• APAC stocks began the week subdued as participants digested mixed economic growth and activity data from China.
• Chinese GDP was firmer than expected QQ but disappointed YY, while Industrial Production topped estimates and Retail Sales missed.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.5% after the cash market closed up by 0.2% on Friday.
• DXY is contained just below the 100 mark, EUR/USD has maintained 1.12 status, antipodeans slightly lag peers.
• Crude futures were on the back foot with early headwinds from the resumption of production at Libya's largest oil field.
• Looking ahead, highlights include US NY Fed Manufacturing, Speeches from ECB’s Lagarde, Lane & Elderson, Earnings from Richemont & Charles Schwab.

US TRADE

EQUITIES

• US stocks were mostly lower on Friday after solid earnings from major US banks JPMorgan and Wells Fargo failed to support sentiment amid some profit-taking across asset classes, while a surge in the University of Michigan consumer survey and a nudge higher in inflation expectation gauges added to the pullback in dovish Fed pricing.
• SPX -0.1% at 4,506, NDX -0.04% at 15,566, DJIA +0.33% at 34,510, RUT -1.01% at 1,931.
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APAC TRADE

EQUITIES

• APAC stocks began the week subdued as participants digested mixed economic growth and activity data from China with conditions also thinned due to the holiday closure in Japan and typhoon disruption in Hong Kong.
• ASX 200 was rangebound with gains in healthcare and tech counterbalanced by losses in consumer and commodity-related industries, while Australian Treasurer Chalmers provided a glum outlook in which he expects a substantial economic slowdown and unemployment to increase as inflation eases.
• KOSPI was constrained by a sombre mood after the deadly floods in South Korea and lingering US concerns that North Korea will move forward with another intercontinental ballistic missile test.
• Shanghai Comp underperformed in the absence of Stock Connect flows owing to the unscheduled closure in Hong Kong and as participants reflected on the mixed bag of tier-1 releases from China which showed economic growth was firmer than expected QQ but disappointed on the YY reading, while Chinese Industrial Production topped estimates in June and Retail Sales missed. Furthermore, the data was seen to be distorted by the effects of the lockdowns in China last year and attention was also on the PBoC which maintained its 1-year MLF rate unchanged at 2.65%, as expected.
• US equity futures were cautious owing to the similar mood in Asia after the latest Chinese data releases; ES -0.1%.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.5% after the cash market closed up by 0.2% on Friday.

FX

• DXY traded rangebound with price action contained just shy of the 100.00 level amid light newsflow from the US and after the Fed entered into a blackout period over the weekend.
• EUR/USD was uneventful in the absence of any major catalysts for the single currency which recently found a platform at the 1.1200 level.
• GBP/USD lacked direction after failing to sustain the 1.3100 status and was unmoved by the UK signing a treaty to join the CPTPP Indo-Pacific trade deal, with Business Secretary Badenoch pessimistic about the chances of a free trade agreement with the US.
• USD/JPY was mildly pressured and JPY-crosses retreated in the absence of Japanese participants.
• Antipodeans declined alongside the subdued risk appetite, recent commodity pressure and CNY weakness.
• PBoC set USD/CNY mid-point at 7.1326 vs exp. 7.1386 (prev. 7.1318)

FIXED INCOME

• 10yr UST futures traded rangebound and found some respite from Friday’s declines which were triggered after a surge in the University of Michigan consumer survey and higher inflation expectation gauges facilitated the pullback in dovish Fed pricing, while price action overnight was also hampered by the holiday closure in Tokyo.
• Bund futures were little changed and lacked direction in the aftermath of last week's late choppy performance and ahead of upcoming ECB speakers including President Lagarde.

COMMODITIES

• Crude futures were on the back foot with early headwinds from the resumption of production at Libya's largest oil field and with prices not helped by activity data from China.
• Libya’s El Sharara oil field and the El Feel oil field resumed production, according to Reuters.
• Kuwait plans to raise oil output from 2.7mln bpd to 3.15mln bpd within four years, according to Reuters.
• Saudi’s Energy Minister said they will continue to guarantee oil supply to Japan and maintain the position as the reliable partner, while he added that Saudi is Japan’s largest oil exporter fulfilling 40% of its total needs and will continue cooperating with Japan in clean hydrogen and recycled carbon fuels, according to state TV.
• Japan is to ensure private sector loans for LNG procurement with Nippon Export & Investment Insurance to receive premiums from private lenders in turn for policies that will cover more than 90% of the loaned amount, with NEXI is to insure a loan by Sumitomo Mitsui Banking Corp (8318 JT) to a unit of LNG importer JERA, according to Nikkei.
• Turkey raised the special consumption tax on oil and gasoline with taxes on petrol increased by about 200%, according to Official Gazette and FT.
• Spot Gold languished near Friday's lows after the recent unwinding of some of the dovish Fed pricing.
• Copper futures were lower with pressure seen heading into and in the aftermath of the mixed Chinese data.

