• APAC stocks were mixed after the indecisive performance stateside, while the region also digested firmer-than-expected inflation data from Australia and NZ.
• Microsoft beat on the bottom line and Cloud revenue, but later faded after-market gains following weak guidance in its conference call.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.3% after the cash market closed up 0.1% yesterday.
• 102 acted as a ceiling for DXY overnight, AUD was the clear outperformer post-CPI as antipodes diverged.
• Looking ahead, highlights include German Ifo, BoC Policy Announcement, BoJ SOO, Supply from Germany & US, Earnings from ASML, AT&T, Tesla, Boeing, IBM & Abbott, Holiday in China (Lunar New Year).

US TRADE

• US stocks traded sideways for most of the session amid varied data and geopolitical tensions, while pressure was seen at the opening bell amid a flurry of halts on the NYSE due to a technical glitch which triggered 84 Limit Up Limit Down halts. However, there was a bout of support for futures after the close following Microsoft's earnings which beat on the bottom line and its Cloud revenue also topped forecasts.
• SPX -0.07% at 4,016, NDX -0.22% at 11,846, DJI +0.31% at 33,733, RUT -0.27% at 1,885.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US House Speaker McCarthy said they need to have a responsible debt ceiling and called for eliminating wasteful spending, while he added debt is the greatest threat to the nation and that President Biden needs to stop playing politics on the debt ceiling.
• US Treasury Secretary Yellen said Japan and the EU would need to negotiate new trade agreements with the US to meet the mineral-sourcing requirements for an overhauled EV tax subsidy, according to WSJ.
• NYSE said it is thoroughly examining the glitch and that the exchange ended Tuesday with a normal close, while a regular open is expected on Wednesday, according to Reuters.
• Microsoft Corp (MSFT) Q2 2023 (USD): Adj. EPS 2.32 (exp. 2.30), Revenue 52.70bln (exp. 52.99bln), Co. Intelligent Cloud revenue USD 21.51bln (exp. 21.43bln), while it stated that Azure and other cloud revenue growth of 31% was driven by strong demand for consumption-based services. However, it noted growth is to slow in its commercial business for the rest of FY23 and that FY operating margins are expected to decrease around 2% Y/Y excluding Q2 charge and a favourable impact from the change in accounting method.

APAC TRADE

EQUITIES

• APAC stocks were mixed after the indecisive performance stateside owing to the varied data releases and geopolitical tensions, while the region also digested firmer-than-expected inflation data from Australia and New Zealand.
• ASX 200 failed to sustain an initial foray above 7,500 with the index subdued by hot CPI data which printed its highest since 1990 and boosted the market pricing for the RBA to continue with its hiking cycle next month.
• Nikkei 225 gradually edged higher with trade uneventful in the absence of any pertinent drivers although Dai Nippon Printing outperformed after Elliot Management built a stake in the Co. of slightly under 5%.
• KOSPI was among the biggest gainers on return from the Lunar New Year holiday with the index also driven by strength in top-weighted stock Samsung Electronics.
• US equity futures were initially supported overnight amid the initial optimism from Microsoft's earnings, which beat on the bottom line and Cloud revenue, but later faded after weak guidance in its conference call.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.3% after the cash market closed up 0.1% yesterday.

FX

• DXY was lacklustre after yesterday’s choppy price action which coincided with mixed data releases in the US and increased geopolitical tensions after reports the US is leaning towards sending Abrams tanks to Ukraine, while the 102.00 level has also provided a ceiling overnight.
• EUR/USD tested 1.0900 to the upside following another bout of hawkish ECB rhetoric including from Simkus who suggested continuing with 50bp rate hikes and that reaching the rate peak before summer may be unlikely.
• GBP/USD traded flat and took a breather following the recent swings around the 1.2300 level.
• USD/JPY gradually edged higher after having rebounded off support near 130.00.
• Antipodeans were mixed with AUD/USD boosted by hot CPI data from Australia which printed at its highest since 1990 and boosted the odds for the RBA to continue hiking next month, while NZD/USD faded the initial support from firmer-than-expected New Zealand inflation, as the reading matched the prior quarter and was below the central bank’s forecast for 7.5% inflation.

FIXED INCOME

• 10yr UST futures were rangebound and partially held on to the gains from the prior session where treasuries bull-flattened after the initial data-driven selling was reversed by geopolitical tensions.
• Bund futures remained near yesterday’s best levels after having gained in tandem with their US counterparts but with further upside capped by resistance at 138.50.
• 10yr JGB futures traded sideways and largely ignored the BoJ’s presence in the market for nearly JPY 1.9tln of JGBs on top of its fixed-rate operations.

COMMODITIES

• Crude futures nursed some of the prior day's losses albeit with the rebound contained after private inventory data showed a greater-than-expected build for crude and the largest Cushing build since April 2020.
• US Energy Inventory Data (bbls): Crude +3.4mln (exp. +1.0mln), Cushing +3.9mln, Gasoline +0.6mln (exp. +1.8mln), Distillate -1.9mln (exp. -1.1mln)
• US Treasury issued a licence allowing Trinidad and Tobago to develop Venezuela's Dragon offshore gas field.
• Spot gold slightly softened following the recent data and haven-driven fluctuations.
• Copper futures were rangebound alongside the mixed risk appetite and with China still on holiday.

CRYPTO

• Bitcoin returned to flat territory after fading an initial retreat beneath the 22,500 level.

NOTABLE ASIA-PAC HEADLINES

• White House said it will continue to communicate to China the implications of providing material support to Russia in the war against Ukraine, while it was reported that US officials are seeing non-lethal military assistance and economic support from Chinese Co.s that stops short of wholesale sanctions evasion, according to Reuters sources.
• US Secretary of State Blinken is likely to warn China against aiding Russia when visiting Beijing, according to SCMP.
• Australian PM Albanese said there is increased engagement at different levels between Australian and Chinese agencies, according to Reuters.
• North Korea ordered a 5-day lockdown of its capital Pyongyang due to increasing cases of an unspecified respiratory illness, according to South Korean-based NK News.

DATA RECAP

• Australian CPI QQ (Q4) 1.9% vs. Exp. 1.6% (Prev. 1.8%)
• Australian CPI YY (Q4) 7.8% vs. Exp. 7.5% (Prev. 7.3%)
• Australian CPI YY (Dec) 8.4% vs Exp. 7.6% (Prev. 7.3%)
• New Zealand CPI QQ (Q4) 1.4% vs. Exp. 1.3% (Prev. 2.2%)
• New Zealand CPI YY (Q4) 7.2% vs. Exp. 7.1% (Prev. 7.2%)
• RBNZ Sectoral Factor Model Inflation Index (Q4) 5.8% (Prev. 5.4%)

GEOPOLITICS

• Ukrainian President Zelensky said Russia is readying for new aggression and that Ukraine will prevent further Russian actions, while he added Russia is intensifying its offensive towards Ukraine's Bakhmut.
• Russian Ambassador to the US said Washington's possible deliveries of tanks to Ukraine would be a blatant provocation and it is clear Washington is trying to inflict a strategic defeat on us, according to Reuters.
• Germany is to send Leopard tanks to Ukraine and is to allow other countries such as Poland to re-export Leopard tanks, according to Spiegel citing sources.