• APAC stocks traded with a mostly negative bias; Evergrande cancelled its creditor meeting and is scrapping its USD 35bln debt restructuring plan.
• European equity futures are indicative of a softer open with Euro Stoxx 50 futures -0.2% after the cash market closed down 0.1% on Friday.
• DXY is contained above 105.50, EUR/USD lingers below 1.0650, USD/JPY maintained 148 status, and antipodeans narrowly lagged.
• House Republicans are said to consider a stopgap measure that would range from 14 to 60 days.
• Looking ahead, highlights include German Ifo (Sep) & US National Activity Index (Aug).

US TRADE

EQUITIES

• US stocks finished with marginal losses on Friday on what was a choppy session following mixed PMI data in which Manufacturing PMI topped forecasts but remained in contraction territory and Services PMI disappointed, while there were several central bank speakers including Fed's Bowman who implied she was the top dot at the Fed saying more rate hikes are likely needed.
• SPX -0.23% at 4,320, NDX +0.05% at 14,701, DJIA -0.31% at 33,963, RUT -0.30% at 1,776.
• Click here for a detailed summary.

NOTABLE US HEADLINES

• Fed's Daly (non-voter) said on Friday that they stood pat on rates in recognition that they are closer to their destination and are holding rates steady to collect information to see if more is necessary, while she added that they need to go at a slower pace.
• US lawmakers warned that a government shutdown was increasingly certain as hopes of a last-ditch compromise dwindle, according to FT.
• US GOP Rep. Graves said Republicans are considering a stopgap government funding measure that would range from 14 to 60 days and warned that letting funding lapse would be a mistake. Furthermore, Graves said House Republicans are moving forward on four appropriations bills in the week ahead but with 7 days left until government funding runs out, lawmakers will need to pass a short-term measure to avoid a shutdown.
• UAW expanded its strikes against General Motors (GM) and Stellantis (STLA) but kept its industrial action against Ford (F) to one plant due to progress being made in talks, according to Reuters.
• Hollywood studios and writers reached a tentative deal to end a strike, according to CNBC.
• Apple (AAPL) is reportedly planning to scale up production in India by over five-fold to USD 40bln during the next 4-5 years.

APAC TRADE

EQUITIES

• APAC stocks traded mixed albeit with a mostly negative bias following the lack of major catalysts from over the weekend and amid Chinese developer woes, while attention this week turns to data releases and the US government shutdown deadline.
• ASX 200 was marginally lower with losses in mining stocks and financials overshadowing the resilience in the consumer and tech sectors.
• Nikkei 225 outperformed amid stimulus hopes with the government considering 5yr-10yr tax benefits for firms producing semiconductors and storage batteries, as well as providing support in areas where firms face high entry risk and will reportedly boost take-home pay for part-time workers.
• Hang Seng and Shanghai Comp were pressured amid developer-related concerns with Evergrande shares down more than 20% after it cancelled its creditor meeting and is scrapping its USD 35bln debt restructuring plan, while the Co. said it is unable to issue new debt under the present circumstances citing an investigation into its subsidiary Hengda Real Estate. Furthermore, China Aouyuan shares dropped by over 70% on the resumption of trade following a 17-month hiatus.
• US equity futures were mildly higher in some slight reprieve from Friday's late selling.
• European equity futures are indicative of a softer open with Euro Stoxx 50 futures -0.2% after the cash market closed down 0.1% on Friday.

FX

• DXY traded flat as the US moved closer towards the deadline to avert a government shutdown and with House Republicans said to consider a stopgap measure that would range from 14 to 60 days.
• EUR/USD was rangebound near 1.0650 with comments from ECB’s Villeroy providing little to shift the dial as he noted the recent increase in oil prices won’t derail the ECB’s fight to tame inflation and that patience is more important than raising rates further.
• GBP/USD languished near its 6-month lows after last week’s declines and with PM Sunak facing backlash after the government refused to rule out scrapping the northern leg of the HS2 rail project.
• USD/JPY traded sideways and held on to the 148.00 handle amid a quiet calendar.
• Antipodeans marginally weakened amid the mostly glum mood and Chinese developer woes.
• PBoC set USD/CNY mid-point at 7.1727 vs exp. 7.2983 (prev. 7.1729)
• Iraq’s Central Bank Governor said Iraq will restrict all internal commercial and other transactions to Iraqi Dinars instead of US Dollars in the coming year, according to state media.

FIXED INCOME

• 10yr UST futures marginally eased back after Friday’s partial recovery which was helped by the mixed PMI data releases stateside, while there were several Fed comments late last week including from Daly who said that they stood pat on rates in recognition that they are closer to the destination.
• Bund futures were uneventful ahead of German IFO data scheduled today and with the latest German CPI inflation data scheduled later in the week
• 10yr JGB futures were kept afloat and eventually edged higher on return from the Tokyo break.

