• APAC stocks declined following the weak lead from Wall St, while markets digested mixed Chinese trade data.
• Chinese trade metrics showed the first expansion in exports since April although imports surprisingly contracted.
• European equity futures are indicative of a weaker open with Euro Stoxx 50 future -0.5% after the cash market closed up 0.7% yesterday.
• DXY holds a footing above 104, JPY leads following upside in Japanese yields, antipodeans narrowly lag.
• Looking ahead, highlights include UK Halifax House Prices, French Trade, Italian Retail Sales, EZ Employment (Final), GDP (Revised), US IJC, US Wholesale Sales, NZ Manufacturing Sales, Japanese Cash Earnings & GDP (Revised), Speech from ECB’s Elderson, Supply from Spain, France & US.

US TRADE

EQUITIES

• US stocks declined with risk appetite soured as participants digested more soft data releases including a disappointing ADP jobs report and a steeper decline in revised Unit Labour Costs, while traders were reticent in pushing Fed rate cut pricing any further for the time being ahead of NFP report on Friday and the FOMC meeting next Wednesday.
• SPX -0.39% at 4,549, NDX -0.56% at 15,788, DJI -0.19% at 36,054, RUT -0.21% at 1,852.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden announced the administration approved USD 4.8bln in student debt cancellation for 80,300 people.
• US Treasury Secretary Yellen said the Fed wants to create financial conditions consistent with bringing down inflation and the state of markets feeds into that, while she added it is unclear what role increased treasury supply had in the recent rise of longer-term rates.
• US Senate bill to aid Ukraine and Israel failed to get enough votes to advance with the vote tally at 51-49 which was short of the 60 needed as Republicans pressed demands for measures to control immigration at the border with Mexico.

APAC TRADE

EQUITIES

• APAC stocks declined following the weak lead from Wall St where risk sentiment soured after more soft labour data, while markets digested mixed Chinese trade data which showed the first expansion in exports since April although imports surprisingly contracted.
• ASX 200 was subdued amid notable underperformance in energy following the recent drop in oil prices to multi-month lows and with mixed trade data from both Australia and its largest trading partner.
• Nikkei 225 was the worst hit and slipped back beneath the 33,000 level amid headwinds from a firmer currency and higher yields.
• Hang Seng and Shanghai Comp were varied with the mainland choppy amid mixed Chinese trade data in which exports expanded but the surprise contraction in imports suggested weaker domestic demand, while the Hong Kong benchmark suffered after Moody’s revised its credit outlook for the special administrative region to negative.
• US equity futures were lacklustre as participants await more US jobs data and amid the risk-off mood in Asia.
• European equity futures are indicative of a weaker open with Euro Stoxx 50 future -0.5% after the cash market closed up 0.7% yesterday.

FX

• DXY was uneventful and held on to the 104.00 status after benefitting yesterday alongside the soured risk appetite and with participants looking ahead to jobless claims due later and tomorrow’s NFP following recent disappointing ADP and JOLTS numbers.
• EUR/USD languished near the prior day’s worst levels after recent ECB comments and slump from resistance at 1.0800.
• GBP/USD was stuck around a two-week trough near 1.2550.
• USD/JPY retreated beneath 147.00 amid higher Japanese yields and the downbeat risk sentiment, while the pair was also pressured despite the reaffirmations by BoJ Governor Ueda that they will patiently continue monetary easing under YCC.
• Antipodeans extended on recent declines amid the risk-off mood and after mixed Chinese trade data.
• PBoC set USD/CNY mid-point at 7.1176 vs exp. 7.1623 (prev. 7.1140).

FIXED INCOME

• 10-year UST futures pulled back after briefly climbing above the 111.00 level in the prior session as treasuries twisted and flattened following the soft ADP and Labour Costs data, while Fed cut pricing hit a near-term limit ahead of the NFP data and next week's FOMC.
• Bund futures reversed some of their gains after hitting resistance at fresh contract highs within a hair’s breadth of the 135.50 level which was facilitated by soft EU data and some ECB suggestions that the hiking cycle could be over.
• 10-year JGB futures were pressured shortly after the open and fell through the 147.00 level amid gains in Japanese yields in which the 10yr yield climbed by more than 10bps for its largest increase in a year, while the selling was also triggered after the 30yr auction from Japan which resulted in weaker demand and the longest price tail on record. More recently, Reuters reported that the BoJ is not to conduct unscheduled bond-buying operations.

