• APAC stocks traded mixed as the region digested China's Work Report and Caixin Services PMI data.
• China unveiled the government work report with the 2024 GDP growth target set at around 5%, as expected.
• European equity futures indicate a slightly softer open with Euro Stoxx 50 future -0.3% after the cash market closed up 0.4% on Monday.
• DXY remains sub-104, USD/JPY lingers around the 150.50 mark, EUR/USD uneventful around 1.0850, antipodeans lag
• Fed's Bostic said when rate cuts start, they will not be back-to-back but will likely be followed by a pause; still sees two rate cuts this year with the first in Q3.
• Looking ahead, highlights include EZ, UK & US PMI, EZ Producer Prices, US IBD/TIPP Economic Optimism, Durable Goods, ISM, US Primary “Super Tuesday”, Comments from Fed's Barr, Supply from UK & Germany

US TRADE

EQUITIES

• US stocks were choppy and finished lower amid light catalysts ahead of looming key events, while price action was the main story as Gold and Bitcoin both surged to new recent peaks as momentum and euphoria took over, while tech was mixed as AI names rallied including Nvidia although other mega-cap names struggled with Apple pressured following a USD 1.8bln fine by the EU.
• SPX -0.12% at 5,131, NDX -0.42% at 18,226, DJI -0.25% at 38,990, RUT -0.10% at 2,074.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (2024 voter) said he would not anticipate that cuts would be back-to-back and it will depend on the response, while he added that a third quarter cut is likely to be followed by a pause and he still expects two 25bps rate cuts this year. Bostic said inflation is on track to slowly return to the 2% target but it is too early to claim victory and they need to see more progress and gain confidence in disinflation before reducing the policy interest rate. Furthermore, he said the strength of the economy and job market means the Fed has the luxury of proceeding without urgency.
• White House plans to announce a new federal task force focused on easing health care costs, according to Politico.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as the region digested China's Work Report and Caixin Services PMI data.
• ASX 200 closed slightly lower as strength in mining and health care was offset by losses in the consumer sectors.
• Nikkei 225 initially retreated beneath the 40,000 level after the latest Tokyo CPI data showed an acceleration in price growth, but then gradually recovered its losses and returned to positive territory.
• Hang Seng and Shanghai Comp. were mixed with notable underperformance in the Hong Kong benchmark amid weakness in tech and health care, while the miss on Chinese Caixin Services PMI also provides a headwind for risk appetite. Conversely, the mainland just about remained afloat after the announcement of the government Work Report with the GDP growth target maintained at around 5%, as expected, although Premier Li noted the foundation of China's economic recovery is not solid yet and domestic demand is not strong.
• US equity futures (ES -0.2%) lacked demand after the choppy performance stateside ahead of upcoming key events.
• European equity futures indicate a slightly softer open with Euro Stoxx 50 future -0.3% after the cash market closed up 0.4% on Monday.

FX

• DXY was little changed beneath 104.00 amid a lack of catalysts stateside ahead of Super Tuesday primary elections, while there were recent comments from Fed's Bostic who said when rate cuts start, they would not be back-to-back but will likely be followed by a pause and he still sees two rate cuts this year with the first in Q3.
• EUR/USD languished around the 1.0850 level after fading its recent mild gains ahead of EZ data releases.
• GBP/USD traded sideways as the UK awaits Wednesday's Budget announcement and anticipated tax cuts.
• USD/JPY remained near 150.50 after Tokyo CPI mostly matched estimates but accelerated from the prior month.
• Antipodeans marginally weakened amid the mixed risk tone and with AUD/USD failing to benefit from the larger-than-expected Current Account surplus and Net Exports Contribution which feed into tomorrow's GDP data.
• PBoC set USD/CNY mid-point at 7.1027 vs exp. 7.1961 (prev. 7.1020).

FIXED INCOME

• 10-year UST futures struggled for direction after yesterday's bear-steepening and as markets await key events.
• Bund futures were little changed ahead of European Services PMI data and a Bobl auction later today.
• 10-year JGB futures initially weakened after the pick up in Tokyo inflation but then ultimately recovered as the dust settled from the mixed 10yr auction which resulted in higher accepted prices and a narrower price tail.

COMMODITIES

• Crude futures were contained after the prior day's losses and amid the tentative risk sentiment.
• Spot gold plateaued after its recent advancement north of the USD 2,100/oz level.
• Copper futures were lacklustre as markets digested China's Work Report in which the official GDP growth target was kept at around 5%, as expected, but it was also noted that achieving the target will not be easy.

