• US stocks finished lower in a choppy session with catalysts extremely light; APAC stocks were mixed with the regional bourses mostly rangebound amid a slew of earnings releases and with the mood tentative.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 +0.6% after the cash market closed up by 0.7% yesterday.
• DXY traded flat around the 102.50 level as participants lacked conviction heading into the US CPI data; 10yr UST futures were marginally lower, Bund futures remained subdued, and 10yr JGB futures declined.
• Looking ahead, highlights include Norwegian CPI, Italian CPI (Final), US CPI, IJC, Chinese M2 Money Supply, New Zealand Manufacturing PMI, Banxico Policy Announcement, ECB Economic Bulletin, Speeches from Fed's Harker & Bostic, Supply from US.
• Earnings from Allianz, Deutsche Telekom, Munich Re., Novo Nordisk, Rheinmetall, Siemens, Antofagasta, Entain, Zurich Insurance & Ralph Lauren.

10th August 2023

LOOKING AHEAD

• Highlights include Norwegian CPI, Italian CPI (Final), US CPI, IJC, Chinese M2 Money Supply, New Zealand PMI (Manufacturing), Banxico Policy Announcement, ECB Economic Bulletin, Speeches from Fed's Harker & Bostic, Supply from US, Earnings from Allianz, Deutsche Telekom, Munich Re., Novo Nordisk, Rheinmetall, Siemens, Antofagasta, Entain, Zurich Insurance & Ralph Lauren.

US TRADE

EQUITIES

• US stocks finished lower in a choppy session with catalysts extremely light and as participants brace for the incoming US inflation data, while the Nasdaq led the declines as AI exuberance lost steam after industry bellwether Super Micro Computer (SMCI) tumbled despite strong results and an upgraded outlook.
• SPX -0.7% at 4,468, NDX -1.12% at 15,102, DJIA -0.54% at 35,123, RUT -0.85% at 1,931.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US FAA said it will waive minimum flight requirements at congested New York and Washington airports through October 28th.

APAC TRADE

EQUITIES

• APAC stocks were mixed with the regional bourses mostly rangebound amid a slew of earnings releases and with the mood tentative ahead of incoming US inflation data, while participants also reflected on US efforts to restrict investment in some Chinese tech.
• ASX 200 was rangebound with notable outperformance in the energy sector with oil prices at a 9-month high and following the recent surge in gas prices amid disruption concerns with strike action planned for Australian LNG, although Woodside Energy has since provided some optimism on the bargaining process in which it noted that positive progress is being made and an in-principle agreement was reached on a number of issues.
• Nikkei 225 benefitted from yen weakness but was initially choppy after mixed PPI data and with newsflow in Japan dominated by earnings releases which provided the catalysts for the biggest individual stock movers.
• Hang Seng and Shanghai Comp were pressured after US President Biden’s executive order to ban some new investments in ‘narrow subsets’ of Chinese sensitive technologies such as semiconductors and microelectronics, quantum information technologies and certain AI systems, which drew criticism from China.
• US equity futures found some composure after the prior day's whipsawing as all attention turns to US CPI.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 +0.7% after the cash market closed up by 0.7% yesterday.

FX

• DXY traded flat around the 102.50 level as participants lacked conviction heading into the US CPI data.
• EUR/USD was uneventful with the single currency contained as participants brace for the upcoming major risk event and after the single currency recently hit resistance just shy of the 1.1000 handle.
• GBP/USD struggled for direction amid the lack of catalysts and with PM Sunak facing calls from the Cabinet related to withdrawing from the ECHR if migrant deportation flights to Rwanda are blocked.
• USD/JPY continued to tread closer toward levels where renewed jawboning could be triggered.
• Antipodeans were kept afloat but with gains capped by the mixed risk appetite and absence of tier-1 data.
• PBoC set USD/CNY mid-point at 7.1576 vs exp. 7.2023 (prev. 7.1588)

FIXED INCOME

• 10yr UST futures were marginally lower after recent flattening and amid pre-inflation positioning.
• Bund futures remained subdued with price action stuck around the prior day’s worst levels.
• 10yr JGB futures declined amid mixed PPI data and in the absence of additional BoJ purchases.

COMMODITIES

• Crude futures took a breather after climbing to their highest levels in 9 months.
• Spot gold was confined to a narrow range amid a flat dollar ahead of US CPI.
• Copper futures traded sideways alongside the mixed risk appetite in Asia.

CRYPTO

• Bitcoin saw tepid trade after pulling back yesterday from resistance at the USD 30,000 level.
• US SEC plans to appeal the court ruling in its lawsuit against Ripple Labs.

NOTABLE ASIA-PAC HEADLINES

• US President Biden signed an executive order to regulate future US investments in a narrow set of technologies in China, Hong Kong and Macau, while the order is a 'narrow and targeted action' to complement existing export controls and inbound investment screening. Furthermore, US actions will focus on protecting the most critical technologies for military advancement, including semiconductors, quantum computing and certain artificial intelligence, according to Reuters.
• There were earlier reports that the White House will detail plans restricting some US investments in China in which the regulations will only affect future investments, not current ones, according to a person briefed on the executive order. Restrictions are expected to be implemented next year after multiple rounds of public comment including an initial 45-day comment period on the proposed rulemaking.
• China's MOFCOM said China is gravely concerned about the US order on foreign investment reviews and reserves the right to take measures, while it hopes the US will respect the law of the market economy and the principle of fair competition, according to Reuters.
• China's Ministry of Foreign Affairs said China filed a diplomatic complaint against the US regarding the investment curbs, according to Bloomberg.
• Chinese Embassy in the US said China is very disappointed the US went ahead with new investment restrictions and it opposes the US overuse of national security on trade, while it added that China will firmly safeguard its rights and interests, according to Reuters.
• China’s internet giants rush to order USD 5bln of Nvidia (NVDA) chips to power AI ambitions amid concerns over impending US export controls, according to FT sources.
• China Culture and Tourism Bureau released a third list of destination countries for Chinese group tourism including Japan, Australia, Germany, UK and US, while China also permitted group tours to South Korea.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained its stance of remaining focused on the withdrawal of accommodation which 5 out of 6 MPC members voted for. RBI Governor Das said the Indian economy is exuding enhanced strength and they made significant progress in controlling inflation but added that the MPC is prepared to act if the situation warrants and it remains resolute in its commitment to align inflation to the 4% target. Incremental Cash Reserve Ratio will be reviewed on September 8th. Existing Cash Reserve Ratio remains unchanged at 4.50%.

DATA RECAP

• Japanese PPI MM (Jul) 0.1% vs. Exp. 0.2% (Prev. -0.2%)
• Japanese PPI YY (Jul) 3.6% vs. Exp. 3.5% (Prev. 4.1%)

GEOPOLITICS

• Russian Defence Ministry said 11 Ukrainian drones were downed near Sevastopol, according to RIA. It was separately reported that Russian air defence systems shot down two military drones heading towards Moscow.
• North Korean leader Kim convened a military meeting and vowed to step up preparation for war, while he called for war drills to be conducted to efficiently operate new weapons, according to Yonhap.

UK/EU

NOTABLE HEADLINES

• UK PM Sunak is reportedly facing increasing calls from the Cabinet to put leaving the European Convention on Human Rights at the centre of the Tory election campaign if migrant deportation flights to Rwanda are blocked, according to The Telegraph.

DATA RECAP

• UK RICS Housing Survey (Jul) -53 vs. Exp. -50 (Prev. -46, Rev. -48)