• European bourses trade on the front-foot after shrugging off opening losses which were in part a by-product of Chinese-related concerns overnight.
• Stateside, futures are trading slightly firmer ahead of a catalyst-thin docket, with the ES briefly topping 4,500.
• A partial pick-up in overall sentiment sapped some of the Greenback’s strength rather than any real change in fundamentals; G10s are flat.
• Debt futures regain composure after overcoming several bouts of selling pressure, albeit not uniformly and without an obvious catalyst.
• Looking ahead, highlights include the BoC Senior Loan Officer Survey

14th August 2023

• Highlights include BoC SLOOS.
• Click here for the Newsquawk Week Ahead preview.

EUROPEAN TRADE

EQUITIES

• European bourses trade on the front-foot after shrugging off opening losses which were in part a by-product of Chinese-related concerns overnight.
• Sectors in Europe have a slight positive tilt with marginal outperformance in Telecoms, Banks and Retail names, whilst Energy and Basic Resource names lag on account of Chinese-inspired weakness in underlying commodity prices.
• Stateside, futures are trading slightly firmer ahead of a catalyst-thin docket, with the ES briefly topping 4,500.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• DXY eased from best levels - a partial pick-up in overall sentiment also sapped some of the Greenback’s strength rather than any real change in fundamentals.
• G10s are flat across the board with no real standout performers at the time of writing.
• PBoC set USD/CNY mid-point at 7.1686 vs exp. 7.2461 (prev. 7.1587)
• Click here for more detail.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Debt futures regain composure after overcoming several bouts of selling pressure, albeit not uniformly and without an obvious catalyst.
• Bunds bounce from 131.22 to 131.59 to trade 12 ticks above par.
• Gilts emulate the feat between 93.35-93.75 parameters before waning.
• T-note tagged along within a 109-30+/110-08+ range having closed at 110-06 on Friday.
• Click here for more detail.

COMMODITIES

• WTI and Brent futures have rebounded from session lows after the European cash open, with price action overnight largely dictated by broader market sentiment.
• Dutch TTF futures have trimmed earlier gains but remain positive by around 2% intraday.
• Spot gold moves in tandem with the Dollar while base metals have largely rebounded from APAC lows.
• Australia's Fairwork Commission has issued an order that unions can conduct industrial action ballot of employees of Chevron's (CVX) Wheatstone platform, according to Reuters.
• Click here for more detail.

NOTABLE US HEADLINES

• 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.
• Cleveland-Cliffs (CLF) proposed to acquire US Steel (X) for USD 17.50/share in cash and 1.023 shares in Cliffs although the offer was rejected as being unreasonable by US Steel’s board, according to Reuters.
• Tesla (TSLA) cuts Model Y Performance and Model Y Long Range prices in China.

NOTABLE EUROPEAN 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.

DATA RECAP

• German Wholesale Price Index YY* (Jul 2023) -2.8% (Prev. -2.9%)
• German Wholesale Price Index MM* (Jul 2023) -0.2% (Prev. -0.2%)

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.
• Chinese Defence Minister to visit Russia and Belarus from Aug 14-16, according to Chinese state media.
• Japan and the United States will jointly develop a new type of missile to intercept hypersonic projectiles being developed by countries such as North Korea, China and Russia, according to Kyodo sources.

CRYPTO

• Bitcoin

APAC TRADE

• 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.

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.
• Country Garden (2007 HK) is looking to extend maturing CNY bond over three years, according to Bloomberg.
• Chinese hedge funds are reportedly in crises after losses and with US investors retreating, according to Bloomberg.
• China has reportedly set up a taskforce for its largest asset fund manager Zhongzhi after missed trust payments, according to Bloomberg0
• 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.
• Foxconn (2317 TT) - Q2 2023 (TWD): Revenue 1.31tln (exp. 1.34tln), Net 300bln (exp. 25.9bln), Operating profit 30.9bln (exp. 33.2bln); sees Q3 cloud and network revenue decline Y/Y; Sees Q3 Computing revenue decline Y/Y. Cuts FY23 Revenue to 'slightly decline' y/y (prev. "flat"). Sees components and other profits to slightly decline in 2023 Y/Y. Sees slight Y/Y decline in consumer electronics products, according to Bloomberg and Reuters.

DATA RECAP

• Indian WPI Inflation YY* (Jul 2023) -1.36% vs. Exp. -2.7% (Prev. -4.12%)