• APAC stocks were mostly lower after the negative mood rolled over from global counterparts amid growth and energy-related concerns.
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future unchanged after the cash market closed lower by 1.9% yesterday.
• DXY sits on a 109 handle, EUR/USD remains below parity, antipodeans fare slightly better vs. greenback.
• Saudi Energy Minister said OPEC+ may need to tighten output to stabilise the market.
• Looking ahead, highlights include EZ, UK & US Flash PMIs, EZ Consumer Confidence Flash, US New Home Sales, Fed Discount Rate Minutes, Speech from ECB's Panetta, Supply from UK (I/L) & US.

US TRADE

• US stocks declined with global risk appetite pressured as growth slowdown fears and energy supply concerns festered which resulted in the S&P 500's worst decline in two months, while the Nasdaq underperformed as tech suffered from higher yields.
• SPX -2.07% at 4,140, NDX -2.66% at 12,890, DJIA -1.90% at 33,065, RUT -2.41% at 1,911.
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NOTABLE US HEADLINES

• US SEC added Mogu (MOGU), Cheetah Mobile (CMCM), Alibaba (BABA) and Boqii (BQ) to its conclusive list of issuers identified under the HFCAA.

GEOPOLITICS

RUSSIA-UKRAINE

• US reportedly has intelligence that Russia is preparing strikes on Ukraine's infrastructure in the coming days, according to a US official cited by Reuters.
• US State Department spokesperson said the US warned the Russian Ambassador to Washington against an escalation of the war in Ukraine and called on Russia to cease military operations at the Zaporizhzhia nuclear plant.
• US President Biden's administration warned Turkish businesses against working with sanctioned Russian institutions and individuals, according to WSJ.
• Japanese Finance Minister Suzuki said he discussed with PM Kishida and other ministers the Ukraine situation, while they are to continue to coordinate with the G7 on sanctions against Russia and support for Ukraine. Suzuki said that Japan's sanctions dealt a blow to Russia but added that there has been no discussion of new sanctions against Russia, according to Reuters.

OTHER

• US State Department said the notion that the US has delayed the Iran nuclear deal negotiation in any way is not true and it will respond to Iran's response as soon as consultations are finished, while there are still issues that need to be resolved but it is encouraged that Iran appears to have dropped some of its non-starter demands such as lifting terrorism designation for IRGC. Furthermore, the US State Department added that a nuclear deal is closer now than it was two weeks ago.

APAC TRADE

EQUITIES

• APAC stocks were mostly lower after the negative mood rolled over from global counterparts amid growth and energy-related concerns.
• ASX 200 was subdued as losses in financials and the consumer sectors overshadowed the gains in the mining and energy industries, while sentiment was also dampened after Flash PMI data weakened from the previous month in which Services and Composite PMIs slipped into contraction territory.
• Nikkei 225 declined as Japan suffered a similar fate on the data front which showed factory activity cooled to its slowest pace in 19 months.
• Hang Seng and Shanghai Comp weakened at the open amid a slew of earnings although the mainland gradually recovered as developers benefitted from China’s plans to offer CNY 200bln in special loans to troubled developers, while the PBoC also recently called on the major financial institutions to maintain stable growth of loans and pledged support for the platform industry and infrastructure construction.
• US equity futures were contained following Wall St's worst performance in two months; ES -0.1%.
• European equity futures are indicative of a flat open with the Euro Stoxx 50 future unchanged after the cash market closed lower by 1.9% yesterday.

FX

• DXY heads into the European open on a 109 handle and continues to eye its YTD peak at 109.29.
• EUR/USD remained lacklustre after having recently slipped below parity and with the single currency not helped by energy supply concerns for the bloc.
• GBP/USD was uneventful overnight amid the risk aversion and lack of fresh catalysts from the UK.
• USD/JPY pared early advances although held on to the 137.00 handle owing to the yield differentials.
• Antipodeans resumed yesterday’s modest outperformance against the greenback.
• Turkish President Erdogan said Turkey's inflation is cost-induced and possible to overcome, while he added that Turkey's need is not to increase interest rates but needs more exports and a higher current account surplus.

FIXED INCOME

• 10yr UST futures nursed some losses although the recovery was limited as the 10yr yield held above the psychological 3.00% level and with participants awaiting Jackson Hole.
• Bund futures remained subdued after European energy woes stoked inflationary concerns.
• 10yr JGBs futures were uneventful with demand at the enhanced liquidity auction for longer-dated JGBs relatively in line with the previous month.

COMMODITIES

• Crude extended on the prior day's intraday rebound amid the threat of lower OPEC production after comments from Saudi's Energy Minister that OPEC stands ready to cut output to correct a recent oil price decline.
• Saudi Energy Minister said OPEC+ may need to tighten output to stabilise the market and that the oil futures "disconnect" may force OPEC+ action. Furthermore, he stated OPEC+ will soon start work on a new accord for post-2022 and has the means to deal with market challenges including cutting production at any time and in different forms, while he also stated that the oil market is overlooking limited spare capacity and faces extreme volatility amid low liquidity, according to Bloomberg.
• Spot gold traded sideways with the precious metals contained after recent dollar strength.
• Copper was choppy with price action hampered by the risk aversion.

CRYPTO

• Bitcoin prices remained subdued after recently testing the 21,000 level to the downside.

NOTABLE APAC HEADLINES

• PBoC could reduce RRR this year to compensate for MLF maturities and further RRR cuts could lower lending prime rates, according to Security Times.
• Japan's government is preparing to increase the daily cap of arrivals to Japan to 50k from 20k, according to FNN. In relevant news, Japanese Chief Cabinet Secretary Matsuno said border controls will be lightened in a way to prevent COVID spread and aid economic activity, while he added that they cannot comment on the timing of new measures but will respond appropriately based on conditions at home and abroad.

DATA RECAP

• Japanese JibunBK Manufacturing PMI Flash (Aug) 51.0 (Prev. 52.1)
• Japanese JibunBK Services PMI Flash (Aug) 49.2 (Prev. 50.3)
• Japanese JibunBK Composite Flash (Aug) 48.9 (Prev. 50.2)
• Australian Manufacturing PMI Flash (Aug) 54.5 (Prev. 55.7)
• Australian Services PMI Flash (Aug) 49.6 (Prev. 50.9)
• Australian Composite PMI Flash (Aug) 49.8 (Prev. 51.1)