• European equities extend cash-open gains as the region following the rebound seen on Wall St
• Oil trades choppy as OPEC talks come to a standstill with Iran remaining an obstacle
• Government sources state that the UK meaningful vote on PM May’s deal will take place on December 11th
• Looking ahead, highlights include US and Canadian Jobs Reports, US EIA Natural Gas Storage Fed's Brainard Speaking, OPEC+ Meeting in Vienna

ASIA

Asian stocks saw cautious gains with the region getting an early tailwind after the sharp rebound on Wall St, where most majors finished lower albeit off worse levels as tech recovered and the DJIA clawed back nearly 700 points from intraday lows. ASX 200 (+0.4%) and Nikkei 225 (+0.8%) were both higher at the open but gradually pared some of the gains as the risk tone began to turn cautious heading into today’s key-risk NFP jobs data. Hang Seng (-0.3%) and Shanghai Comp (U/C) were indecisive amid further PBoC inaction in which it remained net neutral for a 5th consecutive week and with the upcoming Chinese trade data over the weekend adding to tentativeness, while pharmaceuticals were the worst hit due to concerns of price declines from the government’s centralized procurement program. Finally, 10yr JGBs were flat amid a similar picture in T-note futures and although early selling pressure was seen in Japanese bonds alongside the strong open in stocks, prices later recovered as the risk appetite somewhat dissipated.

PBoC skipped open market operations and were net neutral for a 5th consecutive week. (Newswires)
PBoC set CNY mid-point at 6.8664 (Prev. 6.8599)

US President Trump said he agrees with the statement US and China are cooperating, while he also agrees that a deal is possible in the 90-day window. (Newswires)

US could use Huawei's CEO arrest as leverage to US-China talks according to reports which cited US administration officials, while it was also noted earlier that US investigation into China's Huawei includes accusations of bank fraud flagged up by HSBC and Iran sanction violations. (CNN/Newswires)

UK/EU/US

UK PM May is said to be weighing plan to postpone next week's Brexit vote, with her allies urging her to delay the vote amid forecasts for a catastrophic defeat. (Newswires)

UK Tory back benches leader Brady told PM May to go back to Brussels for further talks rather than suffer a heavy defeat in Parliament next week. (Times) Elsewhere, there were reports UK cabinet ministers advised PM May to come up with an 11th hour plan to get the deal through Parliament as the chief whip admitted she will lose the vote. (Telegraph)

UK Labour Party leader Corbyn said his party could get a better deal and asked to be given a chance, while he added all options are on the table including election or 2nd referendum if PM May's botched deals fails. (Guardian)

An aide to political strategist Lynton Crosby was said to be making behind-the-scenes preparations with prominent Leave campaigners for a 2nd referendum amid increasing view that Brexit stalemate in parliament could force a 2nd public vote. However, reports also noted that Lynton Crosby denied anyone from his company was working on 2nd referendum. (FT)

UK meaningful vote on PM May's deal will take place on December 11th as planned; according to a UK government source. (Newswires)

UK PM Spokesperson says the vote is going ahead on Tuesday, adding that she believes it is the right deal for the country and PM May has no intention of extending Article 50. In addition, the UK government will consider an amendment on the backstop. (Newswires)

Italian Economy Minister Tria spokesperson categorically rejects early reports regarding Tria's potential resignation. It was earlier suggested that Italy's Deputy PM Di Maio does not seek Economy Minister Tria's resignation; which followed reports that Deputy PM Salvini is also backing Tria, whilst the 5-Star Party and PM Conte are said to want Tria to resign. (Newswires/Stampa)

Italy's Deputy PM Di Maio says Italy will avoid the EU disciplinary procedure. (Newswires)

Fed Chair Powell (Neutral) said the economy is currently performing very well overall and labor market is very strong by many measures, while he added that job creation is strong and wages are gradually increasing. (Newswires)

Fed's Williams (Voter, Neutral) said the US economy is pretty strong and suggested the need to be nimble in responding to unexpected economic conditions. Williams also commented that higher US tariffs is uncertainty for businesses and that he is hearing some business are stepping back from investments which is likely to reduce the pace of the economy a little. (Newswires)

US President Trump's lawyers are said to have resumed discussions with Special Counsel Mueller's office. (Newswires)

GEOPOLITICAL

Russian Foreign Minister Lavrov has said Russia will only be ready to discuss the fate of the captured Ukrainian soldiers after their trial has concluded. (Newswires)

EQUITIES

European equities extended on gains from the cash open (Eurostoxx 50 +1.2%) following the cautious trade in the Asia-Pac session and the rebound seen on Wall St where the Dow clawed back nearly 700 points from intraday lows. European sectors are experiencing broad-based gains with marginal outperformance in the tech sector as IT names bounce back from yesterday’s Huawei-driven slump. Meanwhile, energy names are volatile (currently marginally underperforming) as the complex awaits further hints from the key OPEC+ meeting today. In terms of individual movers, Fresenius SE (-15.0%) fell to the foot of the Stoxx 600 after the company cut medium-term guidance, citing lower profit expectations at its clinics unit Helios and medical arm Fresenius Medical Care (-7.8%). On the flip side, Bpost (+7.5%) and Tesco (+4.8%) are hovering near the top of the pan-Europe index amid broker upgrades.

FX

DXY - Typically rangebound trade in the run up to US labour data, and with markets also monitoring OPEC+ headlines as a decision on whether to cut output and if so by how much remains highly uncertain. The index is hovering just under the 97.000 handle within a 96.767-96.931 band, and well within nearest technical support and resistance levels at 96.300 and 97.311 respectively.

GBP - A marginal G10 underperformer as Cable retreats back below 1.2750 from just above 1.2800 at one stage, but this could be more flow-related rather than anything fundamental as Eur/Gbp rallied towards 0.8930 peaks from just under the big figure into the Frankfurt fixing before drifting back again. However, Halifax house prices were much weaker than expected and latest Brexit news is hardly Sterling supportive given more speculation about delaying the meaningful vote to try and avoid a resounding rejection, even though the Government appears to be resolute and standing firm on December 11.

NZD/AUD - The Kiwi is at the opposite end of a relatively narrow Usd/Major spectrum, and like the Pound also impacted by indirect factors to a degree, if not in the main. Indeed, Nzd/Usd remains capped ahead of 0.6900, but Aud/Nzd is pivoting 1.0500 as the Aussie unit continues to feel the adverse effects of recent bearish impulses, namely softer than forecast Q3 GDP and a more dovish RBA via Debelle. Hence, Aud/Usd is softer between 0.7210-40 parameters and bound to be wary of huge option expiries from 0.7250-60 in 6.6 bn that form a formidable barrier ahead of circa 1.2 bn up at 0.7300.

EUR/JPY - In the pre-NFP ‘hiatus’ and awaiting anything further on the Italian budget front, option expiries may also exert directional impetus on Eur/Usd and Usd/Jpy, as the former faces 2+ bn at the 1.1400 strike and latter is flanked by 1+ bn at 112.50 and 113.00.

CAD - The Loonie has pared a bit more lost ground from recent lows, albeit partly due to a broad Usd retracement, eyeing OPEC and also Canada’s jobs report given latest BoC guidance indicating even greater data dependency. Usd/Cad currently just shy of the 1.3400 mark vs 1.3440+ at one stage yesterday.

FIXED INCOME

Gilts trade just below 123.40 (vs. a marginal new low of 123.33) and derived little inspiration from the BoE’s TNS Inflation Attitudes Survey as core EU bonds continue to tread cautiously amidst an improved risk tone due to the stock turnaround and conjecture circulating overnight that the pace of Fed tightening in the near term may be slower than previously perceived or flagged, ahead of NFP today. Bunds are also conforming to the downturn as the German 10 year recently printed fresh session lows of 163.12 and remain pressured under 163.20, in contrast to the revival in its Italian peer (+39 ticks at 123.25). This comes after positive Roman rumblings categorically denying plots to topple Tria, or intentions that the Economy Minister has of resigning himself, alongside Deputy PM Di Maio claiming that the country will not face EDP measures. Strong retail sales may have added some momentum and helped lift the benchmark ahead of the expected budget revision provision next Wednesday.

Elsewhere, US 10-year futures are fractionally softer on balance from yesterday’s close of 120-13 as trade remains nervy ahead of an action-packed session including Fed speak, the continuation of OPEC’s meeting and the aforementioned monthly labour report. In the near term, Treasuries and markets in general are looking to see whether oil prices stabilise post-OPEC, alongside Fed policy implications after the latest update on jobs and wage growth.

COMMODITIES 

WTI (+0.2%) and Brent (+0.9%) are choppy in what was a volatile session thus far as comments from energy ministers emerged ahead of the key OPEC+ meeting, after yesterday’s OPEC talks ended with no deal for the first time in almost five years. Brent rose after source reports noted that Moscow are ready to cut output by 200k BPD (below OPEC’s desire of 250k-300k but above Russia’s prior “maximum” of 150k) if OPEC are willing to curb production by over 1mln BPD. Prices then fell to session lows following a less constructive tone from Saudi Energy Minister who reiterated that he is not confident there will be a deal today, which came after delegates noted that OPEC talks are focused on a combined OPEC+ cut of 1mln BPD (650k from OPEC and 350k from Non-OPEC). Markets are awaiting the start of the OPEC+ meeting after delegates stated that talks are at deadlocked as Iran appears to be the main sticking point to an OPEC deal, though sources emerged stating that Iran, Venezuela and Libya are set to get exemptions from cuts, adding that OPEC and Russia are looking for a symbolic production commitment from Iran as fears arise that Iran may not be able to follow-through on curb pledges due to US sanctions.

In terms of metals, gold hovers around session highs and is set for the best week since August with the USD trading in a tight range ahead of the key US jobs data later today, while London copper rose over a percent is underpinned by the positive risk tone.

For a full rundown of OPEC commentary please see the relevant stories on our headline feed by using the ‘Commodities’ filter.