CRYPTO

• Bitcoin eked mild gains with trade rangebound after flatlining throughout the weekend.
• National Australia Bank announced new customer protections by blocking some payments made to high-risk cryptocurrency exchanges, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 103bln (CNY 100bln maturing) in 1-year MLF with the rate kept unchanged at 2.65%.
• China's stats bureau said the national economy showed good momentum of recovery in H1 but reiterated that the foundation of the domestic economic recovery is not solid, while it stated that China is confident and capable to achieve economic growth targets.
• US Treasury Secretary Yellen commented at the G20 meeting that her Beijing visit put the US-China relationship on a super footing and is eager to mobilise further action on areas of mutual concern. Yellen said tariffs on China were put in place as there were concerns about unfair trade practices and those concerns remain, while she added that China’s slowdown is significant to the global economy and seems in part a reflection of a consumption slowdown. Furthermore, Yellen said US corporates want to see an environment where they can invest and thrive in China, according to Reuters.
• US Senate Majority leader Schumer said Democrats will amend the defence policy bill to impose sanctions on China and declare a national emergency over fentanyl, while he hopes the China amendment will pass with strong bipartisan support, according to Reuters.
• US climate envoy Kerry arrived in China and commented that it is imperative the US and China make real progress in the little more than 4 months left before COP28.
• New Zealand PM Hipkins said the region is becoming more contested, less predictable and less secure, while he added that China’s rise and how it seeks to exert influence is a major driver of the increasing strategic competition. Furthermore, he stated the relationship with China will continue to require careful management and that New Zealand is stepping up engagement with India as it expands its role and interests in the Indo-Pacific.
• Australian Treasurer Chalmers said he expects a substantial economic slowdown and unemployment to increase as inflation eases, according to Bloomberg.

DATA RECAP

• Chinese GDP QQ SA (Q2) 0.8% vs. Exp. 0.5% (Prev. 2.2%)
• Chinese GDP YY (Q2) 6.3% vs. Exp. 7.3% (Prev. 4.5%)
• Chinese Industrial Production YY (Jun) 4.4% vs. Exp. 2.7% (Prev. 3.5%)
• Chinese Retail Sales YY (Jun) 3.1% vs. Exp. 3.2% (Prev. 12.7%)
• Chinese Urban Investment (YTD)YY (Jun) 3.8% vs. Exp. 3.5% (Prev. 4.0%)
• Chinese House Prices YY (Jun) 0.0% (Prev. 0.1%)

GEOPOLITICS

• Russian President Putin said Russia reserves the right to mirror actions in the event that cluster munitions are used against Russia and that they have a sufficient stockpile of them, while he also stated that Ukraine’s attempts to break through Russian defences have failed, according to IFX and Reuters.
• Russian-backed Governor of Crimea said Russian air defences and fleet engaged in repelling Ukraine’s drone attacks on Crimea, while the Russian Defence Ministry said it stopped Ukraine’s “terrorist attack” on Crimea’s Sevastopol, according to RIA. It was also reported that the Russian-backed Governor said traffic was stopped on the Crimean bridge due to an "emergency", while Ukrainian media reports explosions were heard on the Crimean bridge to Russia.
• Russia moved to ban Apple (AAPL) iPhones for government officials after claiming they were hacked by the US, according to SCMP. It was also reported that Moscow seized the Russian subsidiaries of Danone (BN FP) and Carlsberg’s (CARLB DC) Baltika, according to FT.
• UN sources said the Black Sea grain deal has not been extended yet but everything is possible, according to TASS.
• China and Russia will start joint air and sea drills in the Sea of Japan, according to Reuters.
• Japan is reportedly being pressed by the US to consider a military role in a Taiwan conflict, according to WSJ.
• White House National Security Adviser Sullivan said the administration remains concerned North Korea will move forward with another intercontinental ballistic missile test, according to Reuters.

UK/EU

NOTABLE HEADLINES

• UK PM Sunak is to appoint a new Defence Secretary after Ben Wallace said he will leave the cabinet at the next reshuffle and will not stand as an MP in the next election, according to FT.
• UK signed a treaty to join the CPTPP Indo-Pacific trade deal but sees chances of reaching a free trade agreement with the US as very low, according to Bloomberg citing Business Secretary Badenoch.
• UK consumer group Which? called for government action on grocery prices and noted that supermarket prices have increased 25.8% in two years, while it noted that some prices have jumped by as much as 175%, according to Reuters.

DATA RECAP

• UK Rightmove House Price Index MM (Jul) -0.2% (Prev. 0.0%)
• UK Rightmove House Price Index YY (Jul) 0.5% (Prev. 1.1%)