Newsquawk

Europe Market Open: Chinese trade data better than feared though APAC stocks were still pressured

07 Sep 2023, 06:25 by Newsquawk Desk

APAC stocks were pressured as the region took its cue from the losses stateside, while participants also digested the latest Chinese trade data.
Chinese trade data showed a continued contraction in the nation’s exports and imports but was not as bad as feared.
European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.3% after the cash market closed down 0.7% yesterday.
DXY held on to yesterday's data-driven gains, EUR/USD and USD/JPY remain on 1.07 and 147 handles respectively.
Looking ahead, highlights include German Industrial Production, UK House Prices, EZ Employment Final, US IJC, G20 Finance & Energy Meeting, BoE's Monthly Decision Maker Panel, ECB’s Elderson, Fed’s Goolsbee, Bowman, Logan, Harker, Williams & Bostic, Supply from Spain, France & US.

US stocks declined and yields rose in a hawkish reaction to the hot ISM Services data in which the headline topped the upper forecast boundary range and all key subcomponents of the report climbed from the previous readings.
SPX -0.69% at 4,465, NDX -0.88% at 15,371, DJIA -0.57% at 34,444, RUT -0.33% at 1,874.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed's Beige Book stated that contacts from most districts indicated economic growth was modest during July and August, while most districts reported price growth slowed overall and decelerated faster in manufacturing and consumer-goods sectors.
US Senate voted to confirm Philip Jefferson as Fed Vice Chair and voted to confirm Lisa Cook as Fed Governor, while it voted to advance Fed nominee Kugler towards confirmation, according to Reuters.
US Senate leaders said they are working to move ahead with the first package of appropriations bills on the floor as soon as next week.

APAC stocks were pressured as the region took its cue from the losses stateside where stocks and bonds declined in the aftermath of hawkish ISM Services data, while participants also digested the latest Chinese trade data.
ASX 200 was dragged lower by underperformance in the commodity-related sectors and amid the key data from Australia’s largest trade partner.
Nikkei 225 swung between gains and losses with early support from currency weakness and reports that Japan will put together economic measures around October, although the index eventually succumbed to the selling pressure.
Hang Seng and Shanghai Comp conformed to the downbeat mood as the latest Chinese trade data showed a continued contraction in the nation’s exports and imports but was not as bad as feared, while tech stocks were pressured by frictions after the FCC chair asked US government agencies to address the threat posed by Chinese cellular connectivity modules and a lawmaker called for an investigation into SMIC for potentially violating US sanctions by supplying components to Huawei. Furthermore, China reportedly banned government officials from using iPhones at work and was said to be seeking to extend this to state firms and agencies.
US equity futures were marginally lower amid the broad risk-aversion across Asia-Pac bourses.
European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.3% after the cash market closed down 0.7% yesterday.

DXY was uneventful and held on to the prior day’s data-induced gains amid the subdued risk appetite.
EUR/USD remained flat and stuck on a 1.07 handle after yesterday’s indecisive mood and mixed data releases from the bloc.
GBP/USD languished around the 1.2500 level after its recent underperformance amongst G10 peers and comments from BoE Governor Bailey who suggested they could be nearing the end of the hiking cycle.
USD/JPY took a breather with a firm footing at the 147.00 handle after climbing to a fresh 10-month high.
Antipodeans were subdued owing to the glum mood and as participants digested China’s trade data.
PBoC set USD/CNY mid-point at 7.1986 vs exp. 7.3121 (prev. 7.1969)

10yr UST futures traded rangebound with price action stuck near this week’s lows following the hawkish reaction to the US ISM Services data and with several Fed speakers scheduled later today.
Bund futures remained subdued after the prior day’s whipsawing and ahead of EU jobs and GDP revisions for Q2.
10yr JGB futures clawed back opening losses and edged slightly higher despite the softer 30yr auction.

Crude futures were slightly lower amid the cautious sentiment but with the downside cushioned by bullish private inventory data and after Saudi raised its official selling prices to Asia.
US Energy Private Inventory Data (bbls): Crude -5.5mln (exp. -2.1mln), Gasoline -5.1mln (exp. -1mln), Distillate +0.3mln (exp. +0.2mln), Cushing -1.4mln.
Saudi Arabia is to raise October Arab Light OSP to Asia to a premium of USD 3.60 vs Oman/Dubai, while OSPs to Europe and the US were set at a premium of USD 5.70/bbl and USD 7.45/bbl, respectively.
Russian President Putin and Saudi Crown Prince MBS agreed to continue efforts to secure the stability of energy markets, according to Saudi state news.
US Interior Department on Wednesday will announce the cancellation of oil and gas leases in a federal wildlife refuge that were bought by Alaska’s state agency in 2021, according to Reuters sources.
Texas declared a grid emergency as the heat stoked demand for power, while it warned that rolling blackouts may be needed amid grid emergency, according to Reuters.
Spot gold was contained within tight parameters alongside a rangebound dollar.
Copper futures were lacklustre due to the subdued mood and continued contraction in China's trade data.

NOTABLE ASIA-PAC HEADLINES

China seeks to broaden the Apple (AAPL) iPhone ban to state firms and agencies, according to Bloomberg.
USTR extended reinstated and COVID-related exclusions from Section 301 tariffs on China.
FCC chair asked US government agencies to address the threat posed by Chinese cellular connectivity modules and to consider adding Chinese firms Quectel and Fibocom to the list of companies posing national security risks.
US House Speaker McCarthy said China has the responsibility to repair relations with the world. It was also reported that the US Ambassador to Japan said Japan has done everything right according to science regarding the Fukushima water release and that is in direct contrast with what China has done during the COVID pandemic.
China's Big 4 banks adjusted rates for some existing first-home mortgages, according to Reuters.

DATA RECAP

Chinese Trade Balance (USD)(Aug) 68.36B vs. Exp. 73.9B (Prev. 80.6B)
Chinese Exports YY (USD)(Aug) -8.8% vs. Exp. -9.2% (Prev. -14.5%)
Chinese Imports YY (USD)(Aug) -7.3% vs. Exp. -9.0% (Prev. -12.4%)
Chinese Trade Balance (CNY)(Aug) 488.0B (Prev. 575.7B)
Chinese Exports YY (CNY)(Aug) -3.2% (Prev. -9.2%)
Chinese Imports YY (CNY)(Aug) -1.6% (Prev. -6.9%)
Australian Trade Balance (AUD)(Jul) 8.0B vs. Exp. 10.0B (Prev. 11.3B)
Australian Exports MM (Jul) -2.0% (Prev. -2.0%)
Australian Imports MM (Jul) 3.0% (Prev. -4.0%)

Moscow denounced the US plan to ship arms with depleted uranium to Ukraine, according to the Russian Embassy in Washington cited by Reuters.
Ukrainian drones were downed near Moscow and Rostov, according to the Russian Defence Ministry cited by Reuters.