• APAC stocks were pressured amid ongoing Chinese economic woes and developer default concerns
• Goldman Sachs expects the Fed to begin cutting rates by the end of June 2024 at a gradual pace, which it anticipates likely to be once per quarter
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.4% after the cash market closed down by 1.4% on Friday
• DXY is firmer and just below the 103 mark, USD/JPY briefly climbed above 145, AUD lags the major due to Chinese economic concerns
• Looking ahead, highlights include BoC SLOOS

US TRADE

EQUITIES

• US stocks finished mixed on Friday with trade choppy following the latest PPI data which printed firmer than expected and spurred a hawkish reaction including a continuation of the bond selling and underpinned the dollar.
• SPX -0.11% at 4,464, NDX -0.67% at 15,028, DJIA +0.3% at 35,281, RUT +0.13% at 1,925.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Special Counsel David Weiss said shortly after being promoted into the role on Friday that President Biden’s son Hunter Biden may be headed for a criminal trial after talks with prosecutors on a potential plea deal reached a stalemate, according to Reuters and Sky News. Furthermore, it was more recently reported that Hunter Biden said prosecutors reneged on a plea deal, according to WSJ.
• Goldman Sachs expects the Fed to begin cutting rates by the end of June next year at a gradual pace which it anticipates likely to be once per quarter.

APAC TRADE

EQUITIES

• APAC stocks were pressured as ongoing Chinese economic woes and developer default concerns sapped risk appetite ahead of upcoming notable events including several key data releases worldwide and FOMC minutes.
• ASX 200 was lower amid headwinds from Australia’s largest trading partner and with participants inundated by a slew of earnings releases.
• Nikkei 225 initially swung between gains and losses in which early advances on the back of a weaker currency were wiped out as the index succumbed to the broad risk-off mood.
• Hang Seng and Shanghai Comp declined with the Hong Kong benchmark the worst hit amid heavy losses in tech and the property industry owing to default concerns after Country Garden Holdings suspended trading of 11 onshore bonds and Sino-Ocean Group announced the suspension of trading of 6% guaranteed notes due 2024. China’s recent lending data also added to the ongoing slowdown fears after New Yuan Loans slumped by nearly 90% to the lowest since 2009, while participants are also bracing for tomorrow’s Chinese activity data and this week’s upcoming earnings releases from large tech names including Tencent and JD.com.
• US equity futures were lower (ES -0.3%) but with losses relatively mild compared to the selling across Asia-Pac bourses.
• European equity futures are indicative of a lower open with the Euro Stoxx 50 -0.4% after the cash market closed down by 1.4% on Friday.

FX

• DXY briefly climbed above the 103.00 level as it benefitted from the risk-off mood and recent firmer PPI data.
• EUR/USD was lacklustre after several recent failed attempts to reclaim the 1.1000 status but with the downside in the single currency limited by quiet weekend newsflow from the bloc.
• GBP/USD marginally extended its retreat with the attention for the UK this week on jobs and inflation data.
• USD/JPY continued its advance and briefly climbed back above 145.00 to reach its highest since November.
• Antipodeans weakened with underperformance in AUD/USD amid the risk tone and Chinese economic concerns.
• RBI was reportedly likely selling dollars via state-run banks, according to traders cited by Reuters, while it was also reported that Indonesia's Central Bank intervened in the spot FX market and domestic NDF markets to prevent high volatility in the IDR exchange rate, according to an official.
• PBoC set USD/CNY mid-point at 7.1686 vs exp. 7.2461 (prev. 7.1587)

FIXED INCOME

• 10yr UST futures were contained after Friday’s selling pressure as yields climbed in the aftermath of the firmer PPI data but with further downside stemmed by support at the 110.00 level.
• Bund futures remained subdued and marginally extended beneath last week’s worst levels.
• 10yr JGB futures gapped lower on return from a 3-day weekend and suffered spillover selling from peers.

COMMODITIES

• Crude futures were mildly pressured in risk-off conditions amid China's economic concerns.
• Spot gold traded uneventfully with the precious metal restricted by recent greenback strength.
• Copper futures retreated amid jitters related to developers in the world's largest copper buyer.

CRYPTO

• Bitcoin traded rangebound and remained afloat despite the spooked sentiment across risk assets.

NOTABLE ASIA-PAC HEADLINES

• China’s State Council issued guidelines to further optimise the foreign investment environment and will improve the protection of foreign investment rights and interests, while it will crack down on infringement of IP for foreign-invested enterprises. China will also implement relevant preferential tax policies for foreign-invested firms and will explore a convenient and secure management mechanism for cross-border data flows, according to Reuters.
• Country Garden Holdings (2007 HK) said it will suspend trading of its 11 onshore bonds from Monday with the resumption to be determined at a later date and Sino-Ocean Group (3377 HK) announced the suspension of trading of 6% guaranteed notes due 2024, while Longfor Group (960 HK) was said to have made a CNY 1.7bln early bond payment related to an onshore bond.
• Chinese hedge funds are reportedly in crises after losses and with US investors retreating, according to Bloomberg.

GEOPOLITICS

• Russian Defence Ministry said the Russian military opened warning fire on a dry cargo ship near Ukraine flying a Palau flag and the cargo ship then went on its way to Ukraine after inspection by the Russian military, according to Reuters.
• Russian Defence Ministry said Russia thwarted Ukraine’s attempt to carry out a terrorist attack on objects in Russia and that Russia destroyed a Ukrainian drone over the Belgorod region. It was also reported that the regional Governor said apartments and vehicles were damaged which may have been due to a drone attack, according to Reuters.
• Russia’s Defence Ministry said Ukraine tried to strike Crimea Bridge with S-200 rockets although there were no casualties, while it was also reported that traffic on the Crimean Bridge was temporarily stopped, according to Reuters.
• UK defence intelligence said the Wagner Group is likely moving towards a downsizing and reconfiguration process largely to save on staff salary expenses and there is a realistic possibility that the Kremlin no longer funds the Wagner Group, according to Reuters.
• Taiwan’s Vice President Lai said during his visit to the US that Taiwan will not back down to threats. Lai separately commented through social media that he is happy to arrive at the Big Apple which is an icon of liberty, democracy and opportunities, while he is looking forward to seeing friends and attending transit programs in New York. Furthermore, the chair of the US body that handles relations with Taiwan is to meet with Taiwan’s Vice President in San Francisco, while China’s Foreign Ministry said China firmly opposes Taiwan independence separatists’ visiting the US under any name and for any reason, as well as criticised Lai of stubbornly adhering to the separatist position of Taiwan independence and of being a troublemaker, according to Reuters.
• North Korean leader Kim inspected missile and arms factories, while he called for a drastic boost in missile production capacity, according to KCNA. according to KCNA and Yonhap.

UK/EU

NOTABLE HEADLINES

• UK government urged universities and unions to return to the negotiating table after industrial action suspended marking for months and left students without degree results, according to FT.
• S&P affirmed Denmark at AAA; Outlook Stable and affirmed Switzerland at AAA; Outlook Stable on Friday.