Newsquawk

Europe Market Open: BoJ maintained policy settings & guidance; reports of a Chinese equity package

23 Jan 2024, 06:32 by Newsquawk Desk

APAC stocks mostly gained after the fresh record levels on Wall St, while the region also digested the BoJ and reports of a potential Chinese equity market rescue package.
China is said to consider an equity market rescue package backed by USD 278bln, according to Bloomberg sources.
BoJ kept its policy settings unchanged as expected and made no change to its forward guidance.
European equity futures are indicative of a contained open with Euro Stoxx 50 future +0.1% after the cash market closed up 0.7% on Monday.
DXY is softer but maintaining a 103 handle, antipodeans lead, EUR/USD hovers around 1.09, USD/JPY sits on a 148 handle.
Looking ahead, highlights include UK PSNB, Canadian New Housing Price Index, EZ Consumer Confidence (Flash), US Richmond Fed Index, NZ CPI, Australian PMI, Japanese Trade Data, ECB Bank Lending Survey, Supply from Netherlands, Germany & US, Earnings from Ericsson, Logitech, Johnson & Johnson, Procter & Gamble & Netflix.

US stocks eked mild gains although finished off the fresh record levels seen earlier in the day in what was a quiet start to a risk-packed week. Nonetheless, all major indices closed in the green and the DJIA topped 38,000 for the first time, while the Russell 2000 small-cap index was the notable outperformer.
SPX +0.22% at 4,850, NDX +0.09% at 17,330, DJIA +0.36% at 38,001, RUT +2.01% at 1,983.
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NOTABLE HEADLINES

White House Economic Adviser Brainard said a lacklustre recovery in China has not had a particularly strong effect on the US economy.

APAC stocks mostly gained after the fresh record levels on Wall St but with gains capped ahead of risk events, while the region also digested the BoJ policy decision and reports of a potential Chinese equity market rescue package.
ASX 200 was led higher by financials, tech and defensives, while stocks also shrugged off mixed business surveys.
Nikkei 225 extended on gains after the BoJ maintained its ultra-easy policy, as widely expected, which briefly lifted the index to just shy of the 37,000 level where it then hit resistance and eventually wiped out all its earlier spoils.
Hang Seng and Shanghai Comp were somewhat varied with Hong Kong boosted by reports that China was mulling an equity market rescue package which could be announced as soon as this week, while tech names were also helped after China's gaming regulator took down draft rules for controlling spending on video games from its website. Conversely, the mainland lagged as the initial support from the news of a potential equity market rescue waned given that potential support measures remain speculation and more stimulus will likely be needed to revive the property sector.
US equity futures traded rangebound after pulling back from fresh record highs.
European equity futures are indicative of a contained open with Euro Stoxx 50 future +0.1% after the cash market closed up 0.7% on Monday.

DXY gradually softened with trade subdued as participants await this week's risk events.
EUR/USD rebounded off the prior day's lows and eyes a reclaim of the 1.0900 status.
GBP/USD steadily edged further above the 1.2700 near-term support level.
USD/JPY was choppy and traded on both sides of 148.00 after the lack of surprise from the BoJ.
Antipodeans were boosted after reports of a potential Chinese equity market rescue package.
PBoC set USD/CNY mid-point at 7.1117 vs exp. 7.2033 (prev. 7.1105).

10yr UST futures were uneventful after the prior day's gains which were led by the belly following JPMorgan and Morgan Stanley buy recommendations for 5yr notes after last week's worst weekly decline since May 2023.
Bund futures lacked direction after recent price swings around the 134.50 level and with German supply ahead.
10yr JGB futures traded indecisively heading into and after the BoJ policy decision which lacked any surprises.

Crude futures took a breather after the prior day's advances amid ongoing geopolitical risks.
Spot gold edged mild gains north of USD 2020/oz as the greenback eventually softened.
Copper futures shrugged off initial losses and were boosted by Chinese stimulus hopes.

Bitcoin clawed back some of Monday's losses and returned to above the USD 40,000 level.

NOTABLE ASIA-PAC HEADLINES

China is said to consider an equity market rescue package backed by USD 278bln, according to Bloomberg sources.
BoJ kept its policy settings unchanged, as expected, with rates at -0.10% and QQE with YCC to flexibly target 10yr JGB yields at around 0%, while it maintained the 1% upper bound reference rate for market operations. BoJ made no change to its forward guidance as it reiterated that it will continue with QQE with YCC for as long as needed and won't hesitate to take additional easing steps if needed. BoJ also noted that inflation expectations are gradually heightening and inflation will likely gradually accelerate towards the BoJ target through to the end of the projected period. Furthermore, the BoJ cut the Fiscal 2023 Real GDP median forecast to 1.8% from 2.0% but raised the Fiscal 2024 Real GDP median view to 1.2% from 1.0%, while it cut its Fiscal 2024 Core CPI median forecast to 2.4% from 2.8% but raised the Fiscal 2025 Core CPI median view to 1.8% from 1.7% in the latest Outlook Report.

DATA RECAP

Israel proposed a two-month fighting pause in Gaza for the release of all hostages, according to Axios.
Israel's army said it carried out a raid on a Hezbollah building in Maroun al-Ras, south of Lebanon.
Hezbollah said they targeted Israeli soldiers with missiles in the vicinity of the Evin Menachem colony and achieved direct hits, according to Al Jazeera.
US and British forces conducted a fresh round of strikes in Yemen against Houthi targets, while the US, UK, Bahrain and other nations confirmed in a joint statement that an additional round of proportionate and necessary strikes was conducted against 8 Houthi targets in Yemen, according to Reuters.
White House said President Biden and UK PM Sunak discussed in a call the ongoing Iranian-backed Houthi attacks against merchant and naval vessels in the Red Sea and discussed securing the release of hostages held by Hamas.
Yemen's Houthi military spokesman said naval forces carried out a military operation targeting an American military cargo ship in the Gulf of Aden. However, it was later reported that the US military said a Houthi report of an alleged successful attack on MV Ocean Jazz is 'patently false'.
White House's Kirby said the US still believes that normalisation between Saudi Arabia and Israel is possible.

NOTABLE HEADLINES

UK train drivers called off extra walkouts as the threat of an anti-strike law was dropped, according to FT.