Newsquawk

Europe Market Open: AUD lags post RBA while APAC stocks followed the positive Wall St. handover

01 Aug 2023, 06:45 by Newsquawk Desk

APAC stocks were mostly higher following the positive lead from Wall St where the S&P 500 notched its 5th consecutive monthly gain.
RBA maintained its Cash Rate Target unchanged at 4.10% and noted that some further tightening of monetary policy may be required.
AUD lags post-RBA, JPY is also on the backfoot, DXY oscillates around the 102 mark, EUR/USD sits just below 1.10.
European equity futures are indicative of a flat open with the Euro Stoxx 50 unchanged after the cash market closed up by 0.1% yesterday.
Looking ahead, highlights include German Unemployment Rate, UK/EZ Final PMI, US ISM, JOLTS, New Zealand Labour Data, Speech from Fed's Goolsbee.
Earnings from Covestro, Deutsche Post, Daimler Truck, BP, Diageo, HSBC, AIG, Advanced Micro Devices, Electronic Arts, Merck & Co.

US stocks were ultimately higher on what was a choppy day for the major indices at month-end amid somewhat mixed data releases and as participants await this week's upcoming risk events. Nonetheless, all major US indices finished in the green and the S&P 500 notched its fifth consecutive monthly gain although the Russell 2k was the biggest gainer and climbed above the 2000 level amid strength in small caps.
SPX +0.15% at 4,589, NDX +0.04% at 15,757, DJIA +0.28% at 35,560, RUT +1.09% at 2,003.
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NOTABLE HEADLINES

Fed SLOOS noted tighter standards were reported across businesses and households with weakening demand, while banks expect to further tighten standards in the second half of the year.

APAC stocks were mostly higher following the positive lead from Wall St where the S&P 500 notched its 5th consecutive monthly gain, while participants also digested disappointing Chinese Caixin Manufacturing PMI data and the RBA rate decision.
ASX 200 traded positive amid strength in tech and the commodity-related sectors with further upside after the RBA kept rates unchanged.
Nikkei 225 was underpinned by a weaker currency and with headlines in Japan dominated by earnings releases, while a recent poll by Bloomberg also showed that BoJ watchers don’t expect a further policy shift from the central bank this year with April 2024 now seen as the likely timing for a policy change
Hang Seng and Shanghai Comp managed to shrug off the disappointing Chinese Caixin Manufacturing PMI data which slipped into contraction territory for the first time in 3 months with Hong Kong boosted by tech strength and the mainland kept afloat by further support efforts from China.
US equity futures were uneventful and largely remained near the prior day's best levels.
European equity futures are indicative of a flat open with the Euro Stoxx 50 unchanged after the cash market closed up by 0.1% yesterday.

DXY marginally extended on gains and reclaimed the 102.00 status after having ignored the month-end sell-side models which pointed to dollar selling, although price action was relatively contained ahead of upcoming events and following comments from Fed's Goolsbee who was unsure if they should skip at the September meeting.
EUR/USD remained lacklustre at a sub-1.1000 level after giving way to the dollar's strength.
GBP/USD was subdued amid a lack of catalysts and ahead of the BoE rate decision later in the week.
USD/JPY continued on its advances with economists not anticipating any further policy tweaks from the BoJ this year and government officials also voiced their opinion that last week’s BoJ decision was meant to increase the sustainability of monetary easing and was not a shift in the monetary easing stance.
Antipodeans were pressured after weak Australian Building Approvals, the contraction in Chinese PMI data and with selling exacerbated after the RBA continued its pause on rates.
PBoC set USD/CNY mid-point at 7.1283 vs exp. 7.1495 (prev. 7.1305)

10yr UST futures lacked direction after the prior day’s choppy performance and somewhat mixed US data releases, while recent comments from Fed’s Goolsbee provided little for markets to latch on to.
Bund futures traded rangebound with price action stuck near the 133.00 level ahead of final Eurozone PMIs.
10yr JGB futures just about kept afloat despite the pressure seen in the aftermath of a weaker 10yr auction.

Crude futures were rangebound amid the lack of energy-specific catalysts and with further economic support efforts from China was counterbalanced by the disappointing Chinese Caixin Manufacturing PMI data.
Kinder Morgan's (KMI) El Paso Natural Gas Co. experienced an equipment failure associated with its Roswell Compressor Station and as such the station is currently unavailable, while it declared a force majeure.
Spot Gold was contained as the greenback marginally extended on its recent advances.
Copper futures were lacklustre after the latest Caixin PMI data showed a contraction in China's factory activity.

Bitcoin was pressured and dipped beneath the USD 29,000 level with headwinds for the crypto industry after the judge in the Terra case rejected a previous Ripple ruling that had been positive for the industry.
The 'Ripple ruling' on crypto was rejected by a federal judge in the Terra case whereby the judge ruled that there is no distinction between public and institutional sales, according to Bloomberg.

NOTABLE ASIA-PAC HEADLINES

China's NDRC issued a notice to promote private economy development in China and said it will extend loan support tools for small and micro firms until the end of 2024.
US Commerce Secretary Raimondo is aiming for an August China trip amid tech control tensions, according to Bloomberg.
RBA maintained its Cash Rate Target unchanged at 4.10% (vs split views between 25bps hike and unchanged) and noted that some further tightening of monetary policy may be required. RBA reiterated that the Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that, while it also reaffirmed a priority to return inflation to target within a reasonable timeframe and expects inflation will be back at 2-3% target range in late 2025.

DATA RECAP

Ukrainian President Zelensky is likely to head to New York for the UN General Assembly where he’s expected to make the case for his peace formula, according to Bloomberg sources.
White House's Kirby said the US is not encouraging attacks inside Russia and that the decision is for Ukraine to make, according to a CNN interview.
A drone hit a high-rise building in Moscow and a second drone was downed in Moscow's suburbs, according to agencies quoting emergency services.
China's Defence Ministry said it lodged solemn representations to the US side regarding US military arms sales to Taiwan and urges the US to stop all forms of military collusion with Taiwan, according to Reuters.

DATA RECAP

UK BRC Retail Shop Price Index YY (Jul) 7.6% (Prev. 8.4%)
UK food price inflation has slowed to its lowest level this year in July, at 13.4% (vs 14.6% in June), according to BRC and NielsenIQ retail analysts.
UK Lloyds Business Barometer (Jul) 31 (Prev. 37)