Newsquawk

Euro Market Open: APAC boosted amid firmer PMIs, US ISM Manufacturing & German prelim. CPI ahead

01 Mar 2023, 06:49 by Newsquawk Desk

APAC stocks were mostly positive as the region digested a slew of data releases.
Official Chinese PMI printed its highest level since April 2012 and Caixin Manufacturing PMI also returned to expansion territory.
European equity futures are indicative of a contained open with the Euro Stoxx 50 +0.1% after the cash market closed down 0.2% yesterday.
DXY is a touch softer and back on a 104 handle, EUR/USD lingers below the 1.06 mark, JPY lags G10 FX.
Looking ahead, highlights include EZ/UK/US Final PMIs, German CPI (Prelim.), US ISM Manufacturing PMI, New Zealand Export/Import Prices, Speeches from BoE's Bailey & Fed's Kashkari, Supply from UK & Germany.

US stocks finished mostly lower on what was a choppy performance with soft US data, hot Spanish and French inflation, as well as month-end flows all at play, while a sizeable sell-side market imbalance into the close saw the major indices close in the red.
SPX -0.30% at 3,970, NDX -0.13% at 12,042, DJI -0.71% at 32,656, RUT +0.04% at 1,896.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed Discount Rate Minutes noted that 2 of 12 Fed bank boards sought no change to the discount rate and 3 of 12 sought a 50bps hike ahead of the FOMC's 25bps hike in February.
Fed's Goolsbee (voter) said it is a mistake to rely too heavily on market reactions for guidance on the monetary policy path and said the Fed needs "on-the-ground" data on the real economy to make the best policy decisions.
US President Biden plans a relentless focus on the economy during his re-election race, even as much of the public doubts the country's direction, according to Axios.

APAC stocks were mostly positive as the region digested a slew of data releases including the fastest pace of expansion for Chinese Manufacturing PMI in more than a decade.
ASX 200 was initially pressured by weakness in telecoms and financials, but later pared the losses as the miss on quarterly GDP and softer monthly CPI data effectively eased some of the hawkish pressure on the RBA.
Nikkei 225 lacked firm direction with price action confined to a narrow range around the 27,500 level.
Hang Seng and Shanghai Comp. were supported by the blockbuster official Chinese PMI data which printed its highest since April 2012 and Caixin Manufacturing PMI also returned to expansion territory. Furthermore, a surge in tech spearheaded the outperformance in Hong Kong, while advances in the mainland were somewhat moderated by US-China frictions as the Biden administration considers revoking export licenses issued to US suppliers for sales to Huawei and with the US also barring chipmakers from expanding capacity in China for 10 years if they are to receive some of the federal funding from the CHIPS Act.
US equity futures (ES Unch.) were uneventful but moved off lows as sentiment in Asia gradually improved.
European equity futures are indicative of a contained open with the Euro Stoxx 50 +0.1% after the cash market closed down 0.2% yesterday.

DXY slightly softened as the dollar gave way to the strengthening CNY and after a failed incursion above the 105.00 level, although still holds on to most of the gains from the prior day’s rebound whereby month-end buying helped the dollar recoup its initial data-induced losses.
EUR/USD moved off lows but remained lacklustre after recently slipping beneath 1.0600.
GBP/USD was contained and took a breather following a brief roundtrip to the 1.2100 handle.
USD/JPY traded sideways with recent price action at the whim of the dollar and yield spreads.
Antipodeans were choppy with initial pressure in AUD/USD after the softer-than-expected Australian CPI and GDP, although the losses were later reversed in the aftermath of the strong Chinese PMI data.
PBoC set USD/CNY mid-point at 6.9400 vs exp. 6.9409 (prev. 6.0519)

10yr UST futures remained subdued after yesterday’s choppy performance where the EGB-led selling on hot inflation data was unwound into month-end and after soft US data.
Bund futures languished below resistance at 133.00 as focus turns to German state inflation data.
10yr JGB futures were lifted at the open and briefly breached 147.00 although have since come off highs amid the lack of additional purchases by the BoJ which also maintained the frequency and amounts of its scheduled bond purchases for March.

Crude futures were supported by the positive risk tone after strong Chinese PMI data although the upside was capped after the latest private sector inventory report remained bearish for headline crude.
US Energy Inventory Data (bbls): Crude +6.2mln (exp. +0.5mln), Cushing +0.5mln, Gasoline -1.8mln (exp. +0.5mln), Distillates -0.3mln (exp. -0.5mln).
Spot gold eked mild gains overnight as the greenback marginally softened.
Copper futures extended on advances amid the surge in Chinese factory activity.

Bitcoin gained as the improved risk tone helped prices springboard from near the 23,000 level.
Binance reportedly used customer funds for its own purposes in a move similar to the FTX scandal, according to Markets Insider citing a Forbes article.

NOTABLE ASIA-PAC HEADLINES

Chinese Finance Minister Liu Kun said proactive fiscal policy will be more forceful, while he added that China's economy will continue its rebound and local governments will see better fiscal conditions.

DATA RECAP

Chinese NBS Manufacturing PMI (Feb) 52.6 vs. Exp. 50.5 (Prev. 50.1)
Chinese NBS Non-Manufacturing PMI (Feb) 56.3 vs. Exp. 55.0 (Prev. 54.4)
Chinese Composite PMI (Feb) 56.4 (Prev. 52.9)
Chinese Caixin Manufacturing PMI (Feb) 51.6 vs. Exp. 50.2 (Prev. 49.2)
Australian Real GDP QQ SA (Q4) 0.5% vs. Exp. 0.8% (Prev. 0.6%)
Australian Real GDP YY SA (Q4) 2.7% vs. Exp. 2.7% (Prev. 5.9%)
Australian CPI YY (Jan) 7.4% vs Exp. 8.0% (Prev. 8.4%)

IAEA Quarterly Report noted that Iran continues to breach restrictions on its nuclear activities imposed by the 2015 nuclear deal with the stock of enriched uranium estimated to have grown by 87.1 kg Q/Q to 3,760.8 kg which is 18x the JCPOA limit. Furthermore, its enriched uranium stock includes an estimated 87.5 kg of uranium enriched to up to 60% purity, near weapons grade, in uranium hexafluoride form, while the report confirmed IAEA found uranium particles enriched to as much as 83.7% in modified cascades that were supposed to be enriched to as much as 60% at Fordow.

UK Treasury is looking at a U-turn on the planned cut to UK energy subsidies, according to FT.

DATA RECAP