• APAC stocks headed into month-end mostly on the front foot as participants digested the latest support efforts from China and mixed PMI data.
• Chinese headline Manufacturing PMI slightly topped forecasts but remained in contraction territory and Non-Manufacturing PMI disappointed with the slowest pace of increase since December 2022.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.5% after the cash market closed up by 0.4% on Friday.
• In FX, DXY is firmer, JPY lags across the majors, antipodeans lead, EUR/USD hovers just above the 1.10 mark. 
• Looking ahead, highlights include German Retail Sales, ECB Survey of Monetary Analysts, EZ Flash CPI, US Chicago PMI.

US TRADE

EQUITIES

• US stocks gained on Friday with outperformance in the Nasdaq as chip names soared after Intel's strong earnings report where it returned to profit after two quarters of losses and with strength attributed to a turnaround in the PC market, while sentiment was also helped by US data releases which were ultimately net dovish.
• SPX +0.99% at 4,582, NDX +1.85% at 15,750, DJIA +0.50% at 35,459, RUT +1.36% at 1,981.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed’s Kashkari (voter) said he is not sure when the Fed will be done raising rates and they are making good progress, while he added will let the data guide the Fed and they may or may not hike in September. Kashkari also noted that it currently appears the US will avoid a recession which he hopes will remain true and the overall inflation outlook is quite positive but cannot prejudge it and it would not surprise him to see unemployment tick up slightly, according to a CBS interview.
• Fed and other regulators said on Friday that banks should maintain actionable contingency plans that consider a range of possible stress scenarios and that events in H1 have further underscored the importance of liquidity risk management and contingency funding planning, according to Reuters.
• Trucking giant Yellow shut down operations which put 30,000 jobs at risk including around 22,000 Teamsters members, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks headed into month-end mostly on the front foot as the region sustained last Friday’s tech-led momentum from Wall St and as participants digested the latest support efforts from China and mixed PMI data.
• ASX 200 lagged with strength in the commodity-related sectors offset by weakness in consumer stocks and financials, with the mood cautious ahead of tomorrow’s RBA rate decision where there is a discrepancy between money markets pricing and analysts’ median expectations on whether the central bank will hike or pause.
• Nikkei 225 was boosted from the open and rose back above the 33,000 level amid a weaker currency and as markets digested the BoJ’s recent shift to a more flexible approach which provided early tailwinds for financials, while the central bank announced unscheduled bond purchases and participants also shrugged off disappointing Industrial Production data.
• Hang Seng and Shanghai Comp were higher amid stimulus-related optimism as Chinese officials are set to announce more measures for consumption, recovery and expansion, while the NDRC said it will solidly promote development and reform, as well as stick to the general principle of making economic stability a top priority. Furthermore, mixed official PMI data from China failed to dampen the mood in which headline Manufacturing PMI slightly topped forecasts but remained in contraction territory and Non-Manufacturing PMI disappointed with the slowest pace of increase since December 2022.
• US equity futures are marginally lower with mild headwinds seen after the mixed Chinese PMI data.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.5% after the cash market closed up by 0.4% on Friday.

FX

• DXY was firmer amid the mixed performance seen in major counterparts albeit with further gains limited heading into month-end and following comments over the weekend from Fed’s Kashkari who said he is not sure when the Fed will be done raising rates and will let the data guide the Fed.
• EUR/USD was uneventful and sat just north of 1.1000 after the latest rhetoric from ECB’s Lagarde provided very little incrementally in which she reiterated that the ECB is to assess the situation on a meeting-by-meeting basis and that a pause would not mean that there would not be any rate hikes after.
• GBP/USD traded sideways with participants lacking conviction ahead of this week’s BoE rate decision.
• USD/JPY extended on Friday’s rebound and climbed above 141.00 amid the heightened risk appetite.
• Antipodeans benefitted from the constructive mood and Beijing’s efforts to support China’s economy.
• PBoC set USD/CNY mid-point at 7.1305 vs exp. 7.1524 (prev. 7.1338)

FIXED INCOME

• 10yr UST futures traded marginally lower after last Friday’s attempts to recover losses waned heading into month-end and this week’s key risk events culminating in the latest US NFP report.
• Bund futures were subdued amid the positive mood and lack of fresh insight from ECB’s Lagarde.
• 10yr JGB futures continued their post-BoJ selling as Japanese yields climbed which saw the 10yr yield at the highest in 9 years and above 0.60% but with further upside in yields capped after the BoJ announced an unscheduled purchase operation for JPY 300bln in JGBs with a residual maturity of 5yr-10yr.

