Newsquawk

US Market Open: Cautious equity action with drivers limited, USD recoups & EGBs/USTs diverge

24 Aug 2022, 11:30 by Newsquawk Desk

Cautious price action in European hours with fresh drivers limited and the docket sparse ahead of Jackson Hole commencing on Thursday (Powell Friday), Euro Stoxx 50 -0.1%
Stateside, futures are in-fitting both directionally and in terms of magnitude, ES -0.1%.
DXY has recouped some of Tuesday's pressure, but has failed to make much ground above 108.80; GBP lags while havens outperform
Initial pronounced EGB pressure briefly abated and brought benchmarks into positive territory; though, this failed to cement itself
Crude benchmarks continue to grind higher while spot gold is steady and base metals are mixed
Looking ahead, highlights include US Durable Goods, Ukraine Independence Day, Supply from the US.

As of 11:10BST/06:10ET

Zaporizhzhia regional administration head confirmed that Russian strikes hit the city of Zaporizhzhia in Ukraine, according to Twitter sources.
US is to announce USD 3bln arms package to Ukraine, according to AP.
Norway's Defence Ministry said Norway and Britain joined forces to donate Black Hornet micro-drones to Ukraine, according to Reuters.
Ukrainian President Zelensky says they will recapture the eastern region of Donbass and Crimea, whatever the path will be. On how the war is seen ending, says: "we used to say peace, now we say victory"
Russian Defence Minister Shoigu says the "special operation" in Ukraine has slowed down to avoid civilian casualties, according to Tass.
US Deputy Secretary of Treasury says has seen "no evidence" of Indian companies circumventing sanctions on Russia, according to Business Standard citing PTI.

US military said it conducted strikes in Syria targeting facilities used by groups affiliated with Iran's IRGC, according to Reuters.
US officials expect to respond to Iran’s comments on a European draft proposal by Wednesday and anticipate another round of negotiations in Vienna to finalize the details of a potential deal will likely be needed, according to Washington Post.

Cautious price action in European hours with fresh drivers limited and the docket sparse ahead of Jackson Hole commencing on Thursday (Powell Friday), Euro Stoxx 50 -0.1%
Stateside, futures are in-fitting both directionally and in terms of magnitude, ES -0.1%.
In Europe, the FTSE 100 is the marginal laggard with metals (ex-aluminium) under broad pressure as the USD gains momentum.
Click here for more detail.

DXY attempted to claw back some of Tuesday’s losses overnight but lost momentum at a current session peak of 108.81.
EUR is subdued as the bearish bias persists, GBP/USD is under similar mild pressure around (and marginally below) 1.1800.
Non US-dollars are all softer against the USD whilst havens JPY and CHF outperform.
Click herefor more detail.

Notable FX Expiries, NY Cut:

Initial pronounced EGB pressure briefly abated and brought benchmarks into positive territory; though, this failed to cement itself.
Gilts are leading the downside though are circa. 20 ticks off worst levels, complex cognisant of the upcoming Ofgem announcement and inflation/rate implications.
USTs are bucking the trend once more and are incrementally positive with 5yr issuance due and the curve incrementally steeper.
Click here for more detail.

WTI and Brent October futures have been grinding higher since the European entrance following an APAC session of consolidation.
Spot gold has been drifting higher after mounting the USD 1,750/oz mark.
Base metals are mixed with 3M LME copper lower but still north of USD 8,000/t, whilst aluminium outperforms.
US Private Inventory report (bbls): Crude -5.6mln (exp. -0.9mln), Cushing +0.7mln, Gasoline +0.3mln (exp. -1.5mln), Distillates +1.1mln (exp. +0.6mln).
Canada and Germany signed a hydrogen alliance deal to accelerate exports of Canadian hydrogen to Germany by 2025, according to Reuters.
Russia's Sakhalin has scrapped a gas shipment to a buyer due to a payment issue, via Bloomberg.
Major oil traders and some producers have ceased direct sales of crude to India's Nayara energy amid concerns regarding Russian sanctions, according to Reuters sources.
American Automobile Association says that US diesel pump prices have climbed for the first time since mid-June.
Indonesia extends the palm oil export levy waiver until October 31st, according to the Trade Minister.
Click here for more detail.

NOTABLE HEADLINES

Scottish Power CEO proposed to UK Business Secretary Kwarteng capping household energy bills at around GBP 2000/year which would need funding of over GBP 100bln over two years, according to FT citing sources.
ECB's Rehn says the investigation phase for the digital EUR is expected to conclude in October 2023, will then determine whether to embark on actually building a digital EUR.

NOTABLE US HEADLINES

Fed's Kashkari (2023 voter) said inflation is very high and it is the Fed's job to curb it, while he added that they need to get the underlying inflation trend back down to 2% and it is very clear they need to tighten monetary policy. Kashkari also stated that half to two-thirds of US high inflation is driven by supply-side shocks and help is needed on the supply side to get inflation down, with the more help they get from the supply side, the less the Fed has to do and will be better able to avoid a hard landing. Furthermore, he said there is currently no trade-off between employment and inflation mandates and they can only relax on rate hikes when they see compelling evidence inflation is heading toward 2%.
Click here for the US Early Morning Note.

Bitcoin is incrementally softer but resides towards the mid-point of relatively contained parameters and remains comfortably above the USD 21k mark.

APAC stocks were mixed and only partially shrugged off the lacklustre lead from global counterparts.
ASX 200 reclaimed the 7,000 level and was led by the tech and commodity-related sectors although gains were capped amid another busy day of earnings releases.
Nikkei 225 failed to sustain opening advances following reports that Japan is considering lowering the COVID employment subsidy.
Hang Seng and Shanghai Comp declined with property names pressured by several bearish factors including weak developer earnings and a default warning by Guangzhou R&F Properties, while China is also reportedly probing real estate executives for possible law violations.

NOTABLE APAC HEADLINES

China Securities Times noted that moderate CNY depreciation is positive for export competitiveness and that the widening US-China interest rate spread has a limited impact on CNY.
Hong Kong is considering a storm level 8 from 18:00 local time 11:00BST/06:00EDT which could result in a market closure on Thursday, according to Bloomberg.
Japanese PM Kishida announced to relax border rules on COVID and will waive tests for vaccinated passenger arrivals from September 7th, but added there was no decision yet on raising the number of daily arrivals, according to Reuters.