Newsquawk

Europe Market Open: APAC trades lower; Debt Ceiling talks postponed; UK GDP ahead

12 May 2023, 06:42 by Newsquawk Desk

The meeting between US President Biden and congressional leaders was postponed to next week.
US House Speaker McCarthy said postponing the debt ceiling meeting doesn't mean that debt talks have fallen apart.
APAC stocks were mostly lower amid a busy slate of earnings releases and after the subdued performance stateside.
European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.1% yesterday.
DXY held onto 102 status, support in EUR/USD held at 1.09, NZD lags following softer NZ inflation expectations.
Looking ahead, highlights include UK GDP, US Export/Import Prices, Uni. of Michigan (Prelim.), Treasury Secretary Yellen, Fed's Bullard & Daly, BoE's Pill, ECB's de Guindos

US stocks were mostly lower after regional banking sector concerns resurfaced following an update related to PacWest (PACW) deposits which dropped around 9.5% in early May after it was reported to be exploring strategic options, although some of the fears were soothed by Western Alliance's (WAL) deposit growth increase. Furthermore, the latest data releases were softer including a rise in initial jobless claims which added to the glum mood although the Nasdaq found some reprieve as Google (GOOGL) continued its post-keynote event rally.
SPX -0.17% at 4,130, NDX +0.31% at 13,389, DJIA -0.66% at 33,309, RUT -0.84% at 1,744.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed Discount Window borrowing at USD 9.3bln on May 10th (prev. 5.3bln on May 3rd), BTFP lending at USD 83.1bln (prev. 75.8bln), Other Credit at USD 212.5bln (prev. 228.2bln).
The meeting between US President Biden and congressional leaders was postponed to next week. White House said staff will continue working on the debt limit and that principals agreed to meet early next week, while a source stated that this is a positive development and meetings are progressing.
US House Speaker McCarthy said postponing the debt ceiling meeting doesn't mean that debt talks have fallen apart and leaders decided it was in the best interest to let staff meet again, while he doesn't think there was enough progress for the leaders to get back together but expects them to meet next week.
US Treasury Secretary Yellen is to talk with JPMorgan (JPM) CEO Dimon and Citi (C) CEO Fraser in Washington next week, according to Reuters.
UAE Royal Group’s Sheikh Tahnoon Bin Zayed said they plan to invest in the US market.

APAC stocks were mostly lower amid a busy slate of earnings releases and after the subdued performance stateside where regional bank fears resurfaced and initial jobless claims disappointed.
ASX 200 was lacklustre with the index constrained by weakness in the energy and mining-related sectors after the recent pressure in underlying commodity prices.
Nikkei 225 outperformed and rose to its highest since November 2021 with price action largely driven by earnings results including various blue-chip stocks.
Hang Seng and Shanghai Comp. were indecisive as talks between US National Security Adviser Sullivan and China's top diplomat Wang Yi provided some encouragement towards a potential Biden-Xi call, although participants also digested weaker-than-expected Chinese loans and financing data.
US equity futures were rangebound after partially nursing some of their recent losses.
European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.4% after the cash market closed up 0.1% yesterday.

DXY took a breather overnight and just about held on to the 102.00 status following yesterday’s advances owing to haven demand and despite the recent soft US data releases, while it was also announced that the debt ceiling meeting between Biden and Congress leaders was postponed.
EUR/USD traded rangebound but off a 1-month low after support held at the 1.0900 level.
GBP/USD lacked direction after failing to benefit from the BoE rate hike and upgraded forecasts.
USD/JPY was steady amid the lack of fresh macro drivers and after recent haven flows.
Antipodeans were subdued by the cautious mood and commodity weakness, while NZD/USD underperformed following softer New Zealand inflation expectations.
PBoC set USD/CNY mid-point at 6.9481 vs exp. 6.9472 (prev. 6.9101)

10yr UST futures were kept afloat after recent gains which were spurred by haven demand, soft PPI data, a spike in initial jobless claims and a solid 30yr auction.
Bund futures traded rangebound after pulling back from yesterday’s peak and following the latest round of hawkish ECB rhetoric.
10yr JGB futures tracked recent gains in peers and with the BoJ also present in the market for nearly JPY 1.4tln of JGBs on top of its fixed rate operations.

Crude futures were marginally lower amid the downbeat risk mood and with Iraq to resume exports through Ceyhan on Saturday, while news of the US SPR refill intentions only provided brief support.
US Energy Secretary Granholm said the US will seek to purchase oil for the SPR after the congressionally mandated sale ends in June, according to Reuters.
Iraq’s Oil Minister said Iraq is to resume oil exports via Ceyhan on Saturday.
Spot gold languished near the prior day's lows as the dollar held on to recent gains.
Copper futures remained lacklustre following the recent soft US and Chinese data.

Bitcoin was pressured amid the risk aversion and extended beneath USD 27,000.

NOTABLE ASIA-PAC HEADLINES

US senior administration official said White House National Security Adviser Sullivan told China's top diplomat Wang Yi that the US does not seek conflict with China and reiterated US commitment to the one-China policy when it comes to Taiwan. Both sides recognised the spy balloon incident led to a pause in relations that they are trying to move past and recognised the importance of leader-level communications, while the US expects more engagements between officials in the coming months, according to Reuters.
Chinese Foreign Minister Qin Gang is to visit Australia in July for a reciprocal visit as ties between Australia and China ease, according to SCMP.
EU Economic Commissioner Gentiloni said we cannot be too dependent on foreign powers and noted that decoupling would be a dangerous risk for the global economy, while he added that he is not talking about closing the trade with China but is instead talking about making supply chains more secure.

DATA RECAP

US State Department said it remains committed to an affirmative agenda in the bilateral relationship with South Africa, but it has serious concerns about the docking of a sanctioned Russian cargo vessel at a South African port in December 2022.

ECB's de Guindos said inflation will undoubtedly fall although he is worried about core inflation and services, while he added that an economic slowdown will curb corporate profits.