CRYPTO

• Bitcoin saw two-way price action in which it initially advanced firmly above USD 68,000 before fading its gains.

NOTABLE ASIA-PAC HEADLINES

• China unveiled the government work report with the 2024 GDP growth target set at around 5%, as expected, but noted achieving this year's economic growth target will not be easy, while it will continue to implement proactive fiscal policy and prudent monetary policy, as well as noted that China should intensify cross-cyclical and counter-cyclical adjustments through macro policies. China will launch a year-long program to stimulate consumption and roll out a "worry-free consumption" initiative to improve the consumption environment and will make concerted efforts to defuse local government debt risks. Furthermore, China will take tough measures against illegal financial activities and will move faster to foster a new development model for real estate.
• Chinese Premier Li said the foundation of China's economic recovery is not solid yet and China's domestic demand is not strong with social expectations relatively weak. Li also commented that some small and medium-sized enterprises are facing operational difficulties but added that China will stabilise and expand private investment.
• China's state planner said it will lift all foreign investment restrictions in the manufacturing sector and it will relax market access restrictions in service industries such as telecoms and medical services, according to Reuters.
• Japan Minister of State for Economic and Fiscal Policy Shindo said they are not thinking now of declaring anything when asked whether the government could call an end to deflation, while Finance Minister Suzuki also said there was no truth to the media report that government is considering announcing the end of deflation

DATA RECAP

• Chinese Caixin Services PMI (Feb) 52.5 vs Exp. 52.9 (Prev. 52.7)
• Chinese Caixin Composite PMI (Feb) 52.5 (Prev. 52.5)
• Tokyo CPI YY (Feb) 2.6% vs. Exp. 2.5% (Prev. 1.6%)
• Tokyo CPI Ex. Fresh Food YY (Feb) 2.5% vs. Exp. 2.5% (Prev. 1.6%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Feb) 3.1% vs. Exp. 3.1% (Prev. 3.1%)
• Australian Current Account Balance (AUD)(Q4) 11.8B vs. Exp. 5.6B (Prev. -0.2B)
• Australian Net Exports Contribution (Q4) 0.6% vs. Exp. 0.2% (Prev. -0.6%)

GEOPOLITICS

MIDDLE EAST

• Hamas said in a message they will be flexible on the issue of the number of prisoners if Israel is flexible on the issue of returning Palestinians to northern Gaza, according to Axios's Ravid on X.
• White House said a temporary ceasefire is essential for a hostage deal and the US called on Hamas to accept the terms on the table.
• US Central Command said Yemen's Houthis fired an anti-ship ballistic missile from Yemen into the southern Red Sea on March 4th although there were no reported damages or injuries to commercial or US Navy ships. Houthis also fired two anti-ship ballistic missiles into the Gulf of Aden at M/V MSC Sky II which is a Liberian-flagged, Swiss-owned container vessel, while one of the missiles impacted the vessel and caused damage but initial reports indicated no injuries. Furthermore, CENTCOM said its forces conducted strikes against two anti-ship cruise missiles that presented an 'imminent threat' to merchant vessels and US Navy ships in the region.

OTHER

• China's coastguard took control measures against Philippine vessels that 'illegally' intruded into waters adjacent to the Second Thomas Shoal, according to state media. Philippines coastguard spokesperson said vessels faced dangerous manoeuvres and blocking from China's coastguard and maritime militia during a resupply mission, while the reckless and illegal actions led to a collision between the Philippines and Chinese coastguard vessels in which the Philippine vessel sustained minor structural damage.
• North Korea’s Defence Ministry said South Korean-US military drills are not defensive and should stop, while it added that South Korea and the US will face consequences for their wrong choice, according to KCNA.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Hunt is believed by some government insiders to be preparing a 2p cut to the basic rate of income tax for the budget announcement on Wednesday, while the tax cut would cost GBP 14bln per year but could be funded by cutting GBP 5bln from future public spending plans, while Hunt is also expected to extend the 5p-a-litre fuel duty cut for a further one year and again scrap an inflation-linked rise in the levy, according to FT.
• Barclays said UK consumer spending in February rose 1.9% Y/Y and was dampened by wet weather, while it noted that consumer confidence about non-essential spending was the highest since November 2021, according to Reuters.

DATA RECAP

• UK BRC Retail Sales YY (Feb) 1.0% (Prev. 1.4%)
• UK BRC Total Sales YY (Feb) 1.1% (Prev. 1.2%)