2022 (prev. 3.41%) and at 4.1% for both Sept. 2023 and Dec. 2023 (prev. 3.95%), while it sees annual CPI at 4.1% by Sept. 2023 (prev. 3.0%).
• RBNZ Governor Orr stated at the press conference that they are not forecasting a recession but expected below-potential growth amid subdued consumer spending. Governor Orr also stated that they did not discuss a 75bps rate hike today and that 50bps moves have been orderly and sufficient, while he added that getting rates to 4% would buy comfort for the policy committee and that a Cash Rate of around 4% is unambiguously above neutral and sufficient to meet the inflation mandate.

DATA RECAP

• Japanese Trade Balance Total Yen (Jul) -1436.8B vs. Exp. -1405.0B (Prev. -1383.8B, Rev. -1398.5B)
• Japanese Exports YY (Jul) 19.0% vs. Exp. 18.2% (Prev. 19.4%, Rev. 19.3%)
• Japanese Imports YY (Jul) 47.2% vs. Exp. 45.7% (Prev. 46.1%)
• Japanese Machinery Orders MM (Jun) 0.9% vs. Exp. 1.3% (Prev. -5.6%)
• Japanese Machinery Orders YY (Jun) 6.5% vs. Exp. 7.5% (Prev. 7.4%)
• Australian Wage Price Index QQ (Q2) 0.7% vs. Exp. 0.8% (Prev. 0.7%)
• Australian Wage Price Index YY (Q2) 2.6% vs. Exp. 2.7% (Prev. 2.4%)

EU/UK

NOTABLE HEADLINES

• German Economy Ministry spokesperson said the recent media report that Germany decided to keep nuclear power plants running "lacks any factual basis" and they will decide on the fate of the last remaining power plants following the results of ongoing stress tests, according to Reuters.
• UK Foreign Minister Truss has commenced formal dispute proceedings against the EU, accusing the bloc of a "clear breach" of the post-Brexit trade agreement, according to the Telegraph.