• APAC stocks traded with a downbeat mood with most major indices pressured after Friday's tech-led declines in the US.
• Japan's revised Q4 GDP data missed expectations but showed the economy averted a technical recession.
• Chinese inflation data showed a return to acceleration in consumer prices; CPI YY (Feb) 0.7% vs. Exp. 0.3% (Prev. -0.8%).
• DXY sits on a 102 handle with FX markets broadly contained. USD/JPY is just below the 147 mark.
• European equity futures indicate a lower open with the Euro Stoxx 50 future -0.5% after the cash market closed down 0.3% on Friday.
• Looking ahead, highlights include US Employment Trends, Japanese Corporate Goods Price, ECB Survey of Monetary Analysts, NY Fed Survey of Consumer Expectations, Supply from US.

US TRADE

EQUITIES

• US stocks ultimately finished lower on Friday with two-way price action seen in the aftermath of the latest Non-Farm Payroll report as there was an initial rally on the "dovish" report where although the headline beat estimates, it was offset by downward revisions, soft wages and rising unemployment. However, stocks then retreated with selling pressure exacerbated by a sharp drop in chip shares.
• SPX -0.65% at 5,123, NDX -1.53% at 18,018, DJIA -0.18% at 38,722, RUT -0.10% at 2,082.
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NOTABLE HEADLINES

• Fed's Goolsbee (non-voter) said on Friday that the Fed is focused on the inflation rate and not the price level, while he added it is not realistic to expect the price level to back to pre-COVID levels and that higher rates have contributed to climbing housing costs.
• US Senate passed a USD 460bln government funding bill late on Friday which President Biden signed to avert a partial government shutdown and fund some federal agencies through the end of September, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks traded with a downbeat mood with most major indices pressured after Friday's tech-led declines in the US, while participants also digested last week's hawkish BoJ source reports and Japanese GDP.
• ASX 200 slumped in which the mining and resources industries led the declines across all sectors.
• Nikkei 225 fell beneath the 39,000 level following recent source reports that suggested a potential exit from NIRP this month and after Japan's revised Q4 GDP data missed expectations but showed the economy averted a technical recession.
• Hang Seng and Shanghai Comp. bucked the trend with the former boosted by tech strength and with Hong Kong's top market regulator seeking an expansion of the Stock Connect and lower the asset threshold for mainland China investors to CNY 100k. Conversely, the mainland was much less decisive after mixed Chinese inflation data which showed a return to acceleration in consumer prices.
• US equity futures (ES -0.1%) remained subdued after the post-