• APAC stocks were mostly lower after the losses on Wall St where banking sector fears resurfaced as First Republic Bank shares fell by 50%.
• First Republic (FRC) is struggling to come up with a viable solution such as a sale of all or part of the bank, according to the FT.
• US equity futures found some reprieve overnight from big tech earnings; Alphabet +1.7% after-hours, Microsoft +8.5%.
• European equity futures are indicative of a weaker open with Euro Stoxx 50 future -0.6% after the cash market closed lower by 0.5% yesterday.
• DXY is flat on a 101 handle, EUR/USD is back below 1.10, AUD marginally lags post-inflation data.
• Looking ahead, highlights include German GfK, US Durable Goods & Retail Inventories, Riksbank Policy Announcement, BoC Minutes, Speech from ECB's de Guindos, Supply from Germany & US.
• Earnings from Deutsche Boerse, UMG, Roche, Standard Chartered, Persimmon, GSK, Smith & Nephew, Meta, Boeing, Thermo Fisher, ADP & American Tower.

US TRADE

EQUITIES

• US stocks declined amid banking sector fears with First Republic (FRC) on the cusp of failure after it reported an exodus in deposits and was said to be mulling offloading USD 100bln worth of assets as it lacked sustainable funding, while weak US Consumer Confidence and Richmond Fed Survey added to the downbeat mood although there was some partial reprieve for futures after-hours following earnings from Alphabet and Microsoft which beat on their top and bottom lines.
• SPX -1.58% at 4,072, NDX -1.89% at 12,725, DJIA -1.02% at 33,531, RUT -2.40% at 1,746.
• Click here for a detailed summary.

NOTABLE HEADLINES

• First Republic (FRC) is struggling to come up with a viable solution such as a sale of all or part of the bank, after announcing it is pursuing strategic operations, according to FT citing sources. FRC was reportedly in touch with the US government on options including a rescue by some of the large US banks that recently deposited USD 30bln into FRC, while CNBC's Faber noted that none of the banks seem to be stepping up to purchase assets of First Republic and it was also reported that FRC was mulling up to USD 100bln in asset sales.
• Bankers working with First Republic (FRC) said they expect an eventual government receivership for the bank after it exhausts private sector solutions like asset sales, finding a buyer, or both, which is appearing difficult, while officials at the big banks believed the Feds were poised to take over FRC last week just before its earnings announcement, according to FBN's Gasparino.
• White House said if President Biden were presented with House Speaker McCarthy's debt bill, he will veto it and said the GOP must take default off the table, while it was also reported that the CBO said the GOP debt bill would cut US deficit by about USD 4.8tln.
• US Senate Republican leader McConnell called on US President Biden to join House Speaker McCarthy on debt limit talks.
• A senior GOP source was said to be more optimistic yesterday than today regarding the debt ceiling and noted plans for the committee were to meet on Tuesday to prepare the bill but that could delay an actual debate until later in the week, according to Fox's Pergram.

EARNINGS RELEASES

• Alphabet (GOOGL) - Q1 2023 (USD): EPS 1.17 (exp. 1.07), Revenue 69.8bln (exp. 68.9bln), board authorised on April 19th to repurchase up to an additional USD 70bln of Class A and Class C shares. Google advertising revenue USD 54.55bln (exp. 53.79bln). (Alphabet IR/Newswires) Shares rose 1.7% after-hours.
• Microsoft (MSFT) - Q3 2023 (USD): EPS 2.45 (exp. 2.23), Revenue 52.9bln (exp. 51.02bln). Cloud revenue 28.5bln (exp. 28.19bln). (Microsoft IR/Newswires) Shares rose 8.5% after-hours
• Visa Inc (V) Q1 2023 (USD): EPS 2.09 (exp. 1.99), Revenue 7.99bln (exp. 7.79bln)

APAC TRADE

EQUITIES

• APAC stocks were mostly lower after the losses on Wall St where banking sector fears resurfaced as First Republic Bank shares fell by 50% due to an exodus of deposits and with the lender considering up to USD 100bln in asset sales, although US equity futures found some reprieve overnight from the big tech earnings.
• ASX 200 was lacklustre but with downside stemmed as participants digested somewhat mixed inflation data in which the headline CPI readings for Q1 topped forecasts, but all other components were softer than expected and supported the view that the economy has passed peak inflation.
• Nikkei 225 declined amid pressure in the banking sector and disappointment in Japan after the failed lunar module landing which resulted in a glut of sell orders for ispace shares.
• Hang Seng and Shanghai Comp were mixed with early weakness in tech after US Republican senators urged for US government measures to address Chinese cloud companies including placing sanctions on Huawei Cloud and adding Alibaba Cloud to the export control list, although it was also reported that China's State Council pledged to expand the export and import scale of key products and will properly respond to unreasonable foreign trade restrictions.
• US equity futures (ES +0.5%) nursed some of the prior day's losses with NDX (+1.3%) futures boosted after tech giants Alphabet and Microsoft beat on their top and bottom lines.
• European equity futures are indicative of a weaker open with Euro Stoxx 50 future -0.6% after the cash market closed lower by 0.5% yesterday.

