• European bourses trade on the front-foot with the Stoxx 600 on track to close the week out with gains, with little action seen on the EZ Flash CPI metrics.
• US equity futures are around flat/tilting higher ahead of today’s key PCE data for May, before traders head out for the long Independence Day holiday weekend.
• ASML does not expect the Dutch government's chip export measures to have a material impact on its financial outlook.
• China may announce more property market support measures although measures might be incremental, according to China Securities Journal.
• Looking ahead, highlights include US PCE, EU leaders’ meeting

30th June 2023

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EUROPEAN TRADE

EQUITIES

• European bourses trade on the front-foot with the Stoxx 600 on track to close the week out with gains, with little action seen on the EZ Flash CPI metrics.
• US equity futures are around flat/tilting higher ahead of today’s key PCE data for May, before traders head out for the long Independence Day holiday weekend.
• Equity sectors in Europe are higher across the board with the exception of technology which is being weighed on by ASML which is also acting as a drag on the AEX following news that the Dutch Foreign Ministry has issued new computer chip equipment export rules whereby an export license will be required for certain technologies.
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• Click here and here for a recap of the main European updates.

FX

• DXY remains relatively resilient and firmly underpinned, with the index forming a solid base above 103.000 between 103.23-54 parameters.
• EUR was unreactive to a batch of mixed EZ data, whilst headline inflation printed cooler than expected, although the core metrics marginally topped expectations.
• Cyclical currencies are held up fairly well on the back of buoyant risk appetite.
• Kiwi got another confidence boost from an improvement in ANZ consumer sentiment.
• Yen is flat despite more verbal intervention from Japanese officials.
• Brazil's Finance Minister said the National Monetary Council decided to set the 2026 inflation target at 3%, while the government expects rates to fall from August, according to Reuters.
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FIXED INCOME

• Debt futures appear destined for a bleak finish and further losses heading into month, quarter, HY-end.
• Bunds, Gilts and the T-note hover precariously over deeper intraday lows, at 133.09, 94.71 and 111-25+ respectively.
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COMMODITIES

• WTI and Brent front-month futures are on a firmer footing intraday despite the firmer Dollar but as equities see cautious gains.
• Spot gold remains heavy as the Dollar extends gains, with the yellow metal threatening another breach of USD 1,900/oz to the downside this morning
• Base metals are mostly but copper bucks the trend and outperforms, with the LME 3M contract back above USD 8,250/t at the time of writing. Reports last night noted an electrical accident at Codelco’s largest copper mine – the El Teniente mine.
• HSBC lowered Brent oil price assumptions to USD 80/bl in H2'23, USD 80/bl in FY23, USD 75/b in FY24 and long-term, according to Reuters.
• Boliden's (BOL SS) Ronnskar production partially resumed; several of production lines may have to operate at limited capacity; all other production lines at Ronnskar are expected to ready for production during July.
• Shanghai INE adjusts trading limit and margin requirements for international copper and crude oil futures, effective from settlement on July 4, according to Reuters.
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NOTABLE US HEADLINES

• Fed Discount Window loans at USD 3.21bln in June 28th week (prev. USD 3.21bln W/W), while BTFP lending was USD 103.1bln (prev. USD 102.7bln W/W) and 'Other credit' was USD 168.3bln (prev. USD 172.3bln W/W).
• Nike (NKE) - Q4 2023 (USD): EPS 0.66 (exp. 0.67), Revenue 12.83bln (exp. 12.59bln). North America revenue USD 5.36bln (exp. 5.28bln). EMEA revenue USD 3.35bln (exp. 3.29bln). Greater China rev. USD 1.81bln (exp. 1.64bln). Asia Pacific & Latin America rev. USD 1.70bln (exp. 1.72bln). Inventory USD 8.45bln (exp. 8.88bln). Guides FY24 rev. growth of mid-single digits and gross margin growth of 140bps-160bps, according to earnings call. (Newswires) NKE shares -4.3% after-market.

