• APAC stocks gained with the MSCI Asia Pacific index on course to enter a bull market as the region took impetus from last Friday’s rally on Wall St.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 +0.8% after the cash market closed up 1.5% on Friday.
• DXY remains on a 103 handle, EUR/USD extended advances above 1.06 and USD/JPY retreated below 132. Antipodeans lead the majors.
• Crude futures were underpinned following China's border reopening and with travel demand expected to be further boosted heading closer to the Lunar New Year.
• Looking ahead, highlights include German Industrial Production, EZ Sentix & Unemployment Rate, Speech from Fed’s Bostic & Supply from EZ.

US TRADE

• US stocks and bonds surged on Friday after the December US jobs report saw notable declines in wage growth, cooling inflationary fears and taking some of the hawkish onus off the Fed, while the tumble in ISM Services not long after further supported the dovish reaction.
• SPX +2.28% at 3,895, NDX +2.79% at 11,040, DJIA +2.12% at 33,629, RUT +2.26% at 1,792.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed’s Evans (retiring) said on Friday that he sees a path for a slower pace of rate increases and that it was possible that the economic data would support a 25bps hike at the next Fed meeting, while he added that slowing the pace to 25bps wouldn’t mean the Fed is preparing to stop hiking rates, according to WSJ.
• White House said it is not considering going around Congress to raise the debt ceiling and that Congress will have to raise the debt limit without conditions, according to Reuters.
• US House of Representatives voted to elect Kevin McCarthy as House Speaker after a 15th ballot, while President Biden congratulated McCarthy and said that he is prepared to work with Republicans when he can, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks gained with the MSCI Asia Pacific index on course to enter a bull market as the region took impetus from last Friday’s rally on Wall St.
• ASX 200 was led higher by strength in the commodity-related sectors and with sentiment also helped by China’s border reopening which JPMorgan predicts could boost Australia’s economy by nearly one percentage point over the next two years, although gains are capped following disappointing building approvals data.
• KOSPI outperformed with the index and shares in LG Electronics unfazed by the Co.’s softer preliminary Q4 earnings.
• Hang Seng and Shanghai Comp were supported after China’s border reopening over the weekend added to the hopes of an economic recovery and with Alibaba shares spearheading the advances in Hong Kong after Jack Ma ceded control of affiliate Ant Group.
• US equity futures marginally extended (ES +0.3%) on their data-driven gains amid the broad constructive mood.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 +0.8% after the cash market closed up 1.5% on Friday.

FX

• DXY remained contained beneath the 104.00 level after it slipped from multi-year highs on Friday.
• EUR/USD mildly continued on its recent advances to gain a firmer footing at the 1.0600 handle.
• GBP/USD reclaimed the 1.2100 status to the upside with UK PM Sunak warning that inflation is not guaranteed to decline this year and that the government will need to be disciplined to ensure inflation is brought down.
• USD/JPY retreated below 132.00 amid a subdued dollar and the absence of Japanese participants.
• Antipodeans benefitted from the risk appetite and gains in commodities following China’s border reopening.
• PBoC set USD/CNY mid-point at 6.8265 vs exp. 6.8276 (prev. 6.8912)

FIXED INCOME

• 10yr UST futures sat near Friday’s best levels following the significant bull steepening seen in the aftermath of the softer wage growth data in the US but with price action capped overnight amid the absence of US Treasury securities trade in Tokyo owing to the holiday closure.
• Bund futures were off highs but with the pullback limited.

COMMODITIES

• Crude futures were underpinned following China's border reopening and with travel demand expected to be further boosted heading closer to the Lunar New Year holiday later this month.
• Qatar set February marine crude OSP at Oman/Dubai plus USD 0.75/bbl and land crude OSP at Oman/Dubai plus USD 2.10/bbl. In relevant news, Qatar Energy is to sign Ras Laffan Petrochemicals Complex agreements with the project to cost USD 6bln and it created a JV with Chevron Phillips Chemicals of which it owns 70% and Chevron (CVX) owns 30%, according to Reuters.
• Iraq’s Oil Minister said the Karbala oil refinery will begin commercial production in mid-March, according to Reuters.
• US DoE rejected the initial batch of bids from oil companies to resupply a small amount of oil to the SPR in February, according to Reuters.
• Colonial Pipeline said repairs at the Witt Booster Station were completed and Line 3 returned to normal operations as of 17:51 EST on Sunday, according to Reuters.
• Spot gold continued its advances as the dollar remained subdued.
• Copper futures were underpinned alongside the gains in risk assets.