COMMODITIES

• Crude futures were choppy owing to the lack of drivers and mostly negative bias in Asia.
• Saudi Foreign Minister said the kingdom is keen to maintain stability, reliability, sustainability and security of oil markets, according to Reuters.
• EU energy official said Europe will have to rely on US fossil fuels for decades, according to FT.
• Spot gold was rangebound with prices contained alongside an uneventful greenback.
• Copper futures traded flat and languished near Friday's lows amid the subdued risk tone.

CRYPTO

• Bitcoin traded marginally lower following a lacklustre performance during the weekend.
• Mixin Network suspended services after a hack involving USD 200mln in funds, according to The Block.

NOTABLE ASIA-PAC HEADLINES

• PBoC adviser said China has limited room for further monetary policy easing and should pursue structural reforms such as encouraging entrepreneurs instead of relying on macroeconomic policies to revive growth, according to Reuters.
• Chinese state asset manager, China Reform Holdings is to set up a strategic emerging industry fund worth at least CNY 100bln, according to Bloomberg.
• Evergrande (3333 HK) cancelled its creditor meeting set for early this week and is scrapping its USD 35bln debt restructuring plan, while it noted that it is necessary to re-assess the terms of the proposed restructuring. Co. also stated that it is unable to issue new debt under the present circumstances citing an investigation into its subsidiary Hengda Real Estate.
• Chinese President Xi said in a meeting with South Korea’s PM that he welcomes a summit between China, South Korea and Japan at an opportune time and will seriously consider visiting South Korea, according to Reuters.
• US Department of Defense said the US and China will hold a working-level meeting on cyber issues and strategy, according to Reuters.
• EU’s Dombrovskis said the EU has no intention to decouple from China but needs to protect itself when its openness is abused. Dombrovskis also said that cooperation with Europe and China remains essential and if they talk candidly, they can make paths converge and re-energise engagement. Furthermore, he said that de-risking is a strategy to maintain openness not undermine it and that the strongest headwind is Russia's aggression against Ukraine and how China positions itself on the issue.
• Japan’s government is considering 5yr-10yr tax benefits for firms producing semiconductors and storage batteries as part of an upcoming economic stimulus package, while the government is considering providing support in areas where private-sector firms face high entry risks.
• Japan is to boost take-home pay for part-time workers, according to Yomiuri.

GEOPOLITICS

• Ukrainian President Zelensky said he met with Mike Bloomberg and other top US financiers during his US visit to discuss reconstruction and investment, according to Reuters.
• Russian Foreign Minister Lavrov said the Ukraine peace formula is not feasible, while he stated regarding the latest proposals by the UN Secretary-General to revive the Black Grain deal that they do not reject them but noted the proposals are simply not realistic, according to Reuters.
• Iranian President Raisi told CNN that Iran has not said it does not want IAEA nuclear inspectors in the country, while he added that Israeli normalisation with Gulf Arab states will see no success.
• Iran’s intelligence ministry said 30 simultaneous explosives were neutralised in Tehran and 28 terrorists were arrested.
• French President Macron announced that France is to end its military cooperation with Niger in the months ahead following the military coup and decided to recall its ambassador from the African country, according to Reuters.
• US President Biden’s administration is reportedly in talks for a major arms transfer to Vietnam that may include fighter jets.
• Philippines strongly condemned the Chinese Coast Guard’s installation of a 300-metre floating barrier preventing Filipino boats from entering the Scarborough Shoal in the South China Sea.

EU/UK

NOTABLE HEADLINES

• UK PM Sunak is facing a renewed backlash from within the Tory party and opposition Labour politicians, as well as business executives and university leaders after the government refused to rule out scrapping the northern leg of the HS2 rail project, according to FT.
• BoE is reportedly set to delay the implementation of some Basel III reforms for a further 6 months but will disappoint banks by reducing the phase-in period, according to FT.
• ECB’s Villeroy said the recent increase in oil prices won’t derail the ECB’s fight to tame inflation and stated that patience is more important than raising rates further, according to Bloomberg citing an interview with France Inter.
• Bundesbank faces hundreds of job reductions under a modernisation plan by Boston Consulting Group which was hired in an effort to make the central bank more agile and efficient, according to FT.
• Italy revisited the windfall tax on banks to give lenders the option to boost reserves instead of paying a levy, according to Reuters.
• Germany is to scrap stricter building insulation standards to help prop up the struggling property sector and Chancellor Scholz is to meet property industry leaders today.