Newsquawk

Euro Market Open: China's CPI missed exp. YY, European futures point lower after subdued APAC trade

10 Feb 2023, 06:49 by Newsquawk Desk

APAC stocks were mostly negative after the losses on Wall St where the major indices wiped out initial gains.
Chinese inflation data saw headline Y/Y CPI and PPI fall short of expectations.
European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.6% after the cash market closed up 1.0% yesterday.
DXY is back on a 103 handle, EUR/USD and Cable sit on 1.07 and 1.21 handles respectively, antipodeans lag.
Looking ahead, highlights include UK GDP, Canadian Jobs Report, US Uni. of Michigan Prelim, ECB TLTRO III publication, EU Leaders Summit (2/2), Speeches from Fed's Waller & Harker, ECB's Schnabel, BoE's Pill.

US stocks finished lower after spending most of the session gradually fading their opening gains in what turned out to be a rather grim session whereby all sectors closed in the red, while a miss on jobless claims data and deeper yield inversion were detrimental for the risk environment.
SPX -0.88% at 4,081, NDX -0.91% at 12,381, DJIA -0.73% at 33,699, RUT -1.40% at 1,915.
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NOTABLE HEADLINES

Fed released 2023 bank stress test scenarios which include heightened stress in commercial and residential real estate markets, as well as a new 'exploratory market shock' for eight of the largest banks.
USTR chief agricultural negotiator said they asked Mexico to respond by February 14th to questions regarding the science behind the GMO corn ban decree and its response will help USTR decide on the next steps in resolving the GMO corn dispute including whether to escalate a USMCA dispute.

APAC stocks were mostly negative after the losses on Wall St where the major indices wiped out initial gains and virtually spent the entire session on the back foot with sentiment hampered and recession fears stoked amid the deepest 2s/10s yield inversion since the 1980s.
ASX 200 was dragged lower as underperformance in tech led the declines seen in almost all sectors and after the latest RBA Statement on Monetary Policy reaffirmed that further rate hikes will be needed.
Nikkei 225 bucked the trend amid an overload of earnings releases and softer PPI data, although advances were capped as participants second-guess who will succeed BoJ Governor Kuroda.
Hang Seng and Shanghai Comp. were lower with Hong Kong pressured by weakness in the property and tech industries, while frictions lingered as the US seeks to take action against Chinese entities linked to the surveillance balloon and reportedly aims to curtail technology investment in China.
US equity futures (ES -0.1%) languished near a weekly low following yesterday's steady retreat.
European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.6% after the cash market closed up 1.0% yesterday.

DXY benefitted from the risk aversion which also helped yesterday's comeback from sub-103.00.
EUR/USD was lacklustre after its recent wind-down from resistance near the 1.0800 handle.
GBP/USD continued its pullback and briefly lost 1.21 status.
USD/JPY took a breather near the prior day’s highs as markets await the nominations for the new BoJ leadership which the government will present on February 14th at 02:00GMT/21:00EST.
Antipodeans were lower amid commodity pressure and the mostly downbeat mood.
PBoC set USD/CNY mid-point at 6.7884 vs exp. 6.7885 (prev. 6.7905)
Banxico hiked rates by 50bps in a unanimous decision (exp. 25bps hike) and said for the next policy meeting, the upward adjustment to the reference rate could be of a lower magnitude.

10yr UST futures attempted to nurse some of the prior day's losses although the recovery lacked strength compared to the selling pressure which was exacerbated by an abysmal 30yr auction in the US.
Bund futures remained subdued after the recent price swings and brief roundtrip above 137.00.
10yr JGB futures were lower as they took their cues from global peers and amid the absence of additional purchases by the BoJ, which instead, announced a pooled collateral operation where it will offer 5-year loans to banks on February 14th to help cap yields.

Crude futures were lacklustre after declining yesterday amid headwinds from the risk-aversion.
Germany is close to signing a long-term supply deal of at least 10yrs with Oman for natural gas which would be between 0.5-1mln tons per annum, according to Reuters sources.
Spot gold marginally extended on its losses with pressure from a firmer dollar.
Copper futures continued to pull back alongside the weakness in risk assets.
MMG (1208 HK) said the Las Bambas copper mine in Peru secured critical supplies that have enabled production to continue at a reduced rate and the property remains secure but transport disruptions continue and critical supplies remain low. Furthermore, it warned that if the situation of critical supplies persists, it would be forced to commence a period of care and maintenance.

Bitcoin was subdued after the recent selling pressure which dragged prices below 22,000.

NOTABLE ASIA-PAC HEADLINES

Japan's government is to present the nominees for the BoJ leadership on February 14th at 02:00GMT/21:00EST, while the ruling and opposition parties are considering holding a hearing on the nominees in the lower house on February 24th, according to officials cited by Reuters.
RBA Statement on Monetary Policy noted that the board's priority is to return inflation to the target and that the board expects further increases in rates will be needed, while it is mindful that a considerable adjustment to interest rates has already been made and that monetary policy affects activity and inflation with a lag and through different channels. RBA also stated there are considerable uncertainties surrounding the outlook, and so around the level of interest rates needed to achieve the Board’s objectives.

DATA RECAP

Chinese CPI MM * (Jan) 0.8% vs. Exp. 0.7% (Prev. 0.0%)
Chinese CPI YY * (Jan) 2.1% vs. Exp. 2.2% (Prev. 1.8%)
Chinese PPI YY * (Jan) -0.8% vs. Exp. -0.5% (Prev. -0.7%)
Japanese Corp Goods Price MM (Jan) 0.0% vs. Exp. 0.3% (Prev. 0.5%)
Japanese Corp Goods Price YY (Jan) 9.5% vs. Exp. 9.6% (Prev. 10.2%)

French President Macron said he doesn't rule out sending fighter jets to Ukraine but added that it is not a priority for now, according to Reuters.
Brazil reportedly bowed to US pressure and agreed to delay Iranian warships from docking in Rio de Janeiro until after President Lula meets with US President Biden, according to sources cited by Reuters.
North Korean hackers reportedly hit healthcare organisations in the US and South Korea, according to CNN.

UK Treasury officials are in discussions to speed up Solvency II reforms and are considering whether to pursue a two-stage implementation, according to FT.
ECB's Nagel said core inflation is a decisive gauge for monetary policy and there is some ground to cover with interest rates.