Newsquawk

Euro Market Open: Risk appetite stalled towards the Wall St. close, Chair Powell ahead

10 Jan 2023, 06:50 by Newsquawk Desk

APAC stocks traded mostly lower as the risk appetite in the region stalled following a similar handover from Wall St.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.8% after the cash market closed up 1.3% yesterday.
DXY is back on a 103 handle after a brief slip below the level, EUR/USD is contained on a 1.07 handle, Cable met resistance at 1.22.
Crude futures were marginally lower after a pullback from yesterday's highs as risk momentum waned.
Looking ahead, highlights include Chinese Loans & M2 Money Supply, Speeches from Fed's Powell, ECB's Schnabel & BoE's Bailey, Supply from Netherlands, UK & US.

US stocks finished mixed despite initially extending on their post-NFP gains as dovish Fed repricing continued and 'soft landing' chatter gained traction, although the major stock indices then faded their advances throughout the afternoon in which the SPX and DJIA slipped into negative territory into the close.
SPX -0.08% at 3,892, NDX +0.62% at 11,108, DJIA -0.34% at 33,518, RUT +0.17% at 1,796.
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NOTABLE HEADLINES

Fed's Bostic (non-voter) said he is very hesitant to declare victory in efforts to cool prices and noted that services inflation has passed goods inflation as the problem, while he sees the likelihood services inflation will prove persistent. Bostic added that he eventually wants to get to 25bps though the timing will depend on the data.
Fed's Daly (non-voter) said she absolutely expects the economy to continue slowing, while she added that the Fed is very data-dependent and that views could change from December projections if things change, according to a WSJ interview.

APAC stocks traded mostly lower as the risk appetite in the region stalled following a similar handover from Wall St where the major indices failed to sustain early gains despite a further dovish Fed repricing.
ASX 200 was lacklustre amid weakness in industrials and mining stocks, although price action was rangebound amid the lack of any major fresh drivers.
Nikkei 225 outperformed as it played catch-up to Monday’s advances on return from the extended weekend but with upside capped as participants also reflected on weak Household Spending and firm Tokyo CPI data releases.
Hang Seng and Shanghai Comp were indecisive as the border reopening euphoria faded and despite reports that China will cut VAT for small businesses, while the PBoC also continued to drain liquidity.
US equity futures were subdued and the ES (-0.1%) briefly breached the 3,900 level to the downside.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.8% after the cash market closed up 1.3% yesterday.

DXY was rangebound after the prior day’s losses and brief decline to beneath the 103.00 level amid the continued dovish Fed repricing which was further spurred after a mixed NY Fed December Consumer Survey in which median 1yr-ahead inflation expectations fell to its lowest since July 2021 at 5%, while there were also recent comments from Fed’s Bostic who eventually wants to get to 25bps hike increments though the timing will depend on the data.
EUR/USD was rangebound overnight and held on to most of the prior day’s gains after reclaiming the 1.0700 handle on the back of the recent softening of the dollar.
GBP/USD marginally pulled back after stalling at resistance near the 1.2200 level despite comments from BoE’s Pill who noted the potential for inflation to prove more persistent.
USD/JPY was slightly choppy in the aftermath of mixed data releases from Japan.
Antipodeans were contained amid the indecisive risk tone and lack of pertinent tier-1 releases.
PBoC set USD/CNY mid-point at 6.7611 vs exp. 6.7613 (prev. 6.8265)

10yr UST futures slightly eased from the prior day’s best levels as they took a breather from the data-driven gains and with recent dovish Fed repricing aided by softening short-term consumer inflation expectations.
Bund futures remained subdued after their recent retreat to beneath the 137.00 level.
10yr JGB futures lacked demand following mixed data releases and the absence of additional BoJ buying.

Crude futures were marginally lower after a pullback from yesterday's highs as risk momentum waned.
Goldman Sachs cut its Summer 2023 TTF price forecast by EUR 80 to EUR 100/MWh, citing exceptionally warm realised and forecast weather, as well as strong energy conservation.
Spot gold traded sideways and held on to recent gains as participants look ahead to a speech from Fed Chair Powell later today and US CPI data on Thursday for further clues on Fed policy.
Copper futures were lacklustre owing to the subdued risk tone.
Large Chinese nickel producer Tsingshan is in talks with struggling Chinese copper plants regarding processing its material which could double Chinese refined nickel output this year, according to Mining.com.

Bitcoin lacked firm direction with price action centred around the 17,200 level.

NOTABLE ASIA-PAC HEADLINES

Chinese state media noted that the COVID-19 wave is past its peak in many parts of China.
China's embassy in South Korea stopped issuing short-term visas for Korean citizens visiting China and said it will adjust policy subject to the lifting of South Korea's discriminatory entry restrictions against China, according to Reuters.

DATA RECAP

Tokyo CPI YY (Dec) 4.0% vs. Exp. 4.0% (Prev. 3.8%)
Tokyo CPI Ex. Fresh Food YY (Dec) 4.0% vs. Exp. 3.8% (Prev. 3.6%)
Tokyo CPI Ex. Fresh Food & Energy YY (Dec) 2.7% vs. Exp. 2.7% (Prev. 2.5%)
Japanese All Household Spending MM* (Nov) -0.9% vs. Exp. -0.5% (Prev. 1.1%)
Japanese All Household Spending YY* (Nov) -1.2% vs. Exp. 0.5% (Prev. 1.2%)

US Pentagon is mulling sending Stryker armoured vehicles to Ukraine in an upcoming aid package, according to people familiar with the matter cited by Politico.
UK is willing to send battle tanks to Ukraine with PM Sunak supportive of Challenger II supply that could provide Ukrainian President Zelensky with a ‘knockout punch’, according to The Telegraph.

NOTABLE HEADLINES

UK government is to cut business energy subsidies to GBP 5.5bln which will last for 12 months.

DATA RECAP