EUROPEAN DATA RECAP

• German Retail Sales YY Real* (May) -3.6% vs. Exp. -4.3% (Prev. -4.3%)
• German Retail Sales MM Real* (May) 0.4% (Prev. 0.8%)
• UK Nationwide house price mm* (Jun) 0.1% vs. Exp. -0.3% (Prev. -0.1%)
• UK Nationwide house price yy* (Jun) -3.5% vs. Exp. -4.0% (Prev. -3.4%)
• German Import Prices YY* (May) -9.1% vs. Exp. -9.1% (Prev. -7.0%)
• German Import Prices MM* (May) -1.4% vs. Exp. -1.4% (Prev. -1.7%)
• UK GDP YY * (Q1) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
• UK GDP QQ * (Q1) 0.1% vs. Exp. 0.1% (Prev. 0.1%)
• German Unemployment Change SA (Jun) 28.0k vs. Exp. 13.0k (Prev. 9.0k)
• German Unemployment Rate SA (Jun) 5.7% vs. Exp. 5.6% (Prev. 5.6%)
• EU HICP-X F,E,A&T Flash YY (Jun) 5.4% vs. Exp. 5.5% (Prev. 5.3%)
• EU HICP-X F&E Flash YY (Jun) 6.8% vs. Exp. 6.7% (Prev. 6.9%)
• EU HICP Flash YY (Jun) 5.5% vs. Exp. 5.6% (Prev. 6.1%)
• EU Unemployment Rate (May) 6.5% vs. Exp. 6.5% (Prev. 6.5%)

CRYPTO

• Bitcoin is on a firmer footing intraday but remains under the USD 31k level.
• RBNZ is to ramp up monitoring of stablecoins and crypto assets but noted that regulation of crypto assets is not currently required.

GEOPOLITICS

• The US is expected to curb exports of some Dutch chip equipment to specific facilities in China, according to a source cited by Reuters. ASML (ASML NA) does not expect the Dutch government's chip export measures to have a material impact on its financial outlook, according to the press release.
• Russian Foreign Minister Lavrov said he sees no argument for a Black Sea Grain Deal extension, according to a press conference.
• US State Department approved the potential sale of logistics supply support to Taiwan for an estimated cost of USD 108mln, while it approved the possible sale of 30mm ammunition and related equipment to Taiwan for an estimated USD 332mln, according to Reuters.
• Australian and EU trade ministers spoke as hopes of a free trade deal rise, according to Reuters citing sources; there is optimism a deal could be struck by mid-year. Another meeting could be held next fortnight.

APAC TRADE

• APAC stocks mostly traded with cautious gains amid the higher yield environment and as participants digested a slew of data releases at quarter-end including the latest Chinese official PMIs.
• ASX 200 lacked direction as gains in the commodity-related sectors and utilities offset losses in real estate and tech.
• Nikkei 225 was subdued after mixed data releases including disappointing Industrial Production and softer-than-expected Tokyo CPI although the losses were cushioned as USD/JPY briefly climbed above 145.00.
• Hang Seng and Shanghai Comp were initially choppy but ultimately gained after the latest Chinese PMI data in which headline Manufacturing PMI matched estimates and Non-Manufacturing PMI was slightly softer-than-expected although remained at a firm expansion.

NOTABLE ASIA-PAC HEADLINES

• China may announce more property market support measures although measures might be incremental, while China is expected to revise certain home purchase restrictions and has room to lower the down payment ratio, according to China Securities Journal.
• PBoC set USD/CNY mid-point at 7.2258 vs exp. 7.2525 (prev. 7.2208).
• PBoC surveyed some foreign banks about USD deposit rates, according to Reuters sources.
• Japan Chief Cabinet Secretary Matsuno said sharp, one-sided currency moves are seen recently, and they are closely watching FX moves with a high sense of urgency. Matsuno said they are to take appropriate steps on excess FX moves, according to Reuters.
• Japan MOF says FX intervention amounted to JPY 0.00 in the period from May 30th to June 28th, according to Reuters.

DATA RECAP

• Chinese NBS Manufacturing PMI (Jun) 49.0 vs. Exp. 49.0 (Prev. 48.8)
• Chinese NBS Non-Manufacturing PMI (Jun) 53.2 vs. Exp. 53.3 (Prev. 54.5)
• Chinese Composite PMI (Jun) 52.3 (Prev. 52.9)
• Japanese Industrial Production MM (May P) -1.6% vs. Exp. -1.0% (Prev. 0.7%)
• Japanese Industrial Production YY (May P) 4.7% vs. Exp. 4.4% (Prev. -0.7%)
• Tokyo CPI YY (Jun) 3.1% vs. Exp. 3.8% (Prev. 3.2%)
• Tokyo CPI Ex. Fresh Food YY (Jun) 3.2% vs. Exp. 3.3% (Prev. 3.2%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Jun) 3.8% vs. Exp. 4.0% (Prev. 3.9%)