• APAC stocks traded mostly lower with risk appetite sapped by the ongoing COVID-related issues in China which has resulted in public unrest.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -0.6% after cash markets closed flat on Friday.
• DXY remains stuck on a 106 handle, EUR/USD lingers around 1.0350, JPY outperforms G10 FX, antipodeans lag.
• Crude declined with Brent beneath USD 82/bbl for the first time since January and WTI printed a YTD low.
• Looking ahead, highlights include EU Money Supply and Private Sector Loans, Speeches from ECB’s Lagarde & de Cos, Fed’s Williams & Bullard.

US TRADE

• US stocks were mixed on Black Friday with trade muted amid shortened hours and thinned conditions.
• SPX -0.03% at 4,026, NDX -0.70% at 11,756, DJIA +0.45% at 34,347, RUT +0.30% at 1,869.

NOTABLE HEADLINES

• Adobe said Black Friday online spending rose by 2.3% Y/Y to a record USD 9.12bln and that electronics was a major growth driver with online sales up 221% over the average day in October 2022, while it expects e-commerce spending of more than USD 9bln over the weekend and for Cyber Monday online sales to grow 5.1% Y/Y to USD 11.2bln, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks traded mostly lower with risk appetite sapped by the ongoing COVID-related issues in China where a fresh record number of daily infections were reported and with public unrest brewing after hundreds of people protested throughout the weekend in several major cities including Beijing and Shanghai.
• ASX 200 was lower with energy leading the declines after oil prices slumped to YTD lows and with sentiment also mired by the surprise contraction in Australian Retail Sales.
• Nikkei 225 trickled closer towards the 28,000 level with some utility names hit after reports that Japan’s FTC will issue a record fine on three regional power companies for antitrust violations.
• Hang Seng and Shanghai Comp were pressured as the PBoC’s recent 25bps RRR cut was overshadowed by the COVID situation in China and with tech also hit after US FCC banned equipment authorisations for Chinese telecommunications and video surveillance equipment deemed to pose a threat to national security, although casino names outperformed after Macau renewed the licences of the six existing operators.
• US equity futures were on the back foot with the Emini S&P (-0.7%) eyeing the 4,000 level to the downside.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 future -0.6% after cash markets closed up flat on Friday.

FX

• DXY traded rangebound after failing to sustain the early haven bid, while the indecisive mood coincided with mixed trade in its major counterparts and fluctuations in the CNY as the attention centred on China's COVID situation.
• EUR/USD retreated further beneath the 1.0400 handle but with downside stemmed by support near 1.0350 and amid a quiet weekend of newsflow from the bloc.
• GBP/USD marginally extended on Friday’s declines with PM Sunak reportedly facing a Tory rebellion for keeping the ban on onshore wind farms.
• USD/JPY was dragged lower by haven flows, while PM Kishida said he agreed with BoJ Governor Kuroda to achieve the price target accompanied by wage growth and affirmed to stick to the 2013 joint statement with the BoJ.
• Antipodeans were pressured alongside the risk aversion and a retreat in crude prices, with disappointing retail sales and the exposure to China contributing to the underperformance of AUD.
• PBoC set USD/CNY mid-point at 7.1617 vs exp. 7.1695 (prev. 7.1339)

FIXED INCOME

• 10yr UST futures were underpinned owing to the subdued risk tone and with yields lower as the drop in oil prices to YTD lows helped ease some of the inflationary pressures.
• Bund futures partially nursed Friday’s notable losses with a rebound from beneath the 141.00 level.
• 10yr JGB futures were steady with prices kept afloat amid the BoJ’s presence in the market for nearly JPY 1.4tln of JGBs on top of its fixed-rate operations but with upside restricted as the 10yr yields sat on top of the BoJ’s target range.

GLOBAL

• Economists said key indicators suggest that global inflation has peaked with the pace of headline inflation set to slow in the approaching months, while Moody's Analytics noted that inflation is likely at its apex, according to FT.