CRYPTO

• Bitcoin traded with marginal gains after having reclaimed the 17,000 level late over the weekend.

NOTABLE ASIA-PAC HEADLINES

• Chinese President Xi Jinping stressed the importance of remaining committed to advancing reform, exploring new ground and carrying forward the fighting spirit, in a bid to modernize the work of judicial, procuratorial, and public security organs, according to China Economic Net.
• PBoC official Guo Shuqing said China’s growth will return to a normal path as China provides further support to households and companies to help recover following the end of the zero-Covid policy, according to People’s Daily.
• Tens of thousands of travellers began to fly in and out of mainland China on Sunday following the removal of nearly all of China’s border restrictions, according to WSJ.
• China’s health security administration said talks to include Pfizer’s (PFE) Paxlovid in the drug list for basic state health insurance failed due to the Co.’s high quotation for the antiviral medicine, according to Reuters.
• Six Chinese cities set GDP targets for this year ranging from 5.5%-7.0%, according to Securities Daily.
• Japanese PM Kishida said they must choose a successor to BoJ Governor Kuroda best suited for the post at the time when Kuroda’s term ends in April and must discuss with the next BoJ Governor the relationship between the government's and BoJ's policies. Kishida added that the government and BoJ must work closely together and each should play their own roles in achieving sustained price stability, while he noted that the government is ready to respond flexibly using reserves when asked if further steps could be taken to soften the blow on households from rising prices, according to Reuters.

DATA RECAP

• Australian Building Approvals (Nov) -9.0% vs. Exp. -1.0% (Prev. -6.0%, Rev. -5.6%)

GLOBAL NEWS

• Czech Central Bank Governor Michl said they expect a significant drop in inflation from spring and are ready to raise rates further if the baseline scenario of a decline in inflation does not materialise, while he added that policy will be strict until inflation begins declining, according to Reuters.
• Supporters of former Brazilian president Bolsonaro invaded ministry buildings, Congress and the Presidential Palace in Brasilia, while the Brasilia Governor said all security forces have been deployed and the US Embassy in Brazil warned US citizens to avoid the central Brasilia area until further notice. Furthermore, President Lula declared a federal security intervention in Brasilia until January 31st and security forces later took back Brazil's Congress, Supreme Court and Presidential Palace, according to Reuters and GloboNews.
• South Africa’s Eskom said it will implement stage 3 electricity cuts from 05:00-16:00 local time and stage 4 cuts during 16:00-05:00 daily until further notice, according to Reuters.

GEOPOLITICS

• Ukrainian President Zelensky said Ukrainian forces were repelling Russian attacks on Bakhmut in eastern Donbas and were holding position in nearby Soledar under very difficult conditions, according to Reuters.
• Russia’s Defence Ministry said it struck a building in eastern Ukraine which killed more than 600 Ukrainian troops in retaliation for Ukraine’s deadly strike against a Russian barracks, although Ukrainian officials denied there were any casualties and said the strike by Russia only damaged civilian infrastructure, according to Reuters and ITV.
• Russia and Belarus will conduct joint air force drills on January 16th-February 1st, according to the Belarusian Defence Ministry cited by Reuters.
• Swedish PM Kristersson said they have fulfilled commitments made to Turkey at the Madrid summit but noted that Turkey is demanding concessions that Stockholm cannot give to approve its application to join NATO, according to FT.
• China's military said it carried out combat drills around Taiwan on Sunday, while Taiwan's Defence Ministry stated 28 Chinese aircraft crossed the Taiwan Strait median line and entered the air defence zone in the past 24 hours. Furthermore, Taiwan's presidential office said it condemns China's recent military drills around Taiwan and that Taiwan's position is very clear whereby it will not escalate conflict nor provoke disputes but added that it will firmly defend its sovereignty and national security, according to Reuters.

EU/UK

NOTABLE HEADLINES

• BoE’s Mann said energy price caps could be lifting inflation in other sectors by boosting consumer spending and noted it is unclear what would happen to inflation when caps are removed, according to Bloomberg.
• UK PM Sunak said inflation is not guaranteed to decline this year and that the government will need to be disciplined to ensure inflation is brought down, according to Reuters. In other news, PM Sunak said he was willing to discuss pay increases for nurses in an effort to end strikes as ministers prepare to meet union leaders on Monday, according to FT.