Newsquawk

US Market Open: Tech outperforms while AUD & JPY lag in FX, BoE and ECB speak ahead

29 Mar 2023, 11:10 by Newsquawk Desk

European bourses/US futures are firmer as banking concerns continue to dissipate while tech outperforms.
Upside in tech names follows updates from Infineon and Micron, MU +2.5% pre-market.
DXY is erring lower and is sub-102.50 despite marked AUD & JPY pressure as EUR & GBP remain resilient.
ECB's Lane says to ensure that inflation falls to 2%, further interest rate hikes are required under the scenario expected by the ECB.
EGBs are at the top-end of parameters with Bunds paring over half of Tuesday's downside thus far.
Commodities are relatively rangebound with crude inching higher while metals remain slightly softer.
Looking ahead, highlights include US House Financial Services Committee re. SIVB, Speeches from Fed's Barr, BoE's Mann, ECB's Schnabel and Supply from the US.

BANKS

US Federal Reserve Office of Inspector General initiated an independent review of the failure of Silicon Valley bank (SIVB), according to a spokesperson cited by Reuters.
Fed Vice Chair for Supervision Barr’s testimony for the House hearing was identical to the Senate hearing.
US President Biden said the White House response to the banking crisis is 'not over yet', according to Reuters.

EUROPEAN TRADE

EQUITIES

European bourses are firmer across the board, Euro Stoxx 50 +1.2%, as banking concerns continue to dissipate and focus turns to the sessions speakers.
Sectors feature marked outperformance in Tech names after updates from Infineon and Micron; MU +2.5% pre-market.
Stateside, futures are in the green, ES +0.9%, paring the downside from Tuesday which was a feature of underperformance in large-cap names; ahead, the US-specific docket is relatively light.
Infineon raised Q2 revenue and segment margin guidance alongside lifting FY revenue guidance, primarily due to resilient business dynamics in its core automotive and industrial segments.
Micron: Q2 adj. EPS -1.91 (exp. -0.86); it made inventory write-downs of USD 1.43bln in the quarter, which had an impact of USD 1.34/shr. Q2 revenue USD 3.69bln (exp. 3.702bln). Expects profitability to remain extremely challenged in the near-term and said profitability levels in the industry are currently not sustainable.
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FX

The DXY is erring lower and has dipped below the 102.50 mark within 102.41-102.75 boundaries despite marked AUD & JPY pressure.
Pressure which stems from cooler-than-expected inflation and a myriad of factors sparking a pullback from recent peaks respectively; AUD/USD at 0.6662 low and USD/JPY above 132.00.
In contrast, the DXY remains softer given the resilience of the EUR and GBP with ECB's Lane and BoE data respectively perhaps assisting with EUR/USD above 1.0850 though Cable is yet to breach 1.2350 convincingly.
CAD fails to derive any lasting support from oil benchmarks and as such is struggling to retain the 1.36 handle while the SEK is impaired by softer retail data despite favourable sentiment indicators.
Swedish NIER expects the Riksbank to continue on its set path re. rate increases, with the cycle deemed to be over in July when the rate will be 3.75%.
PBoC set USD/CNY mid-point at 6.8771vs exp. 6.8780 (prev. 6.8749)
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FIXED INCOME

Debt futures rebound relatively firmly to defy month end rebalancing flows tilted towards stocks over bonds.
Bunds reclaim more than half of Tuesday's losses within a 135.47-136.28 range, Gilts towards the top of 104.18-103.56 parameters and T-note nearer 114-28 than 114-14+ ahead of US housing data, House hearing on bank failures and USD 35bln 7-year auction.
Greece has commenced the sale of a new 5yr bond with price guidance at circa 95bps over mid-swaps, according to Reuters sources.
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COMMODITIES

WTI and Brent are firmer but reside in relatively narrow sub-USD 1/bbl parameters which specifics light aside from weekly inventory data yesterday and ahead alongside ongoing focus re. Iraqi flows through Turkey.
Specifically, WTI trades around USD 74/bbl (in a 73.51-74.00/bbl range) while its Brent counterpart trades on either side of USD 79/bbl (in a 78.73-79.32/bbl parameter).
Spot gold remains softer and in Tuesday's parameters while base metals are generally softer despite the tone but again in narrow ranges, with the exception of iron ore which is bolstered on steel consumption expectations.
US Private Energy Inventory (bbls): Crude -6.1mln (exp. +0.1mln), Cushing -2.4mln, Distillate +0.5mln (exp. -1.5mln), Gasoline -5.9mln (exp. -1.6mln).
US Energy Secretary Granholm said Strategic Petroleum Reserve buybacks could begin late this year and that work on two of four oil reserve sites are to go 'into the fall' which has delayed the buybacks, according to Reuters.
Russian Gazprom says "We are approaching the limit of gas supplies to China", via Sky News Arabia.
Cargill informed the Russian Agriculture Ministry that it will stop the export of Russian grain from the next exporting season (July), according to the Russian ministry which adds it will not affect the volume of domestic grain shipments abroad.
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NOTABLE HEADLINES

EU's Dombrovskis said the situation in the EU banking sector is stable and banks are prepared to withstand shocks.
ECB's Lane says to ensure that inflation falls to 2%, further interest rate hikes are required under the scenario expected by the ECB, according to Die Zeit; rates must increase if banking tensions have no or a "fairly limited" impact, bank sector tensions are seen as settling down and there is no reason to expects major problems.
ECB's Kazimir agreed not to give guidance on the May ECB meeting, Kazimir thinks inflation is too high for too long; ECB should continue increasing rates, possibly at a slower pace; will take into account financial market situation.
BoE FPC Minutes: All UK banks are resilient to risks from rising interest rates, including from bond positions; maintains countercyclical capital buffer rate at 2%; UK firms are resilient from higher debt costs.