COMMODITIES

• Crude futures faded some of last week's gains amid headwinds from the latest Chinese data although WTI crude just remains above the USD 80/bbl level, while there were bullish comments from Goldman Sachs which noted the global oil market is shifting from surplus to deficit and global oil demand reached a new high in July.
• Iran’s Oil Minister Owji said Tehran will pursue its rights in the Durra Field if other parties shun cooperation, according to Shana.
• Russian President Putin said he agreed to have talks with Turkish President Erdogan on Wednesday and that a Turkish gas hub is still on the agenda, while he noted that they want to set up an electronic platform for gas sales in Turkey and don’t want to store gas there, according to Reuters.
• UK PM Sunak will today commit to going ahead with oil and gas exploration and production in the North Sea, according to the Times.
• Spot Gold was marginally pressured as the dollar gradually strengthened overnight.
• Copper futures struggled for direction as participants digested mixed Chinese PMI data and the latest support pledges.

CRYPTO

• Bitcoin edged higher owing to the risk sentiment but with gains capped ahead of the 29,500 level.
• SEC reportedly asked Coinbase (COIN) to halt trading in everything aside from Bitcoin prior to suing the exchange, according to the CEO cited by FT.

NOTABLE ASIA-PAC HEADLINES

• China issued measures to recover and expand consumption including expanding consumption in NEVs and reasonably boosting consumption credit, while it will enhance financial support on consumption, according to a State Council document.
• Chinese officials from several agencies will hold a press conference on Monday at 08:00BST/03:00EDT to announce more measures for consumption, recovery and expansion, according to Bloomberg.
• China's NDRC said it will solidly promote development and reform, as well as stick to the general principle of making economic stability a top priority and pursuing progress while ensuring stability, according to Xinhua.
• Major Chinese cities including Beijing, Shenzhen and Guangzhou vowed to better meet rising housing needs after China’s housing minister called for more efforts to strengthen the property market with measures such as lowering payment requirements and mortgage rates for first-time homebuyers, according to Global Times.
• Chinese Vice Premier He Lifeng said at the China-France economic and financial dialogue that the Chinese side appreciates the French side’s decision to extend 5G licences in some cities to Huawei and the two sides will sign a cooperation agreement on grape cultivation and wine production. Furthermore, the two sides welcomed the recent trial certification of an Airbus (AIR FP) helicopter and aircraft, according to Reuters.
• French Economic Minister Le Maire said China must remain a key partner for all European countries specifically France in tackling climate change and said they need China as a key partner for global growth, while he added that they are totally opposed to the idea of decoupling and want to get better access to Chinese markets, according to Reuters. Furthermore, Le Maire said the European car industry can withstand cheap Chinese EVs, according to FT.
• Italy’s Defence Minister Crosetto said Italy made an improvised and atrocious decision when it joined China’s Belt and Road Initiative under a previous government in 2019, according to Reuters.
• Alibaba (9988 HK) affiliate Ant Group’s listing is unlikely to occur in the short term, according to a Chinese state media report.
• Japan’s Labour Ministry is reportedly proposing a record increase in the minimum hourly wage to lift it above JPY 1,000 to help low-income households tackle inflation, according to Bloomberg.

