Newsquawk

Euro Market Open: Downbeat/contained pre-Christmas trade

23 Dec 2022, 06:48 by Newsquawk Desk

APAC stocks traded mostly lower but drifted off worst levels following a similar performance stateside
DXY fluctuated within a tight range in which it briefly topped 104.50 before drifting to a fresh session low; JPY lagged
Japanese Core CPI for November rose at the fastest annual pace since 1981
Tesla (TSLA) CEO Musk said he will not sell any more Tesla stock for at least 18-24 months; waiting to see the extent of a recession before share buyback
Looking ahead, highlights include US monthly PCE, Canadian GDP, US University of Michigan Survey

US stocks were sold on Thursday with strong upward revisions to Q3 US GDP and low initial claims data igniting a hawkish reaction ahead of today's November PCE data.
SPX -1.40% at 3,824, NDX -2.49% at 10,956, DJIA -1.05% at 33,027, RUT -0.90% at 1,758.
Click here for a detailed summary.

NOTABLE HEADLINES

US President Biden said it will take time to get inflation back to normal levels, according to Yahoo News.
US Senate passed USD 1.66tln government funding bill; now sent to the House for approval, according to Reuters.
Amazon (AMZN) is cutting costs further in anticipation of a severe economic downturn, according to internal documents cited by Business Insider.
Tesla (TSLA) CEO Musk said he will not sell any more Tesla stock for at least 18-24 months; waiting to see the extent of a recession before share buybacks, via Twitter Space. Musk said the economy will be in a "serious recession" in 2023, and demand will be lower.

APAC stocks traded mostly lower but drifted off worst levels following a similar session stateside.
ASX 200 saw all of its sectors in the red with losses led by Tech, Energy and gold miners.
Nikkei 225 was dragged lower by its industrial sector, whilst Japanese Core CPI in November rose at the fastest annual pace since 1981.
Hang Seng and Shanghai Comp were mixed in which the former succumbed to the regional losses and the latter briefly moved into the green, whilst the PBoC injected a net CNY 704bln in the week via OMO - the largest weekly cash in nearly two months, according to Reuters calculations.
US equity futures traded between modest gains (ES +0.1%) and losses in tight ranges throughout the session in a catalyst-light session.
European equity futures posted marginally firmer overnight with the Euro Stoxx 50 future +0.4% after cash markets closed lower by 1.3%.

DXY fluctuated within a tight range in which it briefly topped 104.50 before drifting to a fresh session low at 104.30, after printing a 103.75-104.60 range yesterday.
USD/JPY was the modest G10 underperformer, whilst Japanese press suggested Japanese PM Kishida is looking to reshuffle his cabinet early next year.
EUR/USD and GBP/USD moved in tandem with the Dollar. The former traded on either side of 1.0600 and the latter remained under its 200 DMA (1.2073).
Antipodeans were narrowly firmer with AUD/USD north of its 100 DMA (0.6655) while NZD/USD mounted its 200 DMA (0.6252).
PBoC sets USD/CNY mid-point at 6.9810 vs exp. 6.9885 (prev. 6.9713)

10yr UST futures were modestly softer after the curve flattened on Thursday in a move sparked by strong US data which keeps the hawkish pressure on the Fed.
Bund futures edged lower in line with the broader complex.
10yr JGB futures succumbed to the losses seen in the west with the corresponding yield briefly back above 40bps, while Japanese November Core CPI matched forecasts but still rose at the fastest pace since 1981.

Crude futures were firmer as the benchmarks attempted to recoup some losses after settling lower yesterday.
Spot gold was flat under USD 1,800/oz following yesterday’s Dollar-induced selloff from a USD 1,820/oz high back under its 10 DMA (1,797.08/oz).
Base metal futures were mixed amid the cautious mood, and following the global stock selloff.
Russia could cut oil output by 5-7% early next year as a response to the Western price caps, according to RIA citing Deputy PM Novak; Russia may cut oil output by 500-700k BPD, according to Tass citing Deputy PM Novak
Baker Hughes US Rig Count (w/e Dec. 22nd): Oil +2 at 622, Nat Gas +1 at 155, Total +3 at 779.
Colorado Interstate Gas Co. declared force majeure at CIG Wamsutter compressor station, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

China reported zero new COVID deaths in the mainland on Dec 22nd vs zero a day earlier, according to Reuters.
PBoC injected CNY 2bln via 7-day reverse repos with the rate maintained at 2.00%; injects CNY 203bln via 14-day reverse repos with the rate maintained at 2.15%; daily net injection CNY 164bln.
PBoC injected a net CNY 704bln in the week via OMO; the largest weekly cash in nearly two months, according to Reuters calculations.
Japanese PM Kishida could conduct a cabinet reshuffle as early as January 10th, according to ANN.
Japanese government official said the next wave of food inflation is likely to come in February 2023; effects of government subsidies to cushion energy bills will likely start affecting CPI from February 2023, according to Reuters.
BoJ October meeting minutes (two meetings ago): One member said the effects of BoJ's easing may be heightening as a moderate increase in inflation expectations push down real interest rates.

DATA RECAP

Japanese CPI, Core Nationwide YY (Nov) 3.7% vs. Exp. 3.7% (Prev. 3.6%); fastest annual pace since 1981
Japanese CPI, Overall Nationwide (Nov) 3.8% (Prev. 3.7%)
Australian Housing Credit (Nov) 0.4% (Prev. 0.4%)
Australian Private Sector Credit (Nov) 0.5% (Prev. 0.6%)

Senior Chinese Diplomat Wang Yi spoke to US Secretary of State Blinken and said US must stop supressing China's development and should not challenge China's red lines, according to Reuters.
Chinese Foreign Ministry announced sanctions on Yu Maochun and Todd Stein as countermeasures to US’ sanction on two Chinese officials, citing human rights issues in Xizang (Tibet), according to Global Times.

NOTABLE HEADLINES

TSMC (TSM/2330 TT) is said to be in talks with suppliers over its first European plant, according to FT sources; Senior executives are heading to Germany early next year for discussions.