• US stocks were bid with outperformance in the Russell 2000 amid strong gains in the regional banking ETF.
• APAC stocks were mixed as the ongoing China economic woes partially offset the constructive lead from Wall St.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed up by 0.3% yesterday.
• DXY has reclaimed the 100 level, EUR/USD maintains 1.12 status, JPY lags the majors with USD/JPY back on a 139 handle.
• Looking ahead, highlights include UK CPI, EZ HICP (Final), US Building Permits/Housing Starts, Speech from BoE's Ramsden, Supply from Germany, UK & US, Earnings from Netflix, Tesla, Goldman Sachs & IBM.

US TRADE

EQUITIES

• US stocks were bid with outperformance in the Russell 2000 amid strong gains in the regional banking ETF which was supported by a slew of strong bank earnings from Bank of America (BAC), Morgan Stanley (MS), Bank of New York Mellon (BK), and others. Tech outperformed led by Microsoft (MSFT) and NVIDIA (NVDA) on more AI updates and Energy stocks tracked the upside in crude prices, while sentiment was also supported by dovish ECB comments.
• SPX +0.71% at 4,554, NDX +0.82% at 15,841, DJIA +1.06% at 34,951, RUT +1.27% at 1,976.
• Click here for a detailed summary.

NOTABLE HEADLINES

• White House asks pharmacy chains for help pushing drug-cost law with the administration seeking help promoting the Inflation Reduction Act, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks were mixed as the ongoing China economic woes partially offset the constructive lead from Wall St where risk sentiment was underpinned after strong bank earnings results and recent dovish ECB commentary.
• ASX 200 was positive with gains led by the energy sector after the recent upside in oil prices which facilitated the resilience of Woodside Energy despite its quarterly decline in output and revenue, while the mining sector was choppy amid indecision in Rio Tinto due to a mixed quarterly update.
• Nikkei 225 outperformed after recent comments by BoJ Governor Ueda provided the latest hints regarding the unlikelihood of a policy tweak at next week’s monetary policy meeting.
• Hang Seng and Shanghai Comp were lower as Hong Kong suffered from tech losses and with a non-committal tone in the mainland amid ongoing economic woes and recent support efforts.
• US equity futures were steady as participants await more earnings results including GS, TSLA and NFLX.
• European equity futures are indicative of a slightly higher open with the Euro Stoxx 50 +0.2% after the cash market closed up by 0.3% yesterday.

FX

• DXY was marginally firmer and reclaimed the 100.00 level amid some softening in its major counterparts overnight albeit with price action in the greenback kept to a relatively tight range.
• EUR/USD was lacklustre but remained above 1.1200 despite the recent dovish-leaning ECB rhetoric.
• GBP/USD extended on the prior day’s losses after giving up the 1.3100 status, while the focus turns to UK CPI.
• USD/JPY edged higher and reclaimed the 139.00 handle owing to the rebound in the buck.
• Antipodeans were subdued amid a softer yuan and lingering China economic woes which saw NZD/USD completely fade the initial upside from the firmer-than-expected New Zealand inflation data.
• PBoC set USD/CNY mid-point at 7.1486 vs exp. 7.1798 (prev. 7.1453)

FIXED INCOME

• 10yr UST futures were steady and showed some composure overnight following the prior day’s fluctuations and curve flattening which had been spurred by the mixed Retail Sales data and dovish ECB rhetoric.
• Bund futures slightly eased from yesterday’s peak but with the pullback limited by support around 134.00.
• 10yr JGB futures held on to their recent gains with relatively stable demand at the enhanced-liquidity auction for 2yr-20yr maturities.

COMMODITIES

• Crude futures marginally pulled back from yesterday's highs amid the mixed risk appetite in Asia and after the private sector inventory data showed a narrower-than-expected draw in headline crude inventories.
• US Energy Inventory Data (bbls): Crude -0.8mln (exp. -2.3mln), Gasoline -2.8mln (exp. -2.1mln), Distillate -0.1mln (exp. -0.1mln), Cushing -3.0mln.
• Spot Gold traded rangebound with the recent upside capped by the rebound in the greenback.
• Copper futures were lacklustre amid the ongoing economic concerns surrounding its largest buyer China.
• Key mining zones in Peru will support new protests starting this week with groups from the key copper mining corridor set to arrive in Lima.

CRYPTO

• Bitcoin mildly rebounded overnight with prices back above the USD 30,000 level.

NOTABLE ASIA-PAC HEADLINES

• China's Industry Ministry said China's industrial sector faces difficulties and challenges such as insufficient demand and declining revenues, while it will formulate plans to stabilise the growth of 10 sectors including auto and steel, according to Reuters.
• US Climate Envoy Kerry said his talks with Chinese officials this week were constructive but complicated with the two sides still dealing with political externalities including Taiwan. Kerry added that they are just reconnecting and trying to re-establish the process they have worked on for years, according to Reuters.
• US Climate Envoy Kerry meets with China's Vice President Han Zheng in Beijing and told him that if they can come together over the next months heading into COP28, they will have an opportunity to make a profound difference on climate change, while he added that the US side pledges to work closely with China in order to help their presidents to be able to produce real results. Furthermore, Han told Kerry that both countries have had close communication and dialogue after Kerry became the special envoy for climate and said China and the US have maintained long-term good communication and exchanges on climate, as well as reached some important consensus'.
• US President Biden's administration formally halted the Wuhan Institute of Virology’s access to US funding due to COVID probe failures, according to Bloomberg.

DATA RECAP

• New Zealand CPI QQ (Q2) 1.1% vs. Exp. 1.0% (Prev. 1.2%)
• New Zealand CPI YY (Q2) 6.0% vs. Exp. 5.9% (Prev. 6.7%)
• RBNZ Sectoral Factor Model Inflation Index (Q2) 5.8% (Prev. 5.7%)

GEOPOLITICS

• North Korea launched a ballistic missile into the East Sea, while a second missile was also launched and both appeared to have landed outside of Japan’s exclusive economic zone, according to NHK.
• US assessed that North Korea's launches do not pose an immediate threat but show the destabilising impact of North Korea's illicit weapons program, according to the US military.
• White House said a transit through the US by Taiwan's VP in August will be "routine".
• South Africa claimed it cannot arrest Russian President Putin at a planned BRICS summit in Johannesburg next month as Russia has threatened to “declare war” if the International Criminal Court warrant against its leader is enforced, according to FT.
• European official said does not expect difficulty persuading EU nations to maintain ballistic missile sanctions on Iran due to expire in October and sees a window of opportunity by the end of 2023 to try to negotiate a de-escalatory nuclear deal with Iran.
• US official said Secretary of State Blinken signed a new 120-day waiver to allow Iraq to pay Iran for electricity and that the waiver was expanded to allow Iraq to deposit payments for Iranian electricity into non-Iraqi banks, while it is hoped that the waiver will ease Iran's pressure on Iraq for access to funds which previously only went to restricted accounts in Iraq.

UK/EU

NOTABLE HEADLINES

• UK PM Sunak is set to delay a decision on whether Britain should rejoin the EU's Horizon science program until after the summer holidays, according to FT.
• EU's Vestager said it is questionable to assume that someone's nationality will automatically lead to a bias favouring companies from the same nationality, while she noted there is no indication of a general conflict regarding the pick of the US economist and EU tech rules after French PM Macron criticised her decision to hire a US economist over a European to help oversee big tech.