• APAC stocks were subdued after the declines on Wall St (S&P 500 -2.0%) where strong PMI data prompted hawkish central bank repricing.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.2% after the cash market closed down 0.5% yesterday.
• DXY maintains 104 status, antipodeans diverge as NZD rises post-RBNZ with FX markets otherwise contained. 
• RBNZ delivered a widely expected 50bps rate hike, signalled further rate increases and maintained its peak rate forecast at 5.50%.
• Looking ahead, highlights include German Ifo, German Final CPI, Speech from Fed's Williams, FOMC Minutes (Feb), Supply from Italy, UK, Germany & US, Earnings from Danone, Stellantis, Telefonica Deutschland, Rio Tinto, Lloyds & NVIDIA.

US TRADE

EQUITIES

• US stocks were lower on return from the long weekend as hot Flash PMI data on both sides of the pond spurred fresh hawkish central bank repricing to start the week which saw the S&P 500 eventually retreat below the psychologically key 4,000 level.
• SPX -2.00% at 3,997, NDX -2.41% at 12,060, DJI -2.06% at 33,130, RUT -2.99% at 1,888.
• Click here for a detailed summary.

APAC TRADE

EQUITIES

• APAC stocks were subdued after the declines on Wall St where the major indices were pressured on return from holiday as strong PMI data from Europe and the US spurred hawkish central bank repricing.
• ASX 200 briefly dipped below 7,300 amid a slew of earnings releases although clawed back most of its losses after weak data releases including a surprise contraction in Construction Work and softer-than-expected Wage Price Index, which removes some of the hawkish impulses for the RBA.
• Nikkei 225 underperformed and approached closer to testing the 27,000 level to the downside.
• Hang Seng and Shanghai Comp. conformed to the subdued mood in which weakness in tech briefly pulled the Hong Kong benchmark into correction territory although losses were then pared after the budget announcement which included a giveaway of HKD 5,000 in consumption vouchers and a cut to salary taxes, while there was also strength in HSBC and Hang Seng Bank post-earnings.
• US equity futures (ES +0.2%) were contained after recent losses and as markets await FOMC minutes.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.2% after the cash market closed down 0.5% yesterday.

FX

• DXY took a breather after recent gains which were spurred by a higher terminal rate pricing in the wake of the strong PMI data; maintains 104 status.
• EUR/USD rebounded off the prior day’s lows but with trade kept rangebound by an uneventful dollar.
• GBP/USD just about eased back from the 1.2100 handle but held on to most of the spoils from yesterday’s outperformance owing to the strong PMI data in the UK and with PM Sunak securing the backing of two key Brexiteers Heaton-Harris and Braverman for a Northern Ireland trade deal.
• USD/JPY was choppy with early pressure seen after slightly firmer-than-expected Services PPI.
• Antipodeans were somewhat mixed with AUD/USD pressured by soft data releases, while NZD/USD was initially boosted after the RBNZ rate decision where it delivered a widely expected 50bps rate hike, signalled further rate increases and maintained its peak rate forecast at 5.50%. However, the moves in the Kiwi were later faded alongside the risk aversion.
• PBoC set USD/CNY mid-point at 6.8759 vs exp. 6.8776 (prev. 6.8557)

FIXED INCOME

• 10yr UST futures found a floor near the 111.00 level which provided a slight reprieve from the sell-off seen amid the hawkish terminal Fed rate pricing although the recovery was only minimal after weak demand at the US 2yr auction.
• Bund futures languished at the prior day’s lows owing to the recent slump following firm eurozone PMI data.
• 10yr JGB futures were lacklustre after recent selling in global counterparts but are off their lows after the BoJ announced emergency bond purchases as the 10yr yield sat above the upper limit of the YCC target range.

COMMODITIES

• Crude futures were choppy with recent strong US and European PMI data offset by headwinds from the subdued mood, while this week's inventory data is delayed following the holiday closure.
• Kazakhstan may send the first batch of oil to Germany in the coming days which could possibly occur today, according to RIA citing the Energy Minister.
• Spot gold traded sideways amid an uneventful dollar.
• Copper futures declined amid the risk aversion and as data showed an increase in output last year.
• Preliminary data indicated world copper mine production increased by about 3.3% in 2022 and world refined copper production increased by about 3.5% in 2022, according to ICSG.

CRYPTO

• Bitcoin extended on its recent pullback and briefly dipped beneath the 24,000 level.
• Coinbase (COIN) executive said they are seeing increased regulatory scrutiny in the wake of the FTX and other crypto company failures, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• Hong Kong Finance Secretary Chan delivered the Budget and confirmed the government will provide HKD 5k in consumption vouchers to residents aged 18 years old and above, while they will reduce salaries tax with a ceiling of HKD 6,000 which will benefit 1.9mln taxpayers and lower government revenue by HKD 8.5bln. Chan also noted that the city is at the beginning of a recovery and that GDP contracted by 3.5% in 2022, although the government expects Hong Kong GDP growth of 3.5%-5.5% in 2023.
• China's top diplomat Wang Yi met with Russia's security chief and said the two sides discussed their willingness to oppose all forms of unilateral bullying and discussed ways to improve global governance. Furthermore, the two sides believe peace and stability in the Asia-Pac region should be resolutely upheld and they oppose the introduction of a cold war mentality, according to Reuters.
• RBNZ hiked the OCR by 50bps to 4.75%, as expected, while it maintained its view for rates to peak at 5.50% and considered hikes of 50bps and 75bps at the meeting. RBNZ stated that although there are early signs of price pressure easing, core consumer inflation remains too high and the Committee agreed it must continue to raise the OCR to return inflation to the target and to fulfil its remit.

DATA RECAP

• Australian Construction Work Done (Q4) -0.4% vs. Exp. 1.5% (Prev. 2.2%, Rev. 3.7%)
• Australian Wage Price Index QQ (Q4) 0.8% vs. Exp. 1.0% (Prev. 1.0%)
• Australian Wage Price Index YY (Q4) 3.3% vs. Exp. 3.5% (Prev. 3.1%)

GEOPOLITICS

• Russian President Putin submitted the draft of the Russian suspension of the START treaty to the Duma, according to Reuters.
• Russian Foreign Ministry said Moscow will continue to comply with quantitative restrictions on nuclear arms and will continue to notify the US of planned ICBM and SLBM launches. Furthermore, it said the decision to suspend the New START treaty can be reversed and called on the US to refrain from actions that would prevent a return to New START, according to Reuters and TASS.
• Russia reportedly conducted an ICBM test when US President Biden was recently in Ukraine although the test was said to have failed, while an official stated that Russia notified the US in advance of the launch through deconfliction lines, according to CNN.
• US President Biden’s administration is expected to impose fresh sanctions on about 200 Russian individuals and entities this week, according to WSJ citing sources.
• Italian PM Meloni said sending Italian fighter jets to Ukraine is not on the table but added that supply of more air defence systems to Ukraine is being considered.
• North Korea could fire ICBMs at a normal angle and conduct its seventh nuclear test this year, according to South Korean lawmakers citing intelligence officials.

EU/UK

• UK PM Sunak is considering a 5% public sector pay offer to end waves of strikes, according to FT.
• UK PM Sunak reportedly secured the backing of two key Brexiteers for the Northern Ireland trade deal with Heaton-Harris and Braverman getting behind the outline agreement, according to FT.