DATA RECAP

• Chinese NBS Manufacturing PMI (Jul) 49.3 vs. Exp. 49.2 (Prev. 49.0)
• Chinese NBS Non-Manufacturing PMI (Jul) 51.5 vs. Exp. 53.0 (Prev. 53.2)
• Chinese Composite PMI (Jul) 51.1 (Prev. 52.3)
• Japanese Industrial Production MM (Jun P) 2.0% vs. Exp. 2.3% (Prev. -2.2%)
• Japanese Industrial Production YY (Jun P) -0.4% vs. Exp. 0.3% (Prev. -0.2%)
• Japanese Retail Sales MM (Jun) -0.4% vs. Exp. -0.7% (Prev. 1.3%)
• Japanese Retail Sales YY (Jun) 5.9% vs. Exp. 5.9% (Prev. 5.7%)
• Australian MI Inflation Gauge MM (Jul) 0.8% (Prev. 0.1%); YY 5.4% (Prev. 5.7%)
• New Zealand ANZ Business Confidence (Jul) -13.1% (Prev. -18.0%)
• New Zealand ANZ Activity Outlook (Jul) 0.8% (Prev. 2.7%)

GEOPOLITICS

• Russian President Putin said that they do not reject talks on Ukraine but noted a ceasefire is hard to implement when the Ukrainian army is on the offensive, while he added there should be agreement on both sides and that there are no significant changes on the Ukrainian front for now. Furthermore, Putin also commented that no one wants a direct clash between NATO and Russian forces in Syria and that the Russian Navy is to get 30 new ships this year, according to Reuters.
• Russian Foreign Ministry spokeswoman said Russia has received around 30 peace initiatives on Ukraine, according to TASS.
• Two skyscrapers in Moscow’s premier business district were damaged by drone strikes, while Moscow’s Mayor said Ukrainian drones caused damage although there were no casualties, according to FT.
• Ukrainian President Zelensky has warned war is coming back to Russia following the drone attack on the Russian capital Moscow on Sunday, according to the BBC.
• Ukrainian Chief of Staff said Ukraine will start negotiations on security guarantees with the US next week.
• Polish PM Morawiecki said a group of Wagner mercenaries in Belarus have moved closer to the Polish border and may stage a ‘hybrid attack’ inside Poland, while he added that Wagner fighters may pose as migrants to enter the EU and that the situation is getting increasingly dangerous, according to Politico.
• Russia’s embassy in Moldova announced it will temporarily stop providing appointments for consular matters in what Moldovan officials said is a situation linked to the order by the country’s officials to cut staff, according to Reuters.
• Saudi Arabia will host a Ukrainian-organized peace summit in early August in an effort to find a way to start negotiations over the war in Ukraine, according to an official cited by Politico. Furthermore, it was reported that Ukraine, Brazil, India and South Africa are expected to attend but Russia is not.
• US Secretary of State Blinken said China has repeatedly assured the US that it is not providing material, lethal assistance in Ukraine.
• US President Biden’s administration believes China implanted malware in key US power and communications networks in a ‘ticking time bomb’ that could disrupt the military in the event of a conflict or if China were to move against Taiwan, according to NYT.
• US is to provide Taiwan with military aid of up to USD 345mln, according to the White House.
• North Korean leader Kim met with the Chinese delegation on Friday, while North Korea and China reaffirmed their vow to develop ties based on strategic cooperation, according to KCNA.
• Senior Israeli lawmaker said it is too early to speak of a Saudi normalisation deal being in the works, according to Reuters.

UK/EU

• UK’s financial regulator is under increasing pressure to overhaul rules governing the bank accounts for politicians amid the Farage ‘debanking’ fallout, according to FT.
• ECB’s Lagarde reiterated that the ECB is to assess the situation on a meeting-by-meeting basis and a pause would not mean that there would not be any rate hikes after, while she also stated that Q2 GDP figures for France, Germany and Spain are encouraging, according to an interview in Le Figaro.
• Bundesbank's deputy head Claudia Buch said the ECB needs a more critical mindset on banks and warned the sector still faces significant risks from major macroeconomic upheaval, according to FT.
• EU's EBA said on Friday that three banks fell below legally binding regulatory capital requirements in EU stress tests and 37 banks hit a trigger that introduces limits on payouts, while four banks did not meet their mandatory leverage ratio.