• APAC stocks traded mixed following a firmer lead from Wall Street as eyes turned to earnings from heavyweights Microsoft and Alphabet.
• Microsoft shares rose 3.9% and Alphabet tumbled 5.9% with cloud growth in focus. ES and NQ dipped slightly as Microsoft issued its guidance.
• ASX 200 slipped and AUD/USD was boosted by hotter-than-expected Australian CPI, which led to hawkish revisions to some analysts' RBA calls.
• Israeli occupation forces stormed a town in the West Bank, Israel said two projectiles were launched from Syria, Hezbollah said it struck an Israeli post with guided missiles.
• European equity futures are indicative of a slightly firmer open, with the Euro Stoxx 50 +0.1% after cash markets closed +0.6% yesterday.
• Looking ahead, highlights include German Ifo, US New Home Sales, BoC Policy Announcement, ECB's Lagarde, BoC's Macklem & Rogers, and Supply from the UK, Italy, Germany & US.
• Earnings: ADP, Heineken, Santander, Ubisoft, Reckitt Benckiser; Meta, Thermo Fisher, T-Mobile, IBM, ADP, Boeing.

US TRADE

EQUITIES

• US stocks edged higher throughout the morning despite disappointing EZ PMIs with highs seen shortly after the US open. However, the corresponding move higher in yields eventually saw stocks pare from highs in the afternoon, accompanied by some notable downside in oil prices with the dollar wiping out Monday's losses.
• SPX -1.35% at 4,376, NDX -2.19% at 14,816, DJIA -1.08% at 34,099, RUT -1.27% at 1,846.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Alphabet Inc (GOOGL) - Q3 2023 (USD): EPS 1.55 (exp. 1.45), Revenue 76.69bln (exp. 75.9bln), Revenue ex-TAC 64.05bln (exp. 63.04bln). Operating income 21.34bln (exp. 21.44bln). Google Services operating income 23.94bln (exp. 22.89bln). Google Cloud operating income 266mln (exp. 433.6mln). Operating margin 28% (exp. 28.1%). Click here for the full earnings. GUIDANCE: Q3 cloud growth reflects customer optimization efforts; expects Q4 headwinds in hardware segment. CEO says customers are 'starting to optimize spend' on cloud computing. CFO feels "good about where we're sitting" with cloud computing growth - Shares fell 5.9% after-market.
• Microsoft Corp (MSFT) - Q1 2024 (USD): EPS 2.99 (exp. 2.65), Revenue 56.5bln (exp. 54.5bln). Cloud Revenue 31.8bln (exp. 31.19bln). Productivity Revenue 18.59bln (exp. 18.29bln). Returned USD 9.1bln to holder. Dynamics products and cloud services revenue increased 22%. Click here for the full earnings. GUIDANCE: Q2 Productivity and Business 188.8-19.1bln (exp. 18.83bln). Intelligent Cloud 25.1-25.4bln (exp. 24.94bln). More Personal Computing 16.5-16.9bln (exp. 14.52bln). Bookings growth guided about flat Y/Y. Operating Expenses 15.5-15.6bln (exp. 15.06bln). COGS 19.4-19.6bln (exp. 19.09bln) - Shares rose 3.9% after-market.
• Mike Johnson has won the latest GOP nomination for House Speaker, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks traded mixed following a firmer lead from Wall Street as eyes turned to earnings from heavyweights Microsoft and Alphabet. Shares of the former rose 3.9% and the latter tumbled 5.9% with cloud growth in focus.
• ASX 200 slipped into the red after Aussie CPI topped expectations across the board, which led to hawkish revisions to some analysts' RBA calls. Real Estate led sectoral losses, but the index was cushioned by outperformance in its Mining sector.
• Nikkei 225 was supported by recent JPY weakening as export-related sectors outperformed with some potential tailwinds after Bloomberg sources yesterday suggested that the BoJ saw little need to change its "will not hesitate to take additional monetary easing measures" forward guidance.
• Hang Seng and Shanghai Comp surged at the open with sentiment in the region boosted by reports that Chinese President Xi made an unprecedented visit to the PBoC in a "sign of focus on the economy." Hong Kong markets outperformed as large-caps posted gains between 4-6%, and tech also felt some tailwinds from Microsoft's earnings and guidance.
• US equity futures were subdued overnight following a choppy close as Alphabet's losses offset Microsoft's gains, while the ES and NQ saw modest downticks after Microsoft guided Bookings Growth to be around flat Y/Y irrespective of beats across other guidance metrics.
• European equity futures are indicative of a slightly firmer open, with the Euro Stoxx 50 +0.1% after cash markets closed +0.6% yesterday.

