• APAC stocks were mixed with Chinese stocks rallying on unverified reopening rumours, although the rest of the region was contained
• DXY retreated beneath the 113.00 level, EUR/USD rebounded as the dollar eased overnight, USD/JPY was choppy around 148.00
• US audit inspectors finished on-site China work ahead of schedule, according to Bloomberg
• UK Chancellor Hunt is mulling an increase in the headline rate of Capital Gains Tax, according to The Telegraph.
• Looking ahead, highlights include EZ Composite/Services PMI (Final), US & Canadian Labour Market Reports, Speeches from Fed's Collins, ECB's Lagarde & de Guindos, Earnings from Intesa Sanpaolo, SocGen & Telefonica
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US TRADE

• US stocks and treasuries were lower while the dollar was bid as markets continued to react to Wednesday's hawkish press conference from Fed Chair Powell, while there were also rate hikes from the BoE and Norges Bank in which the former raised rates by 75bps which was the largest rate increase in decades and was as expected, albeit with two dovish dissenters. Furthermore, participants digested mixed data releases, while the focus shifts to the NFP report.
• SPX -1.06% at 3,719, NDX -1.98% at 10,690, DJIA -0.46% at 32,001, RUT -0.53% at 1,779.
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NOTABLE HEADLINES

• White House said it does not expect the US economy to go into a recession and sees the US economy heading to stable and steady growth, while it was also reported that White House Press Secretary is expecting job gains of 150k in the coming months.

APAC TRADE

EQUITIES

• APAC stocks were mixed with Chinese stocks rallying on unverified reopening rumours, although the rest of the region was contained after the wave of central bank rate hikes and ahead of the NFP jobs data.
• ASX 200 was kept afloat by strength in the commodity-related sectors although gains were limited by weakness in defensives and the top-weighted financial sector, while the RBA’s quarterly Statement on Monetary Policy provided little in the way of fresh insight and included a downgrade to growth projections.
• Nikkei 225 was hit on return from holiday and reacted to the recent FOMC and Powell’s hawkish remarks.
• Hang Seng and Shanghai Comp rallied with the Hong Kong benchmark spearheaded by tech and with EV makers boosted following a jump in BYD’s new energy vehicle sales, while sentiment was also boosted as US audit inspectors finished on-site China work ahead of schedule and amid unverified rumours of China reopening.
• US equity futures were rangebound overnight but have started edging higher in recent trade ahead of the key US jobs data.
• European equity futures were higher overnight with the Euro Stoxx 50 future +0.6% after cash markets closed down 0.8% yesterday.

FX

• DXY retreated beneath the 113.00 level amid the mostly improved risk appetite and positioning ahead of NFPs.
• EUR/USD rebounded as the dollar eased overnight, although the single currency remained below the 0.9800 handle following yesterday's selling pressure despite hawkish rhetoric from ECB officials.
• GBP/USD nursed some of the losses from the underperformance seen after the BoE meeting where it hiked rates by 75bps, as expected, but not without its dovish dissenters and also warned of a prolonged recession.
• USD/JPY was choppy around 148.00 amid the familiar FX-related rhetoric by Japanese Finance Minister Suzuki who also noted there was no intention to guide FX rates to certain levels by intervening in the market.
• Antipodeans were firmer alongside a bounce back in commodities and a stronger CNH which was underpinned amid rumours of PBoC efforts to defend its currency and of China reopening sooner with China's CDC said to be working on a reopening path.
• PBoC set USD/CNY mid-point at 7.2555 vs exp. 7.2683 (prev. 7.2472)

FIXED INCOME

• 10yr UST futures were slightly beneath the 110.00 level after the recent Fed-induced bear-flattening and two-way flows post-BoE with participants now awaiting the key US jobs data.
• Bund futures traded rangebound with price action contained after hawkish reiterations from ECB officials.
• 10yr JGB futures declined on return from holiday and with the BoJ only in the market under its fixed-rate operations.

