• APAC stocks eventually traded mostly negatively following a marginally positive handover from Wall Street, which saw an equity bid underpinned by dovish US economic data.
• DXY was caged in a tight range after being dealt another blow by US data yesterday, JPY and AUD narrowly outperformed.
• European equity futures are indicative of a flat open after Euro Stoxx 50 cash closed -0.3% yesterday.
• Chinese PMIs were mixed, manufacturing topped expectations but remained sub-50 while non-manufacturing deteriorated slightly since July.
• The US reportedly restricted the export of some AMD (AMD) and Nvidia (NVDA) chips to the Middle East amid China fears.
• Looking ahead, highlights include German Retail Sales, Unemployment Rate, EZ Flash CPI, Unemployment Rate, US PCE Price Index (Jul), IJC & Challenger Layoffs, speeches from Fed’s Bostic, Collins, ECB’s de Guindos, Schnabel, BoE’s Pill.

US TRADE

EQUITIES

• US stocks were once again supported by cool US economic data after the Q1 GDP 2nd estimate was revised lower and as the ADP missed expectations, with the US focus turning to PCE and NFP data throughout the rest of the week.
• SPX +0.38% at 4,514, NDX +0.56% at 15,462, DJIA +0.11% at 34,890, RUT +0.40% at 1,903.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Apple (AAPL) tests using 3D printers to make devices in a major shift, according to Bloomberg. The new approach will use less material and be more eco-friendly and is trying out the process with steel Apple Watches.
• Fed ramps up demand for corrective actions by regional banks, according to Bloomberg; Fed issued private warnings to Citizens Financial (CFG), Fifth Third Bancorp (FITB) and M&T Bank (MTB).
• Salesforce Inc (CRM) Q2 2023 (USD): Adj. EPS 2.12 (exp. 1.90), Revenue 8.60bln (exp. 8.52bln). Shares rose 5.6% after-hours.
• US officials are reportedly mulling a pathway to let more firms tap the Federal Home Loan Banks, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks eventually traded mostly negatively following a marginally positive handover from Wall Street, which saw an equity bid underpinned by dovish US economic data.
• ASX 200 was flat on either side of 7,300 as the gains in the Telecoms and Financial sectors were offset by losses in Energy and Consumer Staples.
• Nikkei 225 saw mild gains although the machinery sectors were in the red following the dire Japanese industrial output data, with a Japanese government official highlighting a decline in demand both domestically and abroad, with output falling in several areas including production machinery.
• Hang Seng and Shanghai Comp varied at the open but later succumbed to losses, whilst Baidu soared 4.6% after winning Chinese approval for its AI model. The Mainland was more cautious from the start following mixed PMI data which saw Manufacturing topping expectations but remaining in contraction.
• US equity futures traded flat with a modest upward bias as participants brace for more top-tier data.
• European equity futures are indicative of a flat open after Euro Stoxx 50 cash closed -0.3% yesterday.

FX

• DXY was caged in a tight range after being dealt another blow by US data yesterday, which dragged the index to a 102.92 trough. The index found support at 103.00 overnight.
• EUR/USD traded on either side of its 100 DMA (1.0923) after reaching a 1.0945 peak yesterday, with technicians cognizant of the 50 DMA (1.0970) and the 21 DMA (1.0904).
• USD/JPY probed the 146.00 level in early trade and eventually dipped under the psychological figure, with little reaction seen to the overall mixed Japanese data, which consisted of above-forecast Retail Sales and downbeat Industrial Output data.
• Antipodeans held modest positive biases and were largely unreactive to the data from the region.
• PBoC sets USD/CNY mid-point at 7.1811 vs exp. 7.2765 (prev. 7.1816)
• Banxico raised its 2023 GDP growth forecast to 3.0% (prev. 2.3%), 2024 growth forecast raised to 2.1% (prev. 1.6%).
• Brazil's 2024 Budget Law revenue measures will reportedly reach BRL 168bln, according to Estadao sources. The revenue package will consider ending the deductibility of Interest on Equity for all sectors.

FIXED INCOME

• 10yr UST futures saw horizontal trade after ultimately being little changed on Wednesday as the curve bull steepened from lows after more dovish US economic data.
• Bund futures traded sideways above 132.00 after notching a 131.78-132.56 parameter yesterday.
• 10yr JGB futures were uneventful in similar price action seen across western counterparts, with the 10yr JGB yield probing the 65bps mark.

COMMODITIES

• Crude futures were flat after the prior day’s choppiness as traders juggled updates from Hurricane Idalia alongside a larger-than-expected EIA crude stocks draw, albeit shallower than the Private Inventories on Tuesday. Eyes were also on the situation in OPEC-nation Gabon as the African Chamber said in a statement “As tensions mount, concerns are rising that oil and gas activities could be halted."
• Spot gold was flat under USD 1,950/oz as prices as the Dollar remained uneventful.
• Copper futures tilted higher as Chinese manufacturing PMI improved more than expected but remained in contraction territory.

CRYPTO

• Bitcoin was relatively steady above the USD 27k mark.

