Newsquawk

Europe Market Open: Constructive Wall St. tone continued with catalysts light

29 Aug 2023, 06:30 by Newsquawk Desk

APAC stocks traded with an upward bias following the positive lead from Wall Street, with little in terms of fresh catalysts to dictate price action heading into month-end.
DXY was subdued after retreating back under the 104.00 mark in early APAC hours, while debt futures tilted firmer.
Chinese State media reports PBoC may cut banks' RRR earlier than expected to maintain reasonable ample liquidity.
Australian union said workers at Chevron's LNG facilities will escalate industrial action each week until Co. agrees to bargaining claims.
Looking ahead, highlights include German GfK, Spanish Retail Sales & US JOLTS, NBH Policy Announcement, Speeches from Fed's Barr & RBA’s Bullock, and Supply from Germany and the US.

US stocks managed to hold onto their gains seen in the US morning with the RUT marginally outperforming - desks cited a global sentiment boost from China's recent market-supportive measures.
SPX +0.63% at 4,433, NDX +0.74% at 15,052, DJIA +0.62% at 34,559, RUT +0.83% at 1,869.
Click here for a detailed summary.

NOTABLE HEADLINES

US Senate Majority Leader Schumer is to host Tesla (TSLA) CEO Musk and Meta (META) CEO Zuckerberg for an AI forum next month, according to Axios.
US FDIC is set to propose heightened rules to ensure regional banks can be safely dissolved in times of stress.

APAC stocks traded with an upward bias following the positive lead from Wall Street, with little in terms of fresh catalysts to dictate price action heading into month-end.
ASX 200 was supported by its gold, mining, and materials sectors but with the gains modest intraday, with the upside hampered by the index’s IT and Healthcare sectors.
Nikkei 225 was caged after opening higher, with the index supported by its machinery sector, while Toyota shares waned after reports it is to suspend operations at all of its 14 Japanese assembly plants amid system failures.
Hang Seng and Shanghai Comp saw another session in the green, with the gains in the former more pronounced as index heavyweights are again buoyed by the recent stock support measures.
US equity futures traded flat throughout the session with the ES finding some resistance near 4,450 yesterday.
European equity futures are indicative of a flat open with the Euro Stoxx 50 future +0.1% after cash markets closed +1.3%.
FTSE 100 futures outperformed on catch-up play following yesterday's UK Bank Holiday.

DXY was subdued following a retreat back under the 104.00 mark in early APAC hours after notching a 103.73-104.44 range on Monday.
EUR/USD drifted further above the 1.0800 mark before encountering some resistance, with the pair sandwiched between its 10 DMA (1.0845) and 200 DMA (1.0807).
GBP/USD found a footing above 1.2600 with price action largely in tandem with the Dollar, whilst the latest UK BRC shop price inflation in August eased to its lowest level since October 2022, driven by cooling food inflation.
USD/JPY remained caged within yesterday’s 146.25-74 range with little reaction seen to the surprise rise in the Japanese unemployment rate in July.
Antipodeans drifted higher amid another firm PBoC CNY fixing, albeit with gains modest.
PBoC set USD/CNY mid-point at 7.1851 vs exp. 7.2854 (prev. 7.1856)

10yr UST futures edged marginally higher after the US close and as the Treasury curve bull steepened on Monday in quiet trade, with supply limiting the upside in the front end and belly ahead of key risk events later in the week.
Bund futures held an upside bias with the Sep'23 contract not quite reaching yesterday’s 132.33 peak.
10yr JGB futures conformed to price action seen across Western peers.
US sold USD 45bln in 2yr notes; High Yield: 5.024% (prev. 4.823%, six-auction average 4.398%); WI 5.028%. Tail: -0.4bps (prev. 0.3bps, six-auction avg. 0.2bps). Bid-to-Cover: 2.94x (prev. 2.78x, six-auction avg. 2.71x). Dealers: 14.98% (prev. 13.8%, six-auction avg. 16.7%). Directs: 20.01% (prev. 20.8%, six-auction avg. 20.3%). Indirects: 64.22% (prev. 65.4%, six-auction avg. 63.0%)
US sold USD 46bln in 5yr notes; High Yield: 4.400% (prev. 4.17%, six-auction average 4.372%). WI: 4.399%. Tail: 0.1bps (prev. 0.4bps, six-auction avg. -0.3bps). Bid-to-Cover: 2.54x (prev. 2.60x, six-auction avg. 2.71x). Dealers: 13.8% (prev. 13.49%, six-auction avg. 12.2%). Directs: 18.3% (prev. 22.13%, six-auction avg. 19.0%). Indirects: 67.9% (prev. 64.38%, six-auction avg. 68.8%).
Japan sold 2.9tln 2yr JGBs b/c 3.21x (prev. 3.95x), avg. yield 0.011% (prev. -0.045%).

Crude futures traded sideways following a choppy Monday which saw a divergence between WTI and Brent future, albeit within narrow ranges.
Spot gold remained supported above USD 1,920/oz amid the softer Dollar after the yellow metal notched a USD 1,925.90/oz peak yesterday.
Copper futures held a mild upward bias in tandem with the broader APAC risk tone.
Australian union said workers at Chevron's (CVX) LNG facilities to participate in rolling stoppages, bans and limitations; Industrial action will escalate each week until Chevron agrees to bargaining claims, according to Reuters. Workers at Chevron's Australian LNG facilities plan work stoppages of as long as ten hours from next week, according to Reuters
NHC said rapid strengthening in Tropical Storm Idalia is expected in the next day or so. NHC said Tropical Storm Idalia could become a hurricane at any time and is expected to become a major hurricane over the Eastern Gulf of Mexico.
Chilean copper miner Codelco makes further staff cuts, according to a statement cited by Reuters.
Australian Agriculture Minister said the first shipment of Australian barley has been dispatched to China, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

Chinese State media reports PBoC may cut banks' RRR earlier than expected to maintain reasonable ample liquidity, according to reports.
PBoC sold CNY 385bln via 7-day reverse repos with the rate at 1.80% for a CNY 274bln net injection.
South Korea plans government spending of KRW 656.9tln (+2.8% from 2023); and sees debt-to-GDP ratio at 51% in 2024 (vs 50.4% in 2023), according to the Finance Ministry.
Fitch affirms New Zealand at "AA+"; outlook Stable

DATA RECAP

Russia reportedly scrambled two jets due to US drones over Crimea, according to Tass.
China said the meeting between Commerce Secretary Wang and US Commerce Secretary Raimondo was rational, frank and constructive, they discussed issues including tariffs and chips policy, and also concerns over investment limits and sanctions, according to Reuters.
North Korean Leader Kim says the US has turned waters near the Korean Peninsula into the most unstable region with the danger of nuclear war, reported via KCNA. Will deliver new weapons to military units under the policy of expanding tactical nuclear weapons operations.
US President Biden is to meet with Brazilian President Lula on September 19th, according to Reuters.
Veteran US diplomat Mark Lambert likely to be named as Assistant Secretary for China and Taiwan, according to Reuters sources; appointment unlikely to change US' China stance.

DATA RECAP

UK BRC Shop Price Index YY (Aug) 6.9% (Prev. 7.6%); the lowest level since October 2022.