COMMODITIES

• Crude traded higher amid the constructive mood and as China reopening rumours lingered.
• Saudi Arabia set December Arab light crude OSP to Asia at Oman/Dubai + USD 5.45/bbl, while it set OSP to NW Europe at ICE Brent + USD 1.70/bbl and to the US at ASCI + USD 6.35/bbl.
• Spot gold benefitted from the softer dollar and broad commodity strength with prices eyeing USD 1650/oz.
• Copper gained as the risk appetite mostly improved and with the Las Bambas project hampered by disruptions.
• Chile's Escondida mine copper production rose 3.51% in September to 44.5k tonnes and the Collahuasi mine copper production fell 3.5% in September to 44.5k tonnes, according to Cochilco.
• MMG said it has been forced to commence a progressive slow-down of its Las Bambas operation amid disruptions due to blockades by communities, while it continues to work with the government of Peru and communities along the site's logistic route.

CRYPTO

• Bitcoin mildly benefitted from the mostly constructive mood with prices above USD 20,300, while Ethereum rose around 1.2%.

NOTABLE ASIA-PAC HEADLINES

• US audit inspectors finished on-site China work ahead of schedule, according to Bloomberg.
• Chinese President Xi met with German Chancellor Scholz and said as big nations with influence, China and Germany should work together all the more in times of change and turmoil to make a greater contribution to world peace and development, according to state media.
• German Chancellor Scholz said his meeting with Chinese President Xi is at a time of big tension and that the Russian war on Ukraine brings big problems for rule-based order, while they will talk about Europe-China relations and the fight against climate change and world hunger. Scholz added they will also talk about how to develop economic relations and on topics where their perspectives are different.
• Japan's government is said to issue JPY 22.8tln in bonds for the extra budget with total issuance for FY22/23 revised upward to a record JPY 62.5tln, according to Reuters.
• RBA Statement on Monetary Policy said the board expects rates will need to increase further and policy is not on a pre-set path, while they will hike in larger steps or pause if considered necessary. Furthermore, the RBA cut economic growth forecasts in which it sees GDP at 2.9% in December 2022, 1.4% in December 2023 and 1.6% in December 2024, while it lifted the inflation forecast which it sees at 8.0% in December 2022, 4.7% in December 2023 and 3.2% in December 2024.

DATA RECAP

• Australian Retail Trade (Q3) 0.2% vs. Exp. 0.4% (Prev. 1.4%, Rev. 1.0%)
• Japanese Services PMI (Oct F) 53.2 (Prelim. 53.0)
• Japanese Composite PMI (Oct F) 51.8 (Prelim. 51.7)

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky said 4.5mln people in Kyiv and 10 regions lost power due to Russian attacks.
• Russian ambassador said Britain is 'too deep' into the Ukraine war and claims he has proof that UK special forces were involved in a Ukrainian drone attack on Russia's Black Sea fleet in Crimea and had handed evidence to the British ambassador, according to Sky News.
• A new nuclear-powered submarine that will enter service with the Russian navy has successfully fired a ballistic missile as part of final testing, according to Reuters citing the Defence Ministry.

OTHER

• Turkish Foreign Minister said they observed that the new Swedish government is decisive in fulfilling requirements for the NATO bid but added that neither Finland nor Sweden fulfilled all elements of the memorandum.
• US officials have no clear timing for when North Korea might conduct a nuclear test and would like to see China and Russia use their leverage on North Korea to head off a nuclear test. Furthermore, the US is prepared to engage directly with North Korea and has sought to communicate with North Korea in private channels and through third parties, while it rejects the notion that the international community should treat North Korea as a nuclear power, according to a senior US administration official.

EU/UK

NOTABLE EU/UK HEADLINES

• UK Chancellor Hunt is mulling an increase in the headline rate of Capital Gains Tax, according to The Telegraph.
• BoE's Mann said there is still a lot of momentum in drivers of inflation and repeated BoE guidance that rates do not need to be as high as the market suggests, while she added that they must defend against price increases.
• ECB's Lagarde said there's still a way to go on rates and inflation is way too high, while she added that the ECB has to take action. Lagarde also stated that they want a rate that delivers 2% mid-term inflation and will do whatever is required, while they will use all instruments and tools including reducing the size of the balance sheet.