Newsquawk

Europe Market Open: Disappointing Chinese trade data soured the tone, DXY bid while JPY lags

08 Aug 2023, 06:35 by Newsquawk Desk

APAC stocks traded mixed after the early optimism following the positive lead from Wall St was soured
This came as Chinese markets entered the fray, while the region also digested disappointing Chinese trade data
European equity futures are indicative of a slightly lower open with the Euro Stoxx 50 -0.1% after the cash market closed up by 0.1% yesterday
DXY heads into the European session firmer, JPY lags with USD/JPY above 143, EUR/USD is back on a 1.09 handle
Looking ahead, highlights include include German CPI (Final), US Trade, ECB Economic Bulletin, ECB Consumer Expectation Survey, US IBD/TIPP Economic Optimism, Speakers from Fed's Harker & Barkin, Supply from UK, Germany & US

US stocks were higher with gains seen across the major indices but the small-cap Russell 2k underperformed, while there were very few data releases or catalysts from a US perspective ahead of US CPI on Thursday, although the Manheim Used Car Index showed prices fell again in July albeit at a slower pace.
SPX +0.90% at 4,518, NDX +0.87% at 15,407, DJIA +1.16% at 35,473, RUT +0.08% at 1,958..
Click here for a detailed summary.

NOTABLE HEADLINES

San Francisco Fed staff researchers ran a model that showed "year-over-year shelter inflation will continue to slow through late 2024 and may even turn negative by mid-2024", while a different model showed no deflation, but still zero price growth in H2 2024, according to WSJ's Timiraos.
Moody's cut the ratings of 10 US banks by one notch and placed some larger banks on review for potential downgrades including BNY Mellon (BK), US Bancorp (USB), State Street (STT) and Truist Financial (TFC), according to Reuters.

DATA RECAP

APAC stocks traded mixed after the early optimism following the positive lead from Wall St was soured as Chinese markets entered the fray, while the region also digested disappointing Chinese trade data.
ASX 200 traded rangebound after mixed consumer sentiment and business confidence surveys.
Nikkei 225 was initially lifted by a weaker currency and earnings release but then wiped out nearly all of its gains as markets were spooked by selling in Chinese stocks.
Hang Seng and Shanghai Comp spooked markets as they entered the fray with the Hong Kong benchmark heavily pressured as tech and property stocks lead the broad declines across sectors, while sentiment was also not helped by the wider-than-expected contraction in Chinese exports and imports data.
US equity futures (ES -0.2%) were contained as Asia turned cautious and after Moody's cut ratings on US banks.
European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.1% after the cash market closed up by 0.1% yesterday.

DXY strengthened as the early risk-off mood in China soured sentiment and as the dollar also benefitted from the weakness across its major peers, in particular, the return in USD/JPY above the 143.00 level.
EUR/USD marginally softened with the single currency back beneath the 1.1000 handle.
GBP/USD was pressured amid the broad dollar strength and despite recent comments from BoE’s Pill who noted inflation remains much too high and that they have seen a lot of news on inflation persistence.
USD/JPY continued its advances and breached 143 to the upside, in the aftermath of mixed household spending and softer wages.
Antipodeans declined amid China-related concerns and its disappointing trade data.
PBoC set USD/CNY mid-point at 7.1565 vs exp. 7.1869 (prev. 7.1380)

10yr UST futures slightly edged above yesterday’s peak amid China's economic concerns.
Bund futures climbed back above the 132.00 level but with upside capped ahead of supply.
10yr JGB futures nursing opening losses but with the rebound contained as participants await a 30yr auction.

Crude futures were choppy despite recent Saudi jawboning with oil prices restricted as the wider-than-expected contraction in Chinese exports and imports underscored global demand concerns.
Spot gold was uneventful with price action constrained owing to the stronger greenback.
Turkey imposed a 20% extra fee for some gold imports, according to the Official Gazette.
Copper futures nursed opening losses with the rebound assisted by the latest 30yr auction.

Bitcoin traded rangebound following its recent brief dip beneath the USD 29,000 level.

NOTABLE ASIA-PAC HEADLINES

China's Ambassador to the Philippines said the Philippines took unilateral actions to undermine the existing management status quo on Second Thomas Shoal and China had no choice but to make necessary responses. Furthermore, China hopes the Philippines meets China halfway and said third-party forces will not help the situation, while China is waiting for feedback from the Philippine side and hopes to start talks ASAP, according to Reuters.

DATA RECAP

Chinese Trade Balance (USD)(Jul) 80.6B vs. Exp. 70.6B (Prev. 70.6B)
Chinese Exports YY (Jul) -14.5% vs. Exp. -12.5% (Prev. -12.4%)
Chinese Imports YY (Jul) -12.4% vs. Exp. -5.0% (Prev. -6.8%)
Chinese Trade Balance (CNY)(Jul) 575.7B (Prev. 491.3B)
Chinese Exports YY (CNY)(Jul) -9.2% (Prev. -8.3%)
Chinese Imports YY (CNY)(Jul) -6.9% (Prev. -2.6%)
Japanese Overall Labour Cash Earnings (Jun) 2.3% vs. Exp. 3.0% (Prev. 2.5%)
Japanese All Household Spending MM (Jun 2023) 0.9% vs. Exp. 0.3% (Prev. -1.1%)
Japanese All Household Spending YY (Jun 2023) -4.2% vs. Exp. -4.1% (Prev. -4.0%)
Australian Westpac Consumer Confidence Index (Aug) 81.0 (Prev. 81.3)
Australian Consumer Sentiment (Aug 2023) -0.4% (Prev. 2.7%)
Australian NAB Business Confidence (Jul) 2.0 (Prev. 0.0, Rev. -1.0)
Australian NAB Business Conditions (Jul) 10.0 (Prev. 9.0, Rev. 11.0)

Ukraine's Foreign Minister said he called on his US counterpart in a phone call to supply Kyiv with long-range ATACMS.
Japan ruling LDP's Aso said in Taipei that 'we' are moving from peacetime to times of turbulence and believe that issues that were hidden beneath the surface are coming to the fore, while he added that Taiwan is an important partner and friend. Furthermore, Aso said Japan has continued to say that peace in the Taiwan Strait is important for regional stability and the most important thing is to make sure war doesn't break out in the Taiwan Strait.

NOTABLE HEADLINES

BoE's Pill said inflation remains much too high and they have seen a lot of news on inflation persistence. Pill added that there are risks on both sides on UK inflation and risks that the UK hasn't raised rates enough but also noted that a lot of rate hikes have yet to hit the economy.
Barclaycard UK July consumer spending rose 4.0% Y/Y vs. prev. 5.4% growth in June, while it noted that supermarket spending growth slowed sharply, according to Reuters.
Italy's Deputy PM said the Cabinet approved a 40% windfall tax on banks, limited to 2023.

DATA RECAP