• APAC stocks traded with a modest positive bias following the gains on Wall Street but with gains capped ahead of the US PCE and the Christmas break.
• Nike (NKE) shares slumped over 11% after-market after guiding Q3 revenue slightly negative Y/Y, cutting FY24 revenue growth guidance, and warning of cautious consumers.
• DXY took a breather after dipping to multi-month lows overnight. The Dollar was sold on Thursday in quiet US trade with desks pointing to month-end flows ahead of the holidays.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future -0.1% after cash markets closed -0.2% on Thursday.
• Looking ahead, highlights include UK GDP, Retail Sales, US Personal Income, Core PCE, US Durable Goods, UoM Inflation Expectations (Final), and Canadian GDP.

EQUITIES

• US stocks pared some of Wednesday's steep losses on Thursday following mostly weak US data and in the run-up to Friday's PCE and ahead of the Christmas break.
• SPX +1.03% at 4,747, NDX +1.23% at 16,757, DJI +0.87% at 37,404, RUT +1.73% at 2,017.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Apple (AAPL) reportedly pulled watches from online stores to meet the US-ordered ban, according to Bloomberg. Apple Watch Series 9 and Ultra 2 are unavailable to buy on the website. A ban on Apple watches has been ordered in a patent technology fight.
• Nike Inc (NKE) Q2 2024 (USD): EPS 1.03 (exp. 0.85), Revenue 13.39bln (exp. 13.43bln). Guides Q3 revenue slightly negative Y/Y; cuts FY24 revenue growth estimate to +1% (prev. mid-single digit growth), confirms gross margin increase of 140-160bps, via conference call; sees 400bps headwinds from supply chain disruptions. Nike Executive said "We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment." Shares fell 11.7% after-market.

APAC TRADE

EQUITIES

• APAC stocks initially traded with a modest positive bias following the gains on Wall Street but with gains capped ahead of the US PCE and the Christmas break, whilst losses in Hong Kong tilted sentiment into the red after China announced online gaming restrictions.
• ASX 200 was flat in tight ranges above 7,500, whilst the breadth of the sectors was also narrow. Energy and IT were the relative outperformers.
• Nikkei 225 saw support from its Banking Sector, but Autos and Retail once again underperformed.
• Hang Seng and Shanghai Comp were choppy and initially held a mild positive bias, whilst Hang Seng was later hit hard after Chinese regulators issued drafts for online game management, with shares of Tencent and NetEase slumping on the announcement and extending losses on return from the lunch break, with Tencent -16% and NetEase -28% at one point.
• US equity futures (ES -0.2%) were subdued and waned off the highs set at the US close with newsflow overnight also light ahead of US PCE later.
• European equity futures are indicative of a slightly softer open with the Euro Stoxx 50 future -0.1% after cash markets closed -0.2% on Thursday.

FX

• DXY took a breather after dipping to multi-month lows overnight. The Dollar was sold on Thursday in quiet US trade with desks pointing to month-end flows ahead of the holidays.
• EUR/USD traded on either side of 1.1000 after reaching a 1.1012 peak on Thursday.
• GBP/USD remained off this week's best levels despite the slide in the Dollar, with gains capped following the recent inflation data, and ahead of today's Retail Sales and Q3 GDP.
• USD/JPY was on a slightly firmer footing after an earlier brief dip under 142.00 to a 141.88 low, whilst no action was seen on the release of in-line Japanese Core CPI data.
• Antipodeans held a downward bias with losses in NZD shallower than the AUD as the AUD/NZD cross fell back under 1.0800.
• PBoC set USD/CNY mid-point at 7.0953 vs exp. 7.1306 (prev. 7.1012)

FIXED INCOME

• 10-year UST futures traded flat after Thursday's curve steepening in choppy, holiday trade following the downward revisions to GDP and soft Philly Fed.
• Bund futures saw subdued trade despite a lack of pertinent catalysts in APAC hours.
• 10-year JGB futures were grinding lower to levels under 146.50 despite the expected cooling in Japanese CPI whilst the 10-year yield rose back above 62bps.
• US sells USD 20bln of 5yr TIPS (reopening) at 1.71%; High Yield: 1.71% (prev. 2.44%). Tail: 0bps (prev. 2bps, six-auction avg. -1.6bps). Bid-to-Cover: 2.55x (prev. 2.36x, six-auction avg. 2.61x). Dealers: 6.14% (prev. 9.2%, six-auction avg. 10.8%). Directs: 18.2% (prev. 17.6%, six-auction avg. 11.6%). Indirects: 75.66% (prev. 73.2%, six-auction avg. 77.6%)

COMMODITIES

• Crude futures edged higher throughout the night with the contracts underpinned by Red Sea tensions, but capped by Angola leaving OPEC amid quota disputes.
• Spot gold popped above USD 2,050/oz to a USD 2,055/oz high as the DXY hit multi-month lows.
• Copper futures were initially supported by the recent USD weakness alongside the brief recovery in Chinese market sentiment, with 3M LME copper extending gains beyond USD 8,600/t.
• Baker Hughes Rig Count: Oil -3 to 498, Nat Gas +1 to 120, total -3 to 620.
• China's MPI Research Institute said China's 2023 steel demand to fall 3.3% Y/Y and 2024 steel demand to fall 1.7% Y/Y.

CRYPTO

• Bitcoin was slightly firmer and traded on either side of USD 44,000 while Ethereum rose back above USD 2,250.

NOTABLE ASIA-PAC HEADLINES

• Bank of Communications (601328 CH), Construction Bank (601939 CH), China's Agricultural Bank (601288 CH), Bank of China (601988 CH), and China's ICBC (601398 CH) cuts interest rates on some deposits from Dec 22.
• PBoC injected CNY 40bln through 7-day reverse repos at 1.80% and CNY 291bln via 14-day reverse repos at 1.95%; both rates maintained.
• Samsung Electronics (005930 KS) and other smartphone manufacturers are planning to increase production in 2024, according to Nikkei, "In a sign the industry is finally pulling out of its yearlong slump".
• China regulator issues drafts for online game management, according to Reuters; requires online games to set spending limits, and ban daily login rewards.
• BoJ Oct meeting minutes (two meetings ago): Members agreed on the need to patiently maintain the current easy policy; Several members said must sustain YCC to continue supporting wage growth.

DATA RECAP

• Japanese CPI, Core Nationwide YY (Nov) 2.5% vs. Exp. 2.5% (Prev. 2.9%)
• Japanese CPI, Overall Nationwide (Nov) 2.8% (Prev. 3.3%)
• Australian Private Sector Credit (Nov) 0.4% (Prev. 0.3%)
• Australian Housing Credit (Nov) 0.4% (Prev. 0.4%)

GEOPOLITICS

• Pentagon said that over 20 nations are in the task force for the Red Sea, according to Reuters.
• White House said the US is continuing its review of Section 301 tariffs on Chinese products, according to Reuters.
• US Commerce Secretary Raimondo said she doesn't see any change in tone from China regarding Taiwan, via CNBC interview.
• China's top military officer, on Taiwan, said Chinese armed forces will resolutely defend state sovereignty and territorial integrity, according to the Defence Ministry.
• The Chinese Central Military Commission's top military officer had a video call with his US counterpart; China said the US should respect China's sovereignty in the South China Sea, according to Reuters.

LATAM

• Brazil Congressional Budget Committee approves main part of 2024 budget, according to Reuters.