• APAC stocks traded mostly firmer despite the negative handover from Wall Street; Hang Seng outperformed whilst Nikkei lagged.
• European equity futures held onto modest gains with the Euro Stoxx 50 future +0.3% after the cash market closed +0.7% yesterday.
• DXY pulled back to levels under 104.50 after, technicians also eye a potential “death cross” in the index.
• US House is adjourned until 12:00EST (17:00GMT) on Wednesday after three failed House Speaker votes for Republican McCarthy.
• Looking ahead, highlights include German Import Prices, Swiss CPI, EZ Services and Composite Final PMIs, US ISM Manufacturing PMI, FOMC Minutes, Crude Private Inventories, Supply from Germany.

US TRADE

• US stocks ultimately sold off to start the new year albeit closed off the lows after SPX briefly fell sub 3800 before reclaiming the level later in the session. The downside was led by the Nasdaq and the usual heavyweights with AAPL shedding nearly 4% and TSLA closing down over 12%.
• SPX -0.41% at 3,823, NDX -0.70% at 10,862, DJIA -0.04% at 33,134, RUT -0.60% at 1,750.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US House is adjourned until 12:00EST (17:00GMT) on Wednesday after three failed House Speaker votes for Republican McCarthy, according to CNN's Collins.
• Microsoft (MSFT) and OpenAI are said to be working on a ChatGPT-Powered Bing in challenge to Google (GOOG), according to The Information.
• Alphabet's (GOOG) Google and Meta (META) accounted for a combined 48.4% of US digital ad spending in 2022, having not been under 50% since 2014, according to WSJ citing research firm Insider Intelligence.

DATA RECAP

• Atlanta Fed GDPNow Model (Q4): 3.9% (prev. 3.7%).

APAC TRADE

EQUITIES

• APAC stocks traded mostly firmer despite the negative handover from Wall Street.
• ASX 200 was lifted by its gold miners after the yellow metal tested USD 1,850/oz to the upside during yesterday’s session, whilst Tech names benefitted from the pullback in bond yields.
• Nikkei 225 kicked off its first session of the year in the red with the country’s mining and energy stocks taking a hit, whilst Tokyo Gas Co. saw shares tumble some 4% following reports the Co. is nearing a USD 4.6bln deal to buy Rockcliff Energy.
• Hang Seng and Shanghai Comp were firmer with Chinese property names bolstered by further reports of support measures, whilst the Hong Kong Tech sector cheered reports Jack Ma's Ant Group has reportedly won Chinese approval for its USD 1.5bln capital plan, according to Bloomberg citing a notice - Alibaba (9988 HK) shares soared 8%.
• US equity futures resumed trade with a modest downward bias before moving between gains and losses in a tight range, with the NQ narrowly outperforming throughout the session. Traders look ahead to US ISM Manufacturing PMI and FOMC Minutes.
• European equity futures held onto modest gains with the Euro Stoxx 50 future +0.3% after the cash market closed +0.7% yesterday.

FX

• DXY pulled back to levels under 104.50 after yesterday’s surge to a 104.86 high; technicians also eye a potential “death cross” as the 50 DMA (106.44) and 200 DMA (106.25) converge.
• USD/JPY initially traded on either side of 131.00 as Japanese participants entered the market for the first time this year, but the pair later stabilised under the psychological figure.
• EUR/USD moved back above 1.0550 (vs 1.0518 low on Tuesday) as the Dollar eased during APAC hours, and GBP/USD found some resistance near 1.2000. EUR/GBP encountered support near 0.8800.
• Antipodeans extended on gains overnight amid the overall APAC risk mood coupled with the softer Dollar, AUD/USD briefly moved above 0.6800 on reports that Chinese authorities are said to be mulling a partial end to the Australian coal ban, according to Bloomberg sources.
• CNH saw strength after the PBoC opted for the strongest CNY fix since mid-September 2022; USD/CNH fell back under 6.9000 from a 6.9242 high.
• PBoC set USD/CNY mid-point at 6.9131 vs exp. 6.9133 (prev. 6. 9475); strongest level since September 15th 2022.

