Newsquawk

Euro Market Open: A rebound in Chinese PMIs failed to spur a rally, IMF upgrades global growth

31 Jan 2023, 06:50 by Newsquawk Desk

APAC stocks declined following the weak lead from global counterparts, while a rebound in Chinese PMI data failed to inspire a rally in the region.
IMF raised its 2023 global GDP growth forecast to 2.9% from 2.7% citing resilience in advanced economies and China reopening.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.6% after the cash market closed down 0.5% yesterday.
DXY is back on a 102 handle, AUD lags post-retail sales, EUR/USD and GBP/USD sit on 1.08 and 1.23 handles respectively.
Looking ahead, highlights include German Retail Sales, French CPI (Prelim.), EZ GDP Flash, US Consumer Confidence, Supply from Italy & Germany, Earnings from KPN, Exxon Mobil, Marathon Petroleum, General Motors, Phillips 66, UPS, Pfizer, SYSCO, Caterpillar and AMD.

US stocks declined and the broader risk appetite suffered as a hot Spanish inflation print was enough to catalyse profit-taking and added to the market jitters ahead of this week's deluge of key risk events.
SPX -1.30% at 4,017, NDX -2.09% at 11,912, DJIA -0.77% at 33,717, RUT -1.35% at 1,885.
Click here for a detailed summary.

NOTABLE HEADLINES

US President Biden is to end COVID-19 emergency declarations on May 11th, according to the White House.
US Treasury expects to issue USD 932bln (exp. 860bln) of net marketable debt in Q1 and assumes an end-March cash balance of USD 500bln, while it expects to issue USD 278bln (exp. 210bln) of net marketable debt in Q2 and assumes end-June balance of USD 550bln. US Treasury said the increase in the Q1 borrowing estimate is due to a lower beginning-of-quarter cash balance and projections of lower receipts and higher outlay.

APAC stocks declined following the weak lead from global counterparts added to the cautiousness heading into the upcoming risk events, while a rebound in Chinese PMI data failed to inspire a rally as the region also digested a slew of earnings updates.
ASX 200 was subdued as the outperformance in defensives was offset by losses in tech and with Retail Sales at a larger-than-expected contraction.
Nikkei 225 softened amid a deluge of earnings releases which impacted several of the largest movers in the index, although losses were contained by better-than-expected data releases.
KOSPI suffered amid losses in its largest constituent Samsung Electronics which posted its lowest quarterly operating profit in 8 years and flagged macroeconomic uncertainties will persist this year.
Hang Seng and Shanghai Comp. were pressured despite the strong Chinese PMI data which topped forecasts and returned to expansion territory, while attention was also on preliminary earnings and reports that US President Biden's team is weighing fully cutting off Huawei from US suppliers.
US equity futures (ES -0.1%) were constrained by the overall risk aversion as the key events drew closer.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.6% after the cash market closed down 0.5% yesterday.

DXY was flat ahead of the upcoming risk events including tomorrow’s FOMC and remained above the 102.00 level after having benefitted yesterday from the risk aversion.
EUR/USD languished at the prior day’s lows following a recent failed attempt to reclaim the 1.0900 handle in the aftermath of mixed EU data including disappointing German GDP and hot Spanish HICP.
GBP/USD was lacklustre with activity currencies contained by the cautious macro environment.
USD/JPY pulled back after stalling near 130.50, with the JPY also helped by a slight uptick in yields.
Antipodeans were subdued by the uninspired risk tone and disappointing Australian Retail Sales.
PBoC set USD/CNY mid-point at 6.7604 vs exp. 6.7607 (prev. 6.7626)

10yr UST futures attempted to nurse some of the losses from the prior session where treasuries bear-flattened.
Bund futures remained depressed after a recent slump but with support near 136.50.
10yr JGB futures JGBs were flat amid mixed results at the 2yr auction and after the BoJ maintained the frequency of purchases and amounts of its scheduled bond operations unchanged for February.

Crude futures traded marginally lower with price action hampered by widespread cautiousness.
Russia banned domestic oil exporters from adhering to Western price caps and called on the energy ministry to devise an approach for monitoring prices of Russian oil exports by March 1st.
Spot gold conformed to the lacklustre mood across the commodities complex.
Copper futures were pressured amid the subdued tone and despite the rebound in China's PMIs.

Bitcoin was uneventful amid the cautious mood and after prices fell back below 23,000.

NOTABLE ASIA-PAC HEADLINES

US Commerce Department notified companies it would no longer grant them licences to export to Huawei as the White House mulls fully cutting off Huawei from US suppliers, according to FT and Bloomberg.
US is pushing for military sites in the Philippines to counter China, according to WSJ.

DATA RECAP

Chinese NBS Manufacturing PMI (Jan) 50.1 vs. Exp. 49.8 (Prev. 47.0)
Chinese NBS Non-Manufacturing PMI (Jan) 54.4 vs. Exp. 51.0 (Prev. 41.6)
Chinese Composite PMI (Jan) 52.9 (Prev. 42.6)
Japanese Industrial Production Prelim. MM (Dec) -0.1% vs. Exp. -1.2% (Prev. 0.2%)
Japanese Retail Sales YY (Dec) 3.8% vs. Exp. 3.0% (Prev. 2.6%, Rev. 2.5%)
Australian Retail Sales MM Final (Dec) -3.9% vs. Exp. -0.3% (Prev. 1.4%)

Russia and Belarus began joint military staff training, according to the Belarusian Defence Ministry.
US President Biden said the US will not send Ukraine F-16 jets, according to CBS News.
NATO Secretary General Stoltenberg said to Japan that the war in Ukraine demonstrates that their security is closely interconnected and he appreciates the support Japan provides including cargo capabilities, while he added that they will continue to strengthen the partnership between Japan and NATO, according to Reuters.

IMF raised its 2023 global GDP growth forecast to 2.9% from 2.7% citing resilience in advanced economies and China reopening but cut its 2024 global GDP growth forecast to 3.1% from 3.2% due to steeper monetary policy tightening.

UK PM Sunak has been warned by two former negotiators, including Lord Frost not to trade off the power to overrule the EU in Northern Ireland in order to make a deal with Brussels, according to The Telegraph.