• APAC stocks traded mostly lower following the tech-led rout seen on Wall Street which saw the NDX close with losses of 2%
• DXY was steady and held on to most of the prior day’s gain, USD/JPY was underpinned, Antipodeans attempted to nurse losses
• China will fine-tune COVID control measures and allow home quarantine, as well as ease testing, according to Xinhua; China will conduct a press conference at 15:00 local time (07:00GMT/02:00EST)
• NBC projected that Democrat incumbent Warnock defeated Republican challenger Walker in the Senate run-off in Georgia
• Looking ahead, highlights include German Industrial Output, BoC Policy Announcement, Speeches from ECB's Lane & Panetta, Supply from the UK
• Click here for the Week Ahead preview

US TRADE

• US stocks declined in a tech-led rout amid concerns in the advertising space after WSJ reported Meta's targeted advertising model faces restrictions in Europe while Reuters reported the Co. could face hefty fines. As such, Meta saw losses of over 6% which weighed on the communication sector, with firm losses also seen in Tech and Consumer Discretionary. Furthermore, Energy was the biggest laggard on the falling crude prices which hovered around 2022 lows, while defensives "outperformed" amid the risk aversion but still finished in the red.
• SPX -1.44% at 3,941, NDX -2.01% at 11,549, DJIA -1.03% at 33,596, RUT -1.50% at 1,812.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Senate Majority Leader Schumer said lots of negotiation remains to achieve the year-long government funding bill. It was also reported that Senate Republican Leader McConnell said it is increasingly likely that they will need a short-term continuing resolution into early next year to fund the government.
• NBC projected that Democrat incumbent Warnock defeated Republican challenger Walker in the Senate run-off in Georgia, which would provide the Democrats with a 51-seat majority at the Senate vs 49 seats for Republicans.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued after the losses on Wall St where risk sentiment was dampened by tech sector woes and recession concerns, while participants also digested weak trade data and an easing of restrictions in China.
• ASX 200 was pressured after Australian GDP data for Q3 missed forecasts and with the declines in the index led by tech and energy following similar weakness in US counterparts.
• Nikkei 225 was lacklustre but with downside limited by a lack of domestic catalysts and with BoJ’s Nakamura reiterating that the central bank must patiently maintain monetary easing.
• Hang Seng and Shanghai Comp were indecisive as the announcement of an easing of COVID restrictions was offset by the dismal trade data from China.
• US equity futures traded rangebound which provided some respite from the prior day's selling.
• European equity futures were slightly higher with the Euro Stoxx 50 future up 0.1% after the cash market closed with losses of 0.4% yesterday.

FX

• DXY was steady and held on to most of the prior day’s gains after being supported by the risk-off tone in the US.
• EUR/USD languished sub-1.0500 after losing ground to the dollar, while the recent data releases from the bloc were mixed and ECB commentary was somewhat dovish-leaning.
• GBP/USD remained despondent after it gave back the 1.2200 handle during yesterday’s choppy performance in which the mild support heading into the London fix was eventually unwound.
• USD/JPY was underpinned by the recent moves in the buck and amid dovish BoJ reaffirmations.
• Antipodeans attempted to nurse losses but were restricted by the risk tone and miss on Australian GDP.
• PBoC set USD/CNY mid-point at 6.9975 vs exp. 6.9941 (prev. 6.9746)

FIXED INCOME

• 10yr UST futures pulled back overnight in a gradual reversal of the bull flattening seen yesterday which had been spurred by the risk aversion due to the big tech woes and recession concerns.
• Bund futures held on to recent gains after the somewhat dovish rhetoric from ECB’s Lane and Herodotou but with further advances capped by resistance at the 143.00 level.
• 10yr JGB futures were kept afloat with the BoJ present in the market for nearly JPY 1.3tln of JGBs on top of its daily fixed-rate operations and after BoJ’s Nakamura reiterated maintaining monetary easing.

COMMODITIES

• Crude prices were lacklustre after yesterday's selling pressure amid the broad risk aversion, which dragged oil prices to their lowest levels since January, while the latest private sector inventory report failed to spur a recovery as the larger-than-expected draw in headline crude stockpiles was offset by bearish gasoline and distillate data, although there was marginal support following the announcement of a further easing of COVID restrictions in China.
• US Energy Inventory Data (bbls): Crude -6.4mln (exp. -3.3mln), Cushing +0.0mln, Gasoline +5.9mln (exp. +2.7mln), Distillate +3.6mln (exp. +2.2mln)
• US EIA STEO maintained 2022 world oil demand growth unchanged at 2.26mln BPD Y/Y increase and cut the forecast for 2023 world oil demand growth by 160k BPD to a 1mln BPD Y/Y increase.
• Price cap coalition official said nearly all 20 tankers waiting to cross Turkey's straits are loaded with Kazakh oil and not subject to the G7's Russian oil price cap, while the delays in tanker traffic from Russia's Black Sea ports to the Mediterranean stem from the Turkish insurance rule and not the price cap, according to Reuters.
• Hungarian government is to scrap its fuel price cap, according to PM Orban's chief of staff cited by Reuters.
• Spot gold traded sideways with the precious metal restricted by the recent dollar strength.
• Copper copper lacked firm direction owing to the mixed risk appetite

