Newsquawk

Euro Market Open: Mixed trade with Europe seen flat pre-US CPI; JPY leads G10 FX while NZD lags

14 Feb 2023, 06:50 by Newsquawk Desk

APAC stocks eventually traded mixed with a slight positive bias following the firm handover from Wall St (S&P 500 +1.2%).
European equity futures are indicative of a flat open with the Euro Stoxx 50 Unch. after the cash market closed up 1.0% yesterday.
DXY sits in the low 103's, EUR/USD has reclaimed 1.07 JPY leads G10 FX, NZD narrowly lags.
UK and EU could announce a new customs deal within the next two weeks, according to The Telegraph.
US President Biden’s administration plans to sell 26mln more crude oil barrels from the SPR.
Looking ahead, highlights include UK Unemployment, US CPI, OPEC MOMR, Speeches from Fed's Williams, Barkin, Harker & Logan, Supply from Italy & US.

US stocks gained throughout the session with tech leading the advances ahead of Tuesday's CPI report and amid mixed NY Fed inflation expectations, while household expectations of income growth saw a sizeable fall which provided some encouragement in the inflation fight. In addition, JPM noted that positioning in the tech and consumer discretionary sectors remained low and therefore stands to benefit from potential money inflows in the event of a dovish CPI print.
SPX +1.15% at 4,137, NDX +1.60% at 12,502, DJI +1.11% at 34,246, RUT +1.16% at 1,941.
Click here for a detailed summary.

NOTABLE HEADLINES

US President Biden is to name Fed's Brainard as his top economic adviser as early as Tuesday, according to a source familiar with the matter cited by Reuters.

APAC stocks eventually traded mixed with a slight positive bias following the firm handover from Wall St where the major indices gained and the Treasury curve flattened ahead of US inflation data.
ASX 200 was led by tech and telecoms after similar outperformance of their US counterparts but with gains capped as an improved business survey was offset by a deterioration in consumer confidence.
Nikkei 225 was marginally firmer as participants digested GDP data which showed Japan’s economy returned to growth albeit at a slower-than-expected pace, while the government nominated academic Ueda as the next BoJ Governor, as expected.
Hang Seng and Shanghai Comp. were indecisive after the PBoC’s liquidity drain and amid the current balloon-related frictions, although reports noted US Secretary of State Blinken is considering meeting with China's Foreign Minister Wang which could provide an opportunity to diffuse the tensions.
US equity futures (ES -0.1%) took a breather after yesterday's rally as markets await the CPI data.
European equity futures are indicative of a flat open with the Euro Stoxx 50 Unch. after the cash market closed up 1.0% yesterday.

DXY was contained ahead of the incoming US CPI data and following the pressure during US hours; traded within a tight 103.10-26 range overnight.
EUR/USD edged slightly higher to extend on recent gains after having reclaimed the 1.0700 handle and with the European Commission now expecting the eurozone to avoid a technical recession.
GBP/USD remained afloat after benefitting from the softer dollar and risk bias but with further gains limited by resistance at 1.2150 and after a recent poll showed around three-quarters of respondents were expecting the BoE to slow its pace of rate hikes to 25bps in March and then pause thereafter.
USD/JPY gradually pulled back after the prior day’s advances and with the government’s BoJ nominations doing little to spur price action as the announcement was widely telegraphed beforehand,
Antipodeans were lacklustre with underperformance in NZD after softer 2yr Inflation Expectations.
PBoC set USD/CNY mid-point at 6.8136 vs exp. 6.8138 (prev. 6.8151)

10yr UST futures were marginally firmer after the prior day’s flattening heading into the US inflation data and after some encouraging signs from the somewhat mixed NY Fed inflation expectations survey.
Bund futures edged higher but remained within yesterday’s ranges after the price swings on both sides of the 136.00 level and with improved forecasts for the eurozone to avert a recession.
10yr JGB futures kept afloat after the GDP data miss and the government’s BoJ nomination announcement, while the BoJ offered JPY 1tln of five-year loans against collateral to banks.

Crude futures were pressured following the news that the US was planning a further SPR release.
US President Biden’s administration plans to sell 26mln more crude oil barrels from the SPR, with deliveries estimated between April and June after Congress' approval, according to Bloomberg.
Spot gold benefitted from a lacklustre dollar.
Copper futures were steady amid the slightly positive bias risk tone in Asia.

Bitcoin remained subdued but with the downside stemmed by a floor around 21,700.

NOTABLE ASIA-PAC HEADLINES

Japan's government nominated academic Kazuo Ueda as the next BoJ Governor, while it nominated BoJ Executive Director Shinichi Uchida and former FSA chief Ryozo Himino as Deputy Governors, as expected.

DATA RECAP

Japanese GDP QQ (Q4) 0.2% vs. Exp. 0.5% (Prev. -0.2%, Rev. -0.3%)
Japanese GDP QQ Annualised (Q4) 0.6% vs. Exp. 2.0% (Prev. -0.8%, Rev. -1.0%)
Japanese Real GDP YY (2022) 1.1% (Prev. 2.1%)
Australian Westpac Consumer Confidence Index (Feb) 78.5 (Prev. 84.3)
Australian Westpac Consumer Confidence MM (Feb) -6.9% (Prev. 5.0%)
Australian NAB Business Confidence (Jan) 6 (Prev. -1.0)
Australian NAB Business Conditions (Jan) 18 (Prev. 12.0)
New Zealand Inflation Forecast 1 Year (Q1) Q1 5.11% (Prev. 5.08%)
New Zealand Inflation Forecast 2 Years (Q1) Q1 3.30% (Prev. 3.60%)

Top US and Chinese diplomats are contemplating the first meeting since the spy balloon situation with US Secretary of State Blinken considering meeting with China's Foreign Minister Wang Yi at a security conference later this week, according to Bloomberg.
US Department of Defense Spokesperson Kirby said they have determined that China has a high-altitude balloon programme for intelligence gathering and that the programme has provided limited additional intelligence to China.
US State Department said the US stands with the Philippines in the face of the Chinese Coast Guard's reported use of laser devices against the crew of a Philippines Coast Guard ship on February 6th in the South China Sea. US added that China's conduct was provocative and unsafe which resulted in the temporary blindness of crew members and that China's dangerous operational behaviour directly threatens regional peace and stability, while it reaffirmed any attack on Philippine armed forces, public vessels or aircraft would invoke mutual defence commitments under their treaty, according to Reuters.

UK and EU could announce a new customs deal within the next two weeks to resolve the dispute over post-Brexit trading rules in Northern Ireland, according to The Telegraph.
A Reuters poll showed about three-quarters of respondents expect the BoE to hike rates by 25bps in March and then pause. Furthermore, the median view is for the UK economy to contract in Q1, Q2 and Q3, while the economy is expected to contract by 0.8% in 2023 (prev. forecast for 0.9% contraction) and expand by 0.8% in 2024 (prev. forecast 0.8%).