DATA RECAP

German GfK Consumer Sentiment (Apr) -29.5 vs. Exp. -29.2 (Prev. -30.5, Rev. -30.6)
UK M4 Money Supply (Feb) -0.4% (Prev. 1.3%, Rev. 1.2%)
UK Mortgage Approvals (Feb) 43.536k vs. Exp. 40.5k (Prev. 39.637k, Rev. 39.647k); Lending (Feb) 0.738B GB vs. Exp. 2.4B GB (Prev. 2.541B GB, Rev. 2.003B GB)

NOTABLE US HEADLINES

US President Biden commented that he looks forward to talking with House Speaker McCarthy on the economy and debt, while he wants to see the full set of Republican proposals and hopes the House GOP can issue a budget plan before Easter recess.

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GEOPOLITICS

Ukrainian military officials said Russian forces remain relentless in their attempts to take full control of Bakhmut and Avdiivka in eastern Ukraine but were not making progress, according to Reuters.
Ukrainian President Zelensky extended an invitation to Chinese President Xi to visit Ukraine, according to AP; Kremlin says it is not up to Russia to advise China's leader when to visit Ukraine, adds that Russia's wider war with hostile states will last for a long time
US President Biden responded that he hasn't seen that but is concerned when asked if he was concerned about Russia sending tactical nuclear weapons to Belarus, according to Reuters.
Russia has started drills with Yars Intercontinental Ballistic Missiles, according to its Defence Ministry

CRYPTO

FDIC told Signature Bank (SBNY) crypto clients accounts are to close by April 5th, according to Bloomberg.

APAC TRADE

APAC stocks were mostly positive albeit with most major indices rangebound amid a lack of fresh macro drivers and heading into quarter-end, while Hong Kong markets outperformed as tech stocks surged on Alibaba’s plan for a six-way split.
ASX 200 was kept afloat by strength in the commodity-related sectors and after softer-than-expected CPI data supported the case for the RBA to pause at next week’s meeting, although gains were limited by weakness in the top-weighted financial industry.
Nikkei 225 traded higher after Japan’s parliament passed a record JPY 114tln budget for FY23 and with policymakers said to consider lowering mortgage rates for families with children, while BoJ officials also stuck to the dovish script.
Hang Seng and Shanghai Comp. were varied with Alibaba front-running the advances in Hong Kong as its plan for a split is seen to unlock value for shareholders and has spurred some speculation that its large tech peers could follow suit, while the mainland lagged despite the PBoC’s liquidity injection as frictions lingered regarding Taiwan President Tsai’s planned transit through the US and after the Biden administration added five Chinese companies to the entity list for allegedly aiding China's repression of Uyghurs.
CNOOC (883 HK) FY 2022 (CNY): Net Income 141.7bln (exp. 138.16bln); global need for oil and gas is anticipated to increase further.
PetroChina (857 HK): FY 2022 (CNY): IFRS net 149bln (exp. 147.14bln), IFRS revenue 3.239tln (prev. 2.614tln), sees total capex of 243.5bln; says in 2023, crude prices may increase.

NOTABLE ASIA-PAC HEADLINES

China NDRC Deputy Director General said China's potential growth rate is the potential growth rate of the whole world and said they are optimistic for the growth situation for this year, according to Reuters.
US President Biden's administration added five Chinese Co.s to the entity list for allegedly aiding China's repression of Uyghurs.
Taiwan's President Tsai comments before boarding a flight to New York in which she noted Democratic Taiwan defends democratic values and external pressure does not affect their determination to go out into the world, according to Reuters.
China's Taiwan Affairs Office urged the US not to arrange a transit of Taiwan's leader through the US and said any meeting between Taiwan President Tsai and US House Speaker McCarthy would be a severe provocation, while it added that China firmly opposes this and will definitely take measures to fight back, according to Reuters.
US senior administration official said Taiwan President Tsai's planned transit is consistent with a long-standing US practice and the US sees no reason for Beijing to overreact to the transit which is consistent with the unofficial relationship and the One-China policy. The official added that every Taiwan president has transited through the US and President Tsai has met with members of Congress in all her previous six transits, as well as stated that China's attempts to alter Taiwan's status quo will not pressure the US to alter its practice of facilitating transits by Taiwan's presidents, according to Reuters.
BoJ Deputy Governor Uchida said they will make a judgement on trend inflation by looking at various indicators, while he noted the BoJ would face an unrealised loss of JPY 50tln on its balance sheet if the 10yr bond yield rises to 2%, according to Reuters.