FX

• DXY traded within a tight 106.18-27 range amid light newsflow, after the index reached a high of 106.35 yesterday and 106.32 on Monday.
• USD/JPY and GBP/USD were uneventful within narrow parameters, while EUR/USD found some overnight resistance at 1.0600 but eventually rose above the level, with traders now looking ahead to the German Ifo Survey following the previous day's bleak PMIs.
• Antipodeans outperformed with the Aussie bolstered after CPI printed above expectations across the board. This prompted ANZ Bank economists to change their call on RBA rates, now anticipating a 25 basis points hike to 4.35% in November.
• AUD/USD met resistance at 0.6400 and NZD/USD was lifted in tandem with the Aussie, although gains were capped as the AUD/NZD cross rose above 1.0900.

FIXED INCOME

• 10-year UST futures were flat following choppy trade on Tuesday. Hot US survey data offset weak European figures, alongside slightly softer 2-year auction demand.
• Bund futures met overnight resistance 5 ticks below 129.00, after notching a 128.22-129.12 range the day before. Focus turned to the German Ifo Survey ahead of the upcoming ECB confab.
• 10-year JGB futures were subdued despite a firmer bias across Western peers as participants ponder the possibility of a BoJ YCC tweak at the upcoming meeting amid the rise in US yields.

COMMODITIES

• Crude futures consolidated once again during APAC hours after taking another tumble on Tuesday. Desks pointed to soft PMIs in Europe, a Dollar bounce, and a more optimistic or less pessimistic view regarding the Middle East. A surprise draw in private inventories led to modest upside volatility in prices at that time.
• Spot gold was slightly firmer, having found support at USD 1,970/oz, although prices remained within the previous day's parameters.
• Copper futures saw modest gains, and the broader mood across industrial metals was supported by hopes for Chinese demand amid recent reports that China planned to issue CNY 1 trillion in bonds to support the economy. Dalian iron ore January futures rose about 4% in early trade.
• US Energy Inventory Data (bbls): Crude -2.7mln (exp. +0.2mln), Gasoline -4.2mln (exp. -0.9mln), Distillate -2.3mln (exp. -1.2mln), Cushing +0.5mln0
• Iraq PM Sudani said foreign oil companies operating in the Kurdish region informed us that if an agreement is reached on oil production costs and contracts, they will resume oil production within a month, according to Reuters.
• China state planner said China is to cap crude oil processing capacity at 1bln metric tons by 2025. Refineries of 10mln metric ton capacity to account for 55% of capacity. Promote upgrading and optimisation of refineries, and accelerate the elimination of small and outdated plants, according to Reuters.

CRYPTO

• Bitcoin traded on either side of USD 34k in choppy trade with earlier upside coinciding with reports that Blackrock spot BTC ETF ticker appeared again on the DTCC directory.
• DTCC said BlackRock iShares Bitcoin Trust ETF added to the eligibility file in August 2023; appearing on the list is not indicative of the outcome for any outstanding regulatory or other approval, according to Reuters.