COMMODITIES

• Crude declined with Brent beneath USD 82/bbl for the first time since January and WTI printed a YTD low after Chinese daily COVID infections rose by a fresh record, while prices were also subdued amid the negative mood and following reports that the US will grant Chevron a licence to import Venezuelan crude oil to the US.
• US Treasury Department is to issue a licence to allow Chevron to import Venezuelan crude oil to the US, while the licences will allow Chevron to take part in oil activities in Venezuela that were previously banned by the US and also permit them to send products to Venezuela needed to refine heavy crude into exportable grades. Furthermore, the licence is time-limited to 6 months and can be revoked if President Maduro does not negotiate in good faith or follow through on commitments, according to Reuters.
• Iraq’s SOMO said the OPEC+ cut decision in October didn’t decrease Iraq’s crude exports and the decision to cut helps maintain market stability. Iraq also stated that it produces 11% of total OPEC+ output and noted that the upcoming meeting will take into account current market conditions, while it sees oil prices to range USD 85-95/bbl next year, according to Reuters. It was also reported that Iraq’s OPEC representative said the country will increase oil capacity by 150k-250k BPD by 2023 and that Iraq will add 1mln-1.5mln BPD of oil export capacity by 2025.
• Kuwait’s KPIC shipped the first shipment of aviation jet fuel from the Al Zour refinery to UAE and Oman.
• BP’s (BP/ LN) Rotterdam refinery is resuming some operations after being idle for a week amid a pay dispute with workers, according to Reuters.
• Norway’s Gassco decreased the unplanned gas outage impact at fields delivering into Segal which was revised to a decline of 12.0 MCM/day from a decline of 14.9 MCM/day, according to Reuters.
• Spot gold traded rangebound.
• Copper was pressured as risk appetite was soured by China's COVID infections and protests.
• LME hopes to resume nickel trading during Asian hours in the next two weeks and it is close to finalising the nickel review which will be made public next month, while it is discussing the potential need for class 2 nickel reference pricing sources, according to an executive cited by Reuters.

CRYPTO

• Bitcoin declined alongside the risk-aversion although remained above the USD 16,000 level.

NOTABLE ASIA-PAC HEADLINES

• Hundreds of demonstrators conducted protests in cities including Beijing and Shanghai to express their discontent against China’s strict COVID measures, while the protests have so far lasted for 3 days, according to BBC and Reuters.
• China’s Shenzhen announced to limit restaurants and other indoor venues to 50% occupancy and said new arrivals to the city will be barred from entering venues such as theatres and gyms for the first 3 days as part of COVID measures, while it also asked the public to work from home, according to Reuters.
• Goldman Sachs said China could end its zero-COVID policy before April and earlier than widely expected with some chance of a “disorderly” exit, although it still sees a Q2 exit from zero-COVID as most likely with around a 60% chance.
• US FCC banned equipment authorisations for Chinese telecommunications and video surveillance equipment deemed to pose a threat to national security, while the list of companies deemed to pose a threat includes Huawei, ZTE (763 HK) and Hytera Communications (002583 CH), according to Reuters.
• US Space Force chief said the rapid progress of China's military capabilities poses a growing risks to US superiority in outer space, according to Sky News Arabia and Reuters.
• Taiwan’s ruling DPP conceded defeat in the key Taipei mayoral election and Taiwanese President Tsai resigned as chairwoman of the ruling party following poor local election results but rejected an offer from Premier Su Tseng-chang to resign. Furthermore, the Chinese government said that the local Taiwan elections showed the mainstream opinion on the island is for peace, stability and a good life, while it will keep working with Taiwan’s people to promote peaceful relations and firmly oppose Taiwan independence, according to Reuters.
• South Korean Transport Ministry is to meet with the striking truckers’ union on Monday, according to an official cited by Reuters.

DATA RECAP

• Australian Retail Sales MM Final * (Oct) -0.2% vs. Exp. 0.5% (Prev. 0.6%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian Defence Ministry said nine Russian prisoners of war were released as part of a prisoner exchange with Ukraine on Saturday, according to Reuters citing Russian news agencies.
• Energoatom President said there have been signs in recent weeks that Russians may be preparing to leave the Zaporizhzhia nuclear power plant, according to Pravda.
• UK military intelligence said Russia is likely removing nuclear warheads from ageing nuclear cruise missiles and firing unarmed munitions at Ukraine which highlights a depletion in its stock of missiles, according to Reuters.
• UK PM Sunak said Britain will stand with Ukraine for as long as needed and will maintain or increase military aid to Ukraine next year, while he also stated that Britain needs to stand up to competitors 'not with grand rhetoric but with robust pragmatism', according to Reuters.

OTHER

• North Korean leader Kim ordered to promote officials and scientists responsible for nuclear forces and said that building the nuclear force is the most important cause, while their ultimate goal is to possess the world’s most powerful strategic force. Kim added that recent ICBM launches demonstrated their firm resolution and decisive ability to build the world’s strongest army, while its new ICBM clearly proved that North Korea is a full-fledged nuclear power and can withstand the supremacy of the US. Furthermore, Kim said scientists have made a ‘wonderful leap forward’ in technology for mounting nuclear warheads on ballistic missiles and should continue to expand and strengthen the nuclear deterrent at an extraordinary pace, according to KCNA.

EU/UK

NOTABLE EU/UK HEADLINES

• UK PM Sunak is facing a rebellion from the ruling Conservative party as they seek to force the government to drop the ban on new onshore windfarms, according to Bloomberg.
• UK housing market stalled in October with house price growth slowing to its lowest quarterly level since February 2020 amid a disastrous mini-budget and the cost of living crisis, according to Reuters citing data from Zoopla.