CRYPTO

• Bitcoin traded flat with price action confined within a tight range above USD 17,000.
• US Senator Warren is reportedly working on a sweeping crypto bill that would hand the SEC the most regulatory authority over the market, according to Semafor.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo said China will maintain its prudent monetary policy and that monetary policy should be targeted and forceful, while it urged coordinating COVID controls and economic development. China will also fine-tune COVID control measures and allow home quarantine, as well as ease testing, according to Xinhua.
• China will conduct a press conference at 15:00 local time (07:00GMT/02:00EST) on further optimising and implementing epidemic prevention and control, according to Reuters.
• China's Health Commission said asymptomatic patients and cases with mild symptoms can undergo home quarantine, while it will accelerate vaccination of the elderly against new coronaviruses. Furthermore, China bans COVID movement restrictions in non-high-risk zones and scraps COVID test rules in most public venues nationwide, according to Reuters and Bloomberg.
• China is said to be considering a 5.0% GDP target for next year, according to Bloomberg.
• US Senators scaled back a proposal that placed new curbs on the use of Chinese-made chips by the US government and its contractors, according to a draft seen by Reuters.
• EU will proceed with two cases against China at the World Trade Organization on Wednesday after talks to resolve the issues with its largest trading partner failed to yield results, according to Bloomberg.
• RBI hiked the Repurchase Rate by 35bps to 6.25%, as expected, through 5-1 vote, while the Standing Deposit Facility was raised by 35bps to 6.00% and the Marginal Standing Facility was raised to 6.5%. RBI Governor Das said that inflation remains high and broad-based, as well as noted that the MPC will remain focused on the withdrawal of accommodation with 4 out of 6 in the MPC voting in favour of retaining the policy stance. Das added that further calibrated monetary policy is warranted to anchor inflation expectations and that they stand ready to act as necessary from time to time, while the focus on inflation continues and there will be no let-up in efforts to bring inflation to more manageable levels.

DATA RECAP

• Chinese Trade Balance USD* (Nov) 69.84B vs. Exp. 78.1B (Prev. 85.15B)
• Chinese Exports YY (USD)(Nov) -8.7% vs. Exp. -3.5% (Prev. -0.3%)
• Chinese Imports YY (USD)(Nov) -10.6% vs. Exp. -6.0% (Prev. -0.7%)
• Chinese Trade Balance (CNY)(Nov) 494.3B vs Exp. 486.0B (Prev. 586.8B)
• Chinese Imports YY (CNY)(Nov) -1.1% vs Exp. 7.1% (Prev. 6.8%)
• Chinese Exports YY (CNY)(Nov) 0.9% vs Exp. 8.2% (Prev. 7.0%)
• Australian Real GDP QQ SA (Q3) 0.6% vs. Exp. 0.7% (Prev. 0.9%)
• Australian Real GDP YY SA (Q3) 5.9% vs. Exp. 6.2% (Prev. 3.6%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin met with top security officials on Tuesday after Ukrainian drones penetrated Russian airspace for the second day in a row, according to The Telegraph.
• Russia wants a meeting on western weapon supplies to Ukraine and requests a UN Security Council meeting on December 9th, according to TASS.
• US Secretary of State Blinken said the US has neither encouraged nor enabled Ukraine to strike within Russia, according to Reuters.

OTHER

• US military accused the IRGC navy of unsafe and unprofessional action in the Strait of Hormuz which raised the risk of collision, according to CENTCOM.
• US Defense Secretary said the US military will increase the rotational presence of bomber task forces and other forces in Australia, according to Reuters.
• US State Department approved the sale of aircraft spare parts worth around USD 300mln to Taiwan and the sale of non-standard spare parts worth an estimated USD 98mln, according to the Pentagon, while Taiwan's Defence Ministry said the aircraft parts sale will help air force operations in the face of China's military activities, according to Reuters.

EU/UK

NOTABLE HEADLINES

• UK PM Sunak is reportedly under pressure from Tory MPs to speed up anti-strike legislation, according to FT.