• APAC stocks were mostly lower as sentiment reverberated from Wall Street's downbeat performance, while Japanese markets were away on a market holiday.
• DXY held a softer bias overnight but maintained 102+ status after taking a breather from yesterday's surge from a 101.33 low to a 102.25 peak. EUR/USD rose back above 1.0950 while USD/JPY traded on either side of 142.00.
• European equity futures are indicative of a slightly lower open, with the Euro Stoxx 50 future -0.2% after cash markets closed -0.2% on Tuesday.
• China is expected to persist in reducing interest rates and the reserve requirement ratio (RRR) throughout 2024, according to the China Securities Journal. 
• Looking ahead, highlights include German Unemployment, US MBAs, ISM Manufacturing PMI, JOLTs, FOMC Minutes, Fed's Barkin, Supply from Germany. Earnings from JD Sports, and Bellway.

US TRADE

EQUITIES

• US stocks were sold on Tuesday and big tech led the losses despite the lack of a clear catalyst for the weakness, with desks pointing to both fundamental and technical factors such as ongoing rotation, Barclays' downgrade of Apple (AAPL), Middle East troubles, and downbeat PMIs.
• SPX -0.57% at 4,742, NDX -1.68% at 16,543, DJI +0.07% at 37,715, RUT -0.70% at 2,012.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Atlanta Fed GDPnow (Q4): 2.0% (prev. 2.3%).

APAC TRADE

EQUITIES

• APAC stocks were mostly lower as sentiment reverberated from Wall Street's downbeat performance despite the lack of a clear driver, while Japanese markets were away on a market holiday.
• ASX 200 saw the deepest losses in gold names following the recent surge in the Dollar, while Tech also lagged, mimicking the sectoral performance on Wall Street.
• KOSPI extended its downside with semiconductor names among the biggest losers - Samsung Electronics tumbled 3% at one point.
• Hang Seng and Shanghai Comp were mixed with the former's losses led by large-cap Hong Kong stocks also listed in the US (JD.com -4.2%, Baidu -3.0%, Alibaba -2.7%), while Mainland China fluctuated between modest gains and losses, but was ultimately cushioned by stimulus speculation in Chinese press.
• US equity futures traded sideways with a downside bias but ultimately took a breather from yesterday's tech-led losses (ES -0.1%).
• European equity futures are indicative of a slightly lower open, with the Euro Stoxx 50 future -0.2% after cash markets closed -0.2% on Tuesday.

FX

• DXY held a softer bias overnight after taking a breather from yesterday's surge from a 101.33 low to a 102.25 peak. DXY remained above 102.00 after notching an overnight high of 102.24 before waning to a 102.07 low. Upside levels include the 21 DMA (102.37), 21st Dec high (102.45), 102.50, 20th Dec high (102.54), and the 19th, 18th and 15th Dec highs (at 102.63, 102.63 and 102.64 respectively).
• EUR/USD traded on either side of 1.0950 after finding support near its 21 DMA (1.0937).
• GBP/USD held onto 1.2600+ status following yesterday's tumble from levels north of 1.2750.
• USD/JPY saw little action overnight and traded on either side of 142.00, whilst Japanese participants were away due to a market holiday.
• Antipodeans initially benefitted as the Dollar eased off highs, but then headed to session lows ahead of the Chinese cash equity open.
• PBoC set USD/CNY mid-point at 7.1002 vs exp. 7.1512 (prev. 7.0770)

FIXED INCOME

• 10yr UST futures were flat after selling off on Tuesday, with traders now looking ahead to the US ISM Manufacturing and FOMC Minutes due on Wednesday, ADP on Thursday, US NFP and ISM Services on Friday.
• Bund futures saw horizontal trade amid a lack of fresh drivers ahead of this week's risk events.
• Mexico has placed USD 7.5bln in 5-year, 12-year, and 30-year bonds, according to the Finance Ministry cited by Reuters. Demand for the bond offering reached USD 21.3bln.
• Indonesia has launched 5-year, 10-year, and 30-year Dollar bonds at 4.9%, 5.05%, and 5.45%, respectively, according to the term sheet cited by Reuters.

COMMODITIES

• Crude futures consolidated following the prior session's hefty losses, with prices holding a downward bias through APAC hours amid the soured risk tone in the region.
• Spot gold drifted marginally higher and saw some relief as DXY eased off best levels.
• Copper futures failed to benefit amid risk sentiment, but iron ore rose following headlines regarding further potential Chinese stimulus.
• Libya's Sharara oilfield output has been curbed by protests, according to an official cited by Bloomberg.

CRYPTO

• Bitcoin saw mild gains and held above USD 45k after failing to mount resistance near USD 46k yesterday.

NOTABLE ASIA-PAC HEADLINES

• China is expected to persist in reducing interest rates and the reserve requirement ratio (RRR) throughout 2024, according to the China Securities Journal. Economic Daily reported that additional policies aimed at stabilizing the economy are anticipated to be implemented in China.
• PBoC injected CNY 14bln through 7-day reverse repos at a maintained rate of 1.80% for a net drain of CNY 558bln, according to Reuters.
• Japan reported an earthquake with prelim. magnitude of 5.5, no tsunami warning has been issued after the earthquake, according to NHK.
• Australia PM Albanese said his government would consider new cost-of-living relief measures ahead of the May budget without stoking inflation, according to Reuters.

DATA RECAP

• Indian Nikkei Manufacturing PMI (Dec) 54.9 (Prev. 56.0).

GEOPOLITICS

• Senior Hamas official Saleh Al-Arouri was killed in an Israeli drone strike on Dahiyeh, according to three security sources cited by Reuters.
• Lebanon's Hezbollah said assassinating Senior Hamas officials in Beirut is a 'serious assault of Lebanon' and a 'dangerous development in course of the war between enemy and axis of resistance'. Hezbollah added that the assassination of al-Arouri will never go unpunished and the resistance will respond with the utmost readiness.
• Iran said Hamas official Al-Arouri's assassination will undoubtedly further motivate the resistance to fight against Israel, according to state media.
• The US has reportedly reached an agreement with Qatar that extends the American military presence at the biggest base in the Middle East - al Udeid - for another 10 years, sources told CNN's Marqu.
• British Maritime security firm Ambrey said a Malta-flagged container ship reported seeing three explosions towards its port quarter 15 miles SW of Yemen's Mocha, according to Reuters.
• US CENTCOM said on January 2, Iranian-backed Houthis fired two anti-ship ballistic missiles from Houthi-controlled areas in Yemen into the southern Red Sea, according to Reuters. Multiple commercial ships in the area reported the impact of the anti-ship ballistic missiles (ASBMs) into the surrounding water, although none have reported any damage.
• UN Security Council President France said the council may meet as soon as Wednesday on the Red Sea, according to Reuters.
• A senior Chinese official has stated that the upcoming elections in Taiwan (13th Jan) are an important choice between peace and war, prosperity and recession, according to state media.
• Iranian president is set to visit Turkey on Thursday, according to journalist Aslani.