FX

• DXY was flat and held on to the prior day’s gains which were spurred by haven demand amid banking sector concerns and despite the fall in yields after the latest bout of disappointing US data releases.
• EUR/USD languished beneath 1.1000 after the single currency gave way to the recent dollar strength.
• GBP/USD traded rangebound which provided some respite from yesterday's slide which began above 1.2500.
• USD/JPY was contained after the Japanese currency recently benefitted from haven flows and yield differentials.
• Antipodeans declined with AUD/USD gradually pressured as the mostly softer-than-expected inflation data from Australia slightly added to the market pricing for the RBA to pause on rates again next week.
• PBoC set USD/CNY mid-point at 6.9237 vs exp. 6.9250 (prev. 6.8847)

FIXED INCOME

• 10yr UST futures eased after pronounced bull steepening which was spurred by banking sector jitters and data.
• Bund futures remained afloat with the recently reclaimed 135.00 level providing a base for prices overnight.
• 10yr JGB futures tracked the recent gains in global counterparts and were unfazed by a softer 2-year auction.

COMMODITIES

• Crude futures eked gains after bullish headline private inventories but with upside limited by the cautious mood.
• US Energy Inventory Data (bbls): Crude -6.1mln (exp. -1.5mln), Gasoline -1.9mln (exp. -0.9mln), Distillate 1.7mln (exp. -0.8mln), Cushing 0.5mln.
• European Commission VP Sefcovic said 80 companies signed up to the EU's platform for joint natgas purchases that launched on Tuesday, according to FT.
• Spot gold was indecisive as the dollar took a breather and with resistance around the USD 2,000/oz level.
• Copper futures nursed some of the prior day's losses with price action at the whim of risk sentiment.

CRYPTO

• Bitcoin was rangebound overnight beneath the USD 23,000 level although was boosted yesterday as an alternative after banking sector jitters resurfaced.

NOTABLE ASIA-PAC HEADLINES

• US Republican senators urged US President Biden to impose sanctions on Huawei Cloud and said it poses US national security risk, while they urged US agencies to add Alibaba (BABA) Cloud to the export control list and urged US State, Commerce, and Treasury "to use all available tools" to address Chinese cloud companies, according to a letter seen by Reuters.
• RBNZ proposed to ease LVR restriction from June 1st and it assessed that risks to financial stability from high-LVR lending have reduced to a level where current restriction may be unnecessarily reducing efficiency, according to Reuters.

DATA RECAP

• Australian CPI QQ (Q1) 1.4% vs. Exp. 1.3% (Prev. 1.9%)
• Australian CPI YY (Q1) 7.0% vs. Exp. 6.9% (Prev. 7.8%)
• Australian RBA Trimmed Mean CPI QQ (Q1) 1.2% vs. Exp. 1.4% (Prev. 1.7%)
• Australian RBA Trimmed Mean CPI YY (Q1) 6.6% vs. Exp. 6.7% (Prev. 6.9%)
• Australian RBA Weighted Median CPI QQ (Q1) 1.2% vs. Exp. 1.3% (Prev. 1.6%)
• Australian RBA Weighted Median CPI YY (Q1) 5.8% vs. Exp. 5.9% (Prev. 5.8%)
• Australian CPI YY (Mar) 6.3% vs Exp. 6.5% (Prev. 6.8%)
• New Zealand Trade Balance (Mar) -1273M (Prev. -714.0M, Rev. -796M)
• New Zealand Exports (Mar) 6.51B (Prev. 5.23B, Rev. 5.06B)
• New Zealand Imports (Mar) 7.78B (Prev. 5.95B, Rev. 5.86B)

GEOPOLITICAL

• Russian President Putin signed a decree outlining Moscow's response if Russian assets abroad are seized with Uniper's (UN01 GY) Russian division and Russian assets of Fortum (FORTUM FH) entities that could be put under temporary Russian administration, while the Russian federal government property agency later stated that the list of assets of foreign enterprises under temporary control can be expanded, according to TASS.
• Russian Foreign Minister Lavrov said no one needs World War 3, but it seems someone is ready to go to the very end. Lavrov noted that the grain deal situation has not been resolved and there are still problems with insurance, while he also commented that the US has unleashed the process of de-dollarisation and that the process of switching to non-dollar currencies is unstoppable.
• Russia said two of its strategic missile carrier bombers flew over the Barents and Norwegian seas, according to Reuters.
• China and Russia sign memorandum of understanding on maritime law enforcement cooperation, according to Chinese state media
• China Maritime Administration said China will conduct live firing drills in the East China Sea today, according to Reuters.
• China Taiwan Affairs Office commented on a recent media report that an EU diplomat called for EU navy patrols in the Taiwan Strait in which it stated that authorities will be prepared and they will be on high alert for possible harm to China's national sovereignty and territory, according to Reuters.

EU/UK

• ECB's Vujcic commented that there is no choice but to raise rates further, according to Delo.
• Brussels is preparing to reject a German push for member states to be required to meet annual debt reduction targets, according to FT citing draft legislation. The draft legislation is to be unveiled on Wednesday which will require member states to lower public debt burdens by the end of a four-year timespan and is stricter than the EU's initial proposals but not as strict as Germany had wanted.