NOTABLE ASIA-PAC HEADLINES

• Baidu (BIDU/9888 HK) is reportedly among the first firms to win China approval for AI models, according to Bloomberg. Baidu rolled out its Chat GPT-rival AI app to the public, according to a statement cited by AFP
• PBoC said it will continue to step up loans to private firms and will use stocks and bonds to deal with risks of private property developers in a prudent way, according to Reuters. PBoC added it will encourage and guide institutional investors to buy bonds of private firms and will support IPO and refinancing of private firms.
• PBoC injected CNY 209bln via 7-day reverse repos with the rate at 1.80% for a CNY
• The Japanese government cut its assessment of industrial production and noted industrial output is seesawing, according to Reuters.
• Japanese government official on industrial output said demand fell both domestically and abroad in July, and noted that output fell in many areas including production machinery. The official said the decrease in chip manufacturing machinery is due to weak demand abroad, the outlook appears to be severe; chip shortage is easing in autos, which is on a steady recovery, according to Reuters.
• Japanese government official said the electronics device market in China is in a severe state; Domestic material industries are partially affected by China's real estate concerns, according to Reuters.
• BoJ Board Member Nakamura said the BoJ must patiently maintain easy policy for the time being, and need more time to shift to monetary tightening; Japan's economy is no longer in deflation; tweaks to policy must be cautious

DATA RECAP

• Chinese NBS Manufacturing PMI (Aug 2023) 49.7 vs. Exp. 49.4 (Prev. 49.3)
• Chinese NBS Non-Mfg PMI (Aug 2023) 51.0 (Prev. 51.5)
• Chinese Composite PMI (Aug) 51.3 (Prev. 51.1)
• Japanese Retail Sales YY (Jul 2023) 6.8% vs. Exp. 5.4% (Prev. 5.9%)
• Japanese Industrial O/P Prelim MM SA (Jul 2023) -2.0% vs. Exp. -1.4% (Prev. 2.4%)
• Japanese IP Forecast 1 Mth Ahead (Aug 2023) 2.6% (Prev. -0.2%)
• Japanese IP Forecast 2 Mth Ahead (Sep 2023) 2.4% (Prev. 1.1%)
• Japanese Foreign Invest JP Stock (W 26 Aug) w/e -603.8B (Prev. -740.7B)
• Japanese Foreign Bond Investment (W 26 Aug) w/e 425.1B (Prev. -263.2B)
• South Korean Industrial Output YY (Jul 2023) -8.0% vs. Exp. -5.2% (Prev. -5.6%)
• South Korean Industrial Output Growth (Jul 2023) -2.0% vs. Exp. -0.4% (Prev. -1.0%)
• South Korean Service Sector Output Gr (Jul 2023) 0.4% (Prev. 0.5%)
• New Zealand ANZ Business Outlook (Aug 2023) -3.7% (Prev. -13.1%)
• New Zealand ANZ Own Activity (Aug 2023) 11.2% (Prev. 0.8%)
• Australian Capital Expenditure (Q2 2023) 2.8% vs. Exp. 1.2% (Prev. 2.4%)
• Australian Plant/Machinery Capex (Q2 2023) 1.9% (Prev. 3.7%)
• Australian Building Capex (Q2 2023) 3.5% (Prev. 1.3%)
• Australian Private Sector Credit (Jul 2023) 0.3% (Prev. 0.2%)
• Australian Housing Credit (Jul 2023) 0.3% (Prev. 0.2%)

GEOPOLITICS

• Rockets reportedly landed near the Khor Mor gas field in Iraq's Kurdistan, but no damage has been reported, according to Reuters citing security sources.
• US approves first arms to Taiwan under foreign aid program, according to AFP citing an official.
• US reportedly restricts the export of some AMD (AMD) chips to Middle Eastern countries, according to Reuters sources.
• US President Biden reportedly blocked sales of Nvidia (NVDA) AI chips to the Middle East over China fears, according to the Telegraph. NVDA has reportedly "been ordered to seek permission when exporting chips to certain countries in the region, in an escalation of the White House’s national security curbs on advanced semiconductors."
• North Korea conducted full-force command training in response to the SK-US joint exercise, according to Yonhap.
• Japanese PM Kishida has requested top LDP lawmaker Nikai to visit China to resolve the Fukushima water issue, according to local press.
• Australia and EU to resume free-trade deal talks on Thursday via teleconference, a month after the sides failed to reach a deal, according to Reuters.

EU/UK

NOTABLE HEADLINES

• Eurogroup Statement said Italy's Deputy Governor of the Bank of Italy, Piero Cipollone, was the only candidate put forward to succeed ECB exec board member Fabio Panetta, according to Reuters. Panetta will resign on November 1st. Ministers will discuss Cipollone's candidacy on September 15th. A formal appointment will be made by EU leaders, most likely at their next summit in October
• Italy reportedly considering the sale of key state-owned stakes to bolster its finances, according to Bloomberg.
• UK PM Sunak is expected to announce a new Defence Secretary to replace Ben Wallace on Thursday, according to government officials cited by the FT. Grant Shapps is a surprise frontrunner for the role, according to insiders.