Newsquawk

Europe Market Open: Asian stocks took impetus from the gains on Wall St as the US averts a default

02 Jun 2023, 06:39 by Newsquawk Desk

US Senate voted 63-36 to pass the US debt ceiling bill, which sends it to President Biden's desk.
APAC stocks traded higher as the region took impetus from Wall St where the S&P 500 and Nasdaq climbed to 9-month highs.
Fed's Harker (voter) said the Fed does not have to keep moving rates up and thinks they should at least skip raising rates in June.
European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.5% after the cash market closed up 0.9% yesterday.
DXY lingers just above 103.50, antipodeans outperform, EUR/USD and Cable sit comfortably on 1.07 and 1.25 handles respectively.
Looking ahead, highlights include US Labour Market Report, Rating Reviews for Germany, France & UK.

US stocks gained amid debt ceiling optimism after the US House passed the debt ceiling bill and as participants digested a slew of data releases including strong ADP Employment, a sharp revision lower in Q1 Unit Labor Costs and the mostly softer-than-expected ISM Manufacturing PMI report which showed a plunge in the Prices Paid component.
SPX +0.99% at 4,221, NDX +1.31% at 14,441, DJIA +0.47% at 33,061, RUT +1.05% at 1,767.
Click here for a detailed summary.

US DEBT CEILING

US Senate voted 63-36 to pass the US debt ceiling bill, which sends it to President Biden's desk.
US President Biden said he wants to thank Senate leaders Schumer and McConnell for quickly passing the debt ceiling bill and noted that the bipartisan agreement is a big win for the economy, while he looks forward to signing the bill ASAP and directly addressing Americans on Friday. Furthermore, the White House announced that President Biden is to deliver an address on averting a default and the bipartisan budget agreement at 19:00EDT/00:00BST, according to Reuters.

NOTABLE HEADLINES

Fed's Harker (voter) said the Fed is close to the point where it can hold interest rates in place and is closely monitoring data to assess whether additional policy tightening will be needed. Harker also commented that they don't have to keep moving rates up and thinks they should at least skip raising rates in June.
Fed's Bullard (non-voter, hawk) reiterated that policy is now at the low end of what is arguably 'sufficiently restrictive' given current macroeconomic conditions and said the prospect for more disinflation is good but not guaranteed.
Bank of America (BAC) CEO Moynihan said US consumer spending is slowing with restaurant spending growth down to 3% Y/Y from 17% and spending growth slowed to 3% this month from 9% growth.

APAC stocks traded higher as the region took impetus from Wall St where the S&P 500 and Nasdaq climbed to 9-month highs amid debt ceiling optimism, falling labour costs and dovish Fed commentary.
ASX 200 was positive with the index led higher by the mining sector and after the Australian Fair Work Commission raised the minimum wage by 5.75%, although gains were capped by weakness in financials and after recent upward revisions to banks’ forecasts on the RBA’s peak rate.
Nikkei 225 was underpinned amid comments from BoJ Governor Ueda who stuck to the dovish script, with SoftBank among the biggest gainers following a buy rating from Jefferies and as the Co. benefits from the recent AI tech bid in the build-up to the ARM IPO.
Hang Seng and Shanghai Comp. conformed to the broad upbeat mood with Hong Kong significantly outperforming amid a rally in property and tech.
US equity futures held on to recent gains with the default threat averted but with upside capped overnight ahead of the key US jobs data.
European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.5% after the cash market closed up 0.9% yesterday.

DXY was rangebound around 103.50 following yesterday’s losses amid the positive risk environment and a slew of data releases, while there were also comments from Fed's Harker who said the Fed is close to the point where it can hold interest rates in place and thinks they should at least skip raising rates in June.
EUR/USD sat at the prior day’s highs with a firm footing on the 1.0700 handle.
GBP/USD remained firmer after climbing in tandem with the outperformance in cyclical counterparts.
USD/JPY was lacklustre with an early attempt to recoup losses thwarted by resistance at 139.00.
Antipodeans extended on gains owing to the risk environment and with AUD/USD also boosted by the more hawkish forecasts regarding the RBA's peak rate.
PBoC set USD/CNY mid-point at 7.0939 vs exp. 7.0958 (prev. 7.0965)

10yr UST futures took a breather after yesterday's bull-steepening which was spurred by the falling labour costs and dovish comments from Fed's Harker, while the Senate’s passage of the debt ceiling bill had very little impact on prices and was widely anticipated.
Bund futures held on to their recent gains.
10yr JGB futures gave back some of their advances but remained in the green after BoJ Governor Ueda’s dovish reiterations and the central bank's presence in the market for its scheduled purchases.

Crude futures were underpinned after the heightened risk appetite and weaker greenback offset the recent OPEC source reports and this week's bearish inventory data.
Spot gold was kept afloat amid a lacklustre dollar with the attention shifting to US jobs data.
Copper futures were supported amid the constructive mood and strength in China's property sector.

Bitcoin was marginally higher albeit with advances capped beneath the USD 27,000 level.

NOTABLE ASIA-PAC HEADLINES

US President Biden said the US does not seek conflict in competition with China and the countries should work together where they can.
BoJ Governor Ueda said premature tightening could hurt companies even in good health and may weaken the economy's potential, while he said patiently maintaining easy policy would heighten Japan's potential growth in the long run. Ueda also stated it is not time yet to debate a specific exit strategy including the possible sale of the BoJ's holdings of J-REITs and the BoJ will maintain massive monetary easing as it will take more time to achieve the price target, according to Reuters.

South Korea and the US issued a joint cybersecurity advisory against North Korean hacking group Kimsuky and stated that North Korea is engineering cyberattack campaigns targeting think tanks, academia and news outlets, while South Korea issued new independent sanctions on the North Korean hacking group, according to the South Korean Foreign Ministry cited by Reuters.
North Korea denounced the US Secretary-General over condemning its satellite launch and said it will continue to exercise its sovereign rights including the military spy satellite launch, according to KCNA.
UN spokesman is concerned about the continuous slowdown in implementing the Black Sea grain initiative and noted that a slowdown was observed particularly in April and May.
White House National Security Adviser Sullivan hosted Israel's National Security Advisor and Minister of Strategic Affairs, while the officials continued discussions on enhanced coordination to prevent Iran from acquiring a nuclear weapon, according to Reuters.

ECB's Panetta said inflation is too high but there is no reason to worry and now is not the time to be too hasty in raising rates, while he is committed to getting back to the 2% target level and said they cannot rule out a technical recession in the Eurozone, according to Le Monde.