FIXED INCOME

• 10yr UST futures edged higher after the two-way trade experienced in the prior session following the EGB-led bid as a result of the German inflation metrics.
• Bund futures held a modest upward bias but encountered some overnight resistance at 135.50.
• 10yr JGB futures were softer with the corresponding yield around 0.43%, whilst the BoJ conducted an unscheduled bond operation for a fourth straight session.
• BoJ fourth straight unscheduled bond operation: offers to buy JPY 200bln in 1-3yr JGBs, JPY 100bln in 3-5yr JGBs, JPY 150bln in 5-10yr JGBs, JPY 150bln in 10-25yr JGBs, according to Reuters.

COMMODITIES

• Crude futures were subdued following the sentiment and Dollar-driven slide yesterday which saw the contracts settle lower by over USD 3.00 apiece.
• Spot gold was firmer as the yellow metal remained in the proximity to 1,850/oz after testing but failed to breach the level to the upside yesterday.
• Base metal futures were mixed with most metal futures on a firmer footing amid the softer Dollar alongside support from Chinese property headlines.
• Bloomberg OPEC Survey: OPEC December crude output climbed to 29.14mln BPD; Nigerian production rose to 8-month high of 1.35mln BPD, coming as Nigeria cracked down on theft.

CRYPTO

• Bitcoin saw modest gains overnight but price action remained contained to the USD 16.8k area.
• US Banking Regulators issue a joint statement on risks crypto assets pose to banks, and said banks should be aware of key risks associated with crypto, including the risk of fraud and legal uncertainties, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• Jack Ma's Ant Group has reportedly won Chinese approval for its USD 1.5bln capital plan, according to Bloomberg citing a notice.
• China is reportedly looking to pause costly semiconductor investments as COVID strains the budget, according to Bloomberg; China reportedly discussed up to USD 145bln in industry incentives.
• China is reportedly mulling measures to shore up "too big to fail" developers, according to Bloomberg sources.
• Chinese authorities are said to be mulling a partial end to the Australian coal ban, according to Bloomberg sources
• China reported 5 COVID deaths in the Mainland on Jan 3rd (vs. 3 a day prior), according to Reuters.
• PBoC injected CNY 3bln via 7-day reverse repos with the rate maintained at 2.00%; daily net drain CNY 327bln.
• Hong Kong could set a daily entry quota to China at 50,000, according to Now TV.
• The chip surplus that emerged in H2 22 is not expected to ease until at least autumn, according to industry analysts, although a shortage impacting the automotive industry will likely remain throughout the year, according to Nikkei.
• Tokyo Gas Co (9531 JT) unit is said to be in talks to purchase US natgas producer Rockcliff Energy for USD 4.6bln, according to Reuters sources.
• BoJ Governor Kuroda said the BoJ is to continue monetary easing to achieve price target in tandem with wage growth and added that the economy is to grow firmly and stably this year backed by accommodative monetary conditions, according to Reuters.
• Tokyo is reportedly expected to commence handouts of JPY 5,000 per month per child, according to TBS.
• Japanese PM Kishida said Japan is to toughen COVID border control for travellers from China, effective Jan 8th, according to Reuters.

DATA RECAP

• Japanese Foreign Stock Investment -265.1B (Prev. -667.1B, Rev. -668.8B)
• Japanese Foreign Bond Investment -459.5B (Prev. -941.8B, Rev. -941.4B)
• Japanese Manufacturing PMI F (Dec) 48.9 (Prev. 48.8)

GEOPOLITICS

• Russian President Putin reportedly plans to talk to Turkish President Erdogan on Wednesday, according to a Kremlin Spokesperson cited by Interfax.
• US President Biden and Japanese PM Kishida are to meet at the White House on Jan 13th to discuss North Korea and the Russia-Ukraine war, according to Reuters.
• South Korea and the US are planning military exercises against a potential nuclear attack by North Korea, according to Nikkei citing a US official.
• South Korean President Yoon said he will consider suspending the Inter-Korean Military Pact if North Korea intrudes again, according to Yonhap; Yoon calls for the development of "drone killers" following recent tensions with North Korea.
• Japanese PM Kishida is to visit France, Italy, UK, Canada and US from January 9th, according to Reuters.

EU/UK

NOTABLE HEADLINES

• EU countries agreed on a coordinated approach to the changing COVID-19 situation, which includes implications for increased travel from China, according to an EU Health Security Committee Meeting.

DATA RECAP

• UK BRC Shop Price Index (Dec) Y/Y 7.3% (Prev. 7.4%)