• APAC stocks were mixed and indecisively capped off this month’s notable gains as the Israel-Hamas truce hung in the balance before the announcement of a last-minute one-day extension.
• The overnight session saw a slew of key data releases including disappointing Chinese official PMI figures which showed a steeper contraction in China’s factory activity.
• OPEC+ reportedly mulls new oil production cuts amid the Middle East conflict with Saudi Arabia favouring a curb of up to 1mln BPD, while other members oppose downgrading quotas.
• German Finance Minister Lindner said Germany faces a EUR 17bln gap in the 2024 budget.
• Looking ahead, highlights include German Trade, Retail Sales, French GDP (Final), CPI, Produce Prices, German Unemployment, EZ CPI, Italian CPI, US Personal Consumption, PCE Price Index, IJC, Dallas Fed PCE, Canadian GDP, Average Weekly Earnings, Australian PMI (Final), Japanese Unemployment Rate, BoE’s Monthly Decision Panel, OPEC+ Meeting, Speeches from Fed’s Williams, BoE’s Greene & ECB’s Lagarde.

US TRADE

EQUITIES

• US stocks finished mixed with the major indices flat after an early tailwind from cooler-than-expected inflation data from Germany and Spain was offset by hawkish comments from Fed's Barkin, while the revision higher in Q3 US GDP had little effect on price action.
• SPX -0.09% at 4,550, NDX -0.14% at 15,987, DJIA +0.04% at 35,430, RUT +0.61% at 1,803.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Mester (2024 voter) repeated that monetary policy is in a good place and the Fed has time to vet incoming data, while she added it will take time to get inflation to 2% but the Fed will do it.
• Fed's Beige Book stated that price increases largely moderated across Districts, though prices remained elevated. Furthermore, it stated that on balance, economic activity slowed since the previous report with four Districts reporting modest growth, two indicating conditions were flat to slightly down and six noting slight declines in activity.

APAC TRADE

EQUITIES

• APAC stocks were mixed and indecisively capped off this month’s notable gains as the Israel-Hamas truce hung in the balance before the announcement of a last-minute one-day extension, while participants also digested a slew of key data releases including disappointing Chinese official PMI figures.
• ASX 200 was choppy after mixed data in which Building Approvals topped forecast and Private Capital Expenditure missed estimates.
• Nikkei 225 swung between gains and losses amid recent currency strength and with better-than-expected Industrial Production offset by softer Retail Sales.
• KOSPI was just about kept afloat following the unsurprising decision by the BoK to keep rates unchanged and noted that it will maintain a restrictive policy stance for a sufficiently long period of time.
• Hang Seng and Shanghai Comp were indecisive with only brief pressure seen after the PMI data showed a steeper contraction in China’s factory activity which raises the prospects for further supportive measures.
• US equity futures were marginally firmer with Dow futures lifted after Salesforce surged post-earnings.
• European equity futures are indicative of a higher open with Euro Stoxx 50 future +0.3% after the cash market closed up 0.5% yesterday.

FX

• DXY traded rangebound beneath the 103.00 level but held on to the prior day’s mild gains which were facilitated by the upward revision to US GDP and hawkish comments from Fed’s Barkin, while the attention for the dollar now turns to incoming Core PCE data which is the Fed’s preferred measure of inflation.
• EUR/USD was flat with the single currency contained after the recent failure to sustain the 1.1000 status.
• GBP/USD remained steady with price action stuck around the 1.2700 focal point amid a lack of pertinent drivers.
• USD/JPY loitered near support at 147.00 after mixed data from Japan and recent declines in US yields.
• Antipodeans strengthened as CNH gradually shrugged off the initial pressure from weak Chinese data.
• PBoC set USD/CNY mid-point at 7.1018 vs exp. 7.1273 (prev. 7.1031).
• Banxico Governor Rodriguez said they do not see a rate cut in the December decision but it is possible they could begin a discussion of rate cuts in meetings early next year.

FIXED INCOME

• 10-year UST futures took a breather around the 110.00 level after the prior day’s continued advances with the bond market unfazed by recent upward GDP revisions and hawkish remarks from Fed’s Barkin.
• Bund futures retained a firm footing above 132.00 after the recent softer German CPI which preceded incoming EU inflation data.
• 10-year JGB futures faded initial gains after hitting resistance at 147.00 with prices also not helped by a weaker 2yr auction.

COMMODITIES

• Crude futures remained in a holding pattern amid OPEC+ uncertainty ahead of today's virtual meeting and with a recent source report highlighting that Saudi wants deeper output cuts and that other members oppose downgrading their quotas with UAE also reluctant to cut output, while a rollover of most existing output curbs is said to be the most likely scenario.
• OPEC+ reportedly mulls new oil production cuts amid the Middle East conflict with Saudi Arabia favouring a curb of up to 1mln BPD, while other members oppose downgrading quotas with Nigeria and Angola resisting a downgrade of their individual quotas and the UAE is also reluctant to cut output. Furthermore, it was stated that a rollover of most existing output curbs is the most likely scenario but talks are continuing, according to WSJ citing delegates.
• Kazakhstan Energy Ministry said oil output was down 34% at Karachaganak oilfield on November 29th due to the Black Sea storm.
• Oil loadings from Novorossiysk and CPC terminals remained shut on Wednesday amid a storm with the November plan for Novorossiysk delayed by over 1mln tons, according to Reuters sources.
• Spot gold traded sideways as recent buying momentum lost steam after hitting resistance near USD 2050/oz.
• Copper futures eked mild gains but with the upside limited by the mixed risk tone and weak Chinese PMIs.
• First Quantum (FM CA) announced the suspension of 7,000 contract employees due to force majeure at its Panama mine.

CRYPTO

• Bitcoin gradually edged higher and eventually reclaimed the USD 38,000 level.

NOTABLE ASIA-PAC HEADLINES

• Taiwan is closely monitoring China's respiratory illnesses outbreak and will adjust epidemic prevention measures when needed.
• BoK kept its base rate unchanged at 3.50%, as expected, with the decision unanimous and four out of the seven board members said the door to a rate hike should remain open. BoK said uncertainties to the growth path are high with the economy facing heightened geopolitical risks and restrictive monetary policies abroad, while it will maintain a restrictive policy stance for a "sufficiently long period" of time (prev. "considerable time") until the board is confident inflation will converge to the target level. Furthermore. Governor Rhee said the current policy rate is sufficiently restrictive and that restrictive monetary policy could stay for longer than six months.

DATA RECAP

• Chinese NBS Manufacturing PMI (Nov) 49.4 vs. Exp. 49.7 (Prev. 49.5)
• Chinese NBS Non-Manufacturing PMI (Nov) 50.2 vs. Exp. 51.1 (Prev. 50.6)
• Chinese Composite PMI (Nov) 50.4 (Prev. 50.7)
• Japanese Industrial Production MM (Oct P) 1.0% vs. Exp. 0.8% (Prev. 0.5%)
• Japanese Retail Sales YY (Oct) 4.2% vs. Exp. 5.9% (Prev. 5.8%, Rev. 6.2%)
• Australian Building Approvals MM (Oct) 7.5% vs. Exp. 2.0% (Prev. -4.6%, Rev. -4.0%)
• Australian Capital Expenditure (Q3) 0.6% vs. Exp. 1.0% (Prev. 2.8%)
• Australian Private Capital Expenditure 2023-2024 (AUD)(Est. 4) 171.2B (Prev. 157.8B)
• New Zealand ANZ Business Confidence (Nov) 30.8 (Prev. 23.4)
• New Zealand ANZ Activity Outlook (Nov) 26.3 (Prev. 23.4)

GEOPOLITICS

• Israeli military said the truce will continue in light of mediators' efforts to release more hostages and Hamas also confirmed that it agreed to extend the truce for a seventh day, according to Reuters.
• Sources in Israel's war council earlier noted that Hamas's list of the new batch of hostages to be released did not meet the agreed criteria and Israel officials warned fighting will resume if Hamas does not present a new list by 07:00 local time (05:00GMT/00:00EST), while Hamas confirmed Israel rejected its proposed hostage release and it told its fighters to be ready for renewed battles if the truce with Israel was not extended, according to Al Jazeera, Al Arabiya and Reuters.
• Israeli prison service announced it released 30 Palestinians in the sixth round of Gaza truce swaps on Wednesday.
• UK Defence Minister Shapps is sending a warship to the Gulf region amid fears of a ramp up in Iranian missile attacks. The warship will protect against drone threats and ensure safe flow of trade, according to the Telegraph.
• China issued a position paper on the Israeli-Palestinian conflict which stated that the UN Security Council should respond to the general call of the international community for a comprehensive ceasefire to be put in place to stop the fighting. Furthermore, China's Foreign Minister Wang Yi said a spillover of the Israeli-Palestinian conflict to the entire Middle East region should be avoided by urging countries that have an impact on the parties to play an active role, while he added that China is to send another batch of emergency humanitarian supplies to Gaza to alleviate the humanitarian situation.
• North Korean leader Kim inspected satellite photos of a US naval base in San Diego and Kadena air base in Japan, while North Korea said it will never sit face-to-face with the US for negotiations, according to KCNA.

EU/UK

NOTABLE HEADLINES

• German Finance Minister Lindner said Germany faces a EUR 17bln gap in the 2024 budget.
• Dutch NSC party said it is not ready to negotiate on joining the Cabinet with far-right leader Wilders, according to ANP.

DATA RECAP

• UK Lloyds Business Barometer (Nov) 42 (Prev. 39)