NOTABLE ASIA-PAC HEADLINES

• Hong Kong is to cut the home purchase tax by half to 7.5%, according to local press Sing Tao.
• Hong Kong Leader Lee said Hong Kong is to adjust property cooling measures to revive the city's real estate market; to scrap stamp duty for selling second homes after two years; to reduce buyer's stamp duty to 7.5% from 15%. Hong Kong Leader Lee said Hong Kong is to reduce stamp duty of stock transaction to 0.1% from 0.13%
• Chinese Vice Finance Minister said the usage of new sovereign bonds can drive up domestic demand actively and further consolidate economic recovery. Government debt level still within reasonable range despite a modest rise in budget deficit ratio this year. China will watch the macro economy and bond market closely to ensure smooth bond issuance and avoid leaving the funds idle.
• PBoC set USD/CNY mid-point at 7.1785 vs exp. 7.3213 (prev. 7.1786)
• PBoC injected CNY 500bln via 7-day reverse repos with the rate at 1.80% for a CNY 395bln net daily injection.
• ANZ Bank economists have changed their call on RBA rates and now see a 25bps hike to 4.35% in November, according to Reuters.
• Australian Treasurer Chalmers said while inflation in Australia is moderating overall, it is proving to be more persistent, according to Reuters.

DATA RECAP

• Weighted Australian CPI YY 5.6% vs Exp. 5.4% (Prev. 5.2%)
• Australian CPI YY (Q3) 5.4% vs. Exp. 5.3% (Prev. 6.0%)
• Australian CPI QQ (Q3) 1.2% vs. Exp. 1.1% (Prev. 0.8%)
• Australian RBA Weighted Median CPI YY (Q3) 5.2% vs. Exp. 5.0%
• Australian RBA Trimmed Mean CPI YY (Q3) 5.2% vs. Exp. 5.0%
• Australian RBA Weighted Median CPI QQ (Q3) 1.3% vs. Exp. 1.0%
• Australian RBA Trimmed Mean CPI QQ (Q3) 1.2% vs. Exp. 1.1%

GEOPOLITICS

ISRAEL-HAMAS

• Israeli occupation forces stormed the Burqin town, south of Jenin in the West Bank, according to Al Jazeera. Two explosions are heard on the outskirts of Jenin refugee camp in the West Bank, according to Al Jazeera. Israeli army storms the eastern area of Nablus city in the West Bank, according to Sky News Arabia citing Palestinian media
• Israel said two projectiles were launched from Syria, and Israel is responding with artillery fire, according to the IDF. Israeli military said its fighter jets struck Syrian army infrastructure and mortar launchers in response to launches towards Israel on Tuesday.
• Hezbollah said it struck Israeli post with guided missiles, according to Reuters.
• Qatar mediators are urging Hamas to quicken the pace of hostage releases to include women and children held in Gaza and to do so without expecting Israeli concessions, according to Reuters citing diplomats and sources in the region.
• The Arab draft resolution calls for an immediate ceasefire in Gaza and the cancellation of the order issued by Israel to civilians to evacuate the northern Gaza Strip and move towards the south, according to Sky News Arabia.
• Kuwait's representative to the Security Council said a Palestinian state must be established on the 1967 borders, according to Sky News Arabia.
• Lebanon's representative to the Security Council said a Palestinian state must be established on the 1967 borders with East Jerusalem as its capital, according to Sky News Arabia.
• S&P affirmed Israel at "AA-"; downgraded outlook to negative on geopolitical risks.

OTHER

• US is reportedly using Israel’s delay in launching a ground offensive in Gaza to send defensive systems into the region amid growing fears that Iran and its proxies will escalate attacks once the ground offensive begins, according to officials cited by the FT.
• Rocket attack targeted Iraq's Ain Al-Asad airbase, which hosts US and other international forces, West of Baghdad, according to Reuters sources.
• Two dozen American military personnel were wounded last week in drone attacks at US bases in Iraq and Syria, according to NBC News.
• White House Defense Spokesman Kirby said National Security Adviser Sullivan will have meetings later this week with China's Wang Yi, according to Reuters.
• Chinese President Xi said China is willing to manage differences with the US and work together to respond to global challenges, via state media, according to Reuters.