COMMODITIES

• Crude futures slightly nursed some of their recent losses after Brent and WTI crude slipped to multi-month lows beneath the USD 75/bbl and USD 70/bbl, respectively, although the rebound was limited with prices not helped by mixed inventories and global growth woes.
• Russia's Kremlin spokesman said President Putin and Saudi Arabia's Crown Prince discussed OPEC+ cooperation which will continue, according to TASS.
• Kuwait supports the OPEC+ agreement and is committed to voluntary cuts, according to the state news agency.
• Algeria does not rule out extending voluntary oil cuts beyond Q1 or taking additional measures, according to the energy minister.
• Venezuela's PDVSA authorised loading for the first two crude cargoes bound for India following sanctions relief, which were sold by Eni (ENI IM) and Chevron (CVX) to Indian refiners.
• Spot gold traded sideways amid a rangebound dollar and as participants awaited further jobs data including tomorrow's NFP report.
• Copper futures rebounded off the prior day's lows with support around the USD 7.30/lb level but with further advances capped by the widespread downbeat mood in Asia and following the mixed trade data from its largest purchaser China.
• First Quantum (FM CA) Panama workers agreed to a severance package with the copper mine remaining halted with 10-20% of staff working, according to the union.

CRYPTO

• Bitcoin was marginally higher and gradually climbed back above the USD 44,000 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese President Xi met with European Council President Michel and European Commission President von der Leyen and said that both sides should maintain development momentum between China and the EU. Xi added that China and the EU have the responsibility to work together to provide more stability for the world and should be partners in mutually beneficial cooperation, as well as continuously enhance political mutual trust.
• BoJ Governor Ueda said Japan's economy is to continue recovering moderately, supported mainly by accommodative financial conditions and effects of economic stimulus measures but noted that uncertainty over Japan's economy is extremely high. Ueda reiterated they will patiently continue monetary easing under YCC to support economic activity and the cycle of wage growth, while they have not yet reached a situation in which they can achieve the price target sustainably and stably with sufficient certainty. Furthermore, Ueda said they have not made a decision on which interest rate to target and don't have any specific idea in mind on how much they will raise rates once they end NIRP.
• ASEAN Plus Three deputy financial chiefs agreed on a system framework for a new regional emergency lending facility, according to a joint statement cited by Reuters.

DATA RECAP

• Chinese Trade Balance (USD)(Nov) 68.4B vs. Exp. 58.0B (Prev. 56.5B)
• Chinese Exports YY (USD)(Nov) 0.5% vs. Exp. -1.1% (Prev. -6.4%)
• Chinese Imports YY (USD)(Nov) -0.6% vs. Exp. 3.3% (Prev. 3.0%)
• Chinese Trade Balance (CNY)(Nov) 490.8B (Prev. 405.5B)
• Chinese Exports YY (CNY)(Nov) 1.7% (Prev. -3.1%)
• Chinese Imports YY (CNY)(Nov) -0.6% (Prev. 6.4%)
• Australian Trade Balance (AUD)(Oct) 7.1B vs. Exp. 7.5B (Prev. 6.8B)
• Australian Exports MM (Oct) 0.4% (Prev. -1.0%)
• Australian Imports MM (Oct) -1.9% (Prev. 8.0%)

GEOPOLITICS

• G7 leaders' statement noted commitment remains to restrict exports of all items critical to Russia's military and industrial base and they will work to further curtail Russia's use of the international financial system to further its war with Ukraine. Furthermore, G7 leaders are committed to tightening compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices.
• Senior Biden administration officials agreed that striking Houthis is the wrong course of action for now, according to Politico.
• White House's Kirby said they are watching the "worrisome" burgeoning defence relationship between Iran and Russia.
• US Secretary of State Blinken spoke with Guyanese President Ali and reaffirmed US unwavering support for Guyana's sovereignty, while it was separately reported that a Guyanese army helicopter reportedly went missing near the border with Venezuela, according to AFP News Agency.

EU/UK

NOTABLE HEADLINES

• ECB's Villeroy reiterated that the issue of possible rate cuts could be raised in 2024 but not right now, while he also repeated that disinflation is happening quicker than expected.
• Reuters poll showed all 90 economists unanimously expect the ECB to keep the Deposit Rate at 4.00% at next week's meeting, while 51 out of 90 expect a rate cut by end-Q2 2024 and the rest forecast a cut in Q3 2024 or later.