• US stocks finished predominantly lower with underperformance in the Nasdaq, whilst small caps were resilient and the Russell 2000 closed in the green
• APAC stocks were mostly positive as the risk tone improved following the predominantly negative handover from the US
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.3% after the cash market closed up 0.2% yesterday
• DXY is a touch softer but holding above 102.50; downside coincided with a stronger CNH after the PBoC set a firmer-than-expected currency fix
• Looking ahead, highlights include US Durable Goods, Consumer Confidence, New Home Sales-Units, Canadian CPI, Speeches from ECB's Lagarde, Panetta, Elderson, Schnabel, BoE's Dhingra & Tenreyro, BoC's Kozicki, Supply from Netherlands, Italy & UK.

US TRADE

EQUITIES

• US stocks finished predominantly lower with underperformance in the Nasdaq as the downside was led by Communication, Consumer Discretionary and Technology names including losses in big tech stocks Meta, Amazon and Microsoft, while Tesla shares dropped by more than 6% following cautious commentary from Goldman Sachs. Conversely, small caps were resilient and the Russell 2000 closed in the green amid gains in the regional banking ETF KRE.
• SPX -0.44% at 4,329, NDX -1.36% at 14,689, DJIA -0.03% at 33,715, RUT +0.09% at 1,823.
• Click here for a detailed summary.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive as the risk tone improved following the predominantly negative handover from the US where the major indices were subdued heading into quarter-end and the Nasdaq underperformed amid weakness in tech and communications.
• ASX 200 gained as strength in financials and cyclicals picked up the slack from the losses in tech and telecoms.
• Nikkei 225 was pressured in a continued pullback from the 33,000 level amid increasing speculation that the recent currency weakness could force the BoJ’s hand regarding YCC.
• Hang Seng and Shanghai Comp were firmer with Hong Kong led by gains in tech and property after the PBoC’s continued liquidity efforts, while Premier Li pledged to roll out effective policy measures during his speech at the WEF in Tianjin and it was also reported that US Treasury Secretary Yellen is planning a trip to China in July.
• US equity futures were kept afloat as risk sentiment in Asia improved but with gains limited.
• European equity futures are indicative of a marginally higher open with the Euro Stoxx 50 +0.3% after the cash market closed up 0.2% yesterday.

FX

• DXY marginally softened amid gains in its major counterparts which coincided with a stronger CNH after the PBoC set a firmer-than-expected currency fix, although the pressure in the dollar was limited as participants await a slew of central bank speakers at the ECB Forum in Sintra and data from the US including Richmond Fed, Consumer Confidence, Durable Goods and New Home Sales.
• EUR/USD remained firmer after recent comments from ECB's Simkus that at least one more rate hike is required, while Econostream noted the ECB’s September meeting stands a decent chance of another rate hike based on conversations with several ECB insiders.
• GBP/USD kept afloat with near-term support at the 1.2700 level and after the latest Reuters poll showed expectations for the BoE to continue hiking rates at the next two meetings.
• USD/JPY was steady after the prior weeks’ upward momentum was stalled by familiar currency jawboning.
• Antipodeans gained with AUD/USD boosted in tandem with the CNH strength post-fix and as China's state banks stepped in to support the yuan.
• PBoC set USD/CNY mid-point at 7.2098 vs exp. 7.2194 (prev. 7.2056)
• China state banks were spotted selling dollars in offshore currency markets to prop up the yuan, according to sources cited by Reuters.

FIXED INCOME

• 10yr UST futures were lacklustre following the prior day’s choppy price action whereby the weak German IFO-induced rally was reversed due to supply and heading into month-end, while participants look ahead to upcoming data releases from the US.
• Bund futures traded rangebound after the lack of surprises from ECB commentary and with eyes on Sintra.
• 10yr JGB futures were lacklustre amid an uninspired mood across global peers and with price action not helped by mixed results at the 20yr JGB auction.

COMMODITIES

• Crude futures remained confined to within a thin range after the prior day's indecisive performance.
• Spot gold eked slight gains with mild tailwinds across the commodity complex from a softer greenback.
• Copper futures nursed some of yesterday's losses with prices underpinned by the improved risk appetite.

CRYPTO

• Bitcoin traded marginally higher but with gains capped by resistance at the USD 30,500 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li said the pandemic will be over and both visible and invisible barriers will disappear, while he added that countries should strengthen dialogue and communications to avoid misunderstanding with no country able to resolve all problems and unity is the right answer. Premier Li also commented that China will continue to provide a strong driving force for the global economy and roll out more effective policy measures to expand domestic demand and opening up. Furthermore, Li stated that Q2 economic growth will be higher than Q1 growth and China is expected to achieve its growth target of around 5% for 2023, according to Reuters.
• US Treasury Secretary Yellen reportedly plans a China trip in July to speak with her Chinese counterpart while the US prepares investment curbs, according to Bloomberg.
• New Zealand Finance Minister Robertson said the RBNZ Monetary Policy Committee Remit and Charter were renewed with only minor changes to the monetary policy framework, while he added that the MPC is now required to 'achieve and maintain' rather than 'keep' inflation between 1%-3% and the MPC should communicate key considerations of its decisions with regard to financial risks.

GEOPOLITICS

• Russian President Putin said those responsible for organising the rebellion will be brought to justice and that they took all measures to neutralise the danger, while he thanked the commanders and soldiers of Wagner who avoided bloodshed and said Wagner troops can either join the Russian army or go to Belarus.
• Russian President Putin held a meeting with the heads of Russian Security Services including the Minister of Defence, according to Interfax.
• Ukrainian President Zelensky said they are making advances in all sectors and it was a happy day, according to Reuters.
• Ukrainian army attacked Russian troops with chemical weapons in Donetsk, according to Tass cited by Al Arabiya
• US President Biden directed his national security team to monitor the Russian situation and made sure allies were on the same page, while the US made it clear it was not involved in Russia and it was too early to say where the Russian situation is going.
• White House's Kirby said it is too soon to know where Wagner goes as an entity or Prigozhin's role as leader, while there is no indication that a threat to the Zaporizhzhia nuclear power plant is imminent. Kirby added that they had good and direct communications with the Russians over the course of the weekend and expect that to continue going forward.
• US plans to announce as soon as Tuesday a new USD 500mln military aid package for Ukraine which includes ground vehicles, according to US officials cited by Reuters.
• Russian fighter jets were scrambled after two UK warplanes were detected near the country's border, while RAF fighter jets made a U-turn as Russian aircraft approached and Russia's state border was not violated, according to Sky News.
• Russian Defence Ministry said it was conducting tactical flight exercises over the Baltic Sea.
• US Secretary of State Blinken spoke with Kosovan PM Kurti to urge an immediate de-escalation in the north of Kosovo, while he spoke with Serbian President Vucic and urged Serbia to immediately take steps to implement commitments under the normalisation agreement.

EU/UK

NOTABLE HEADLINES

• ECB's Simkus said at least one more rate hike is required, according to CNBC.
• ECB's Kazaks says market bets on rate cuts in early 2024 are wrong; sees rate hikes past July, "but when and by how much will be data dependent", according to Reuters.
• ECB’s September meeting reportedly stands a decent chance of another rate hike based on recent conversations with several ECB insiders, while there is even greater agreement that markets are taking an unreasonably optimistic view of when a rate cut will occur, according to Econostream.

DATA RECAP

• UK BRC Retail Shop Price Index YY (Jun) 8.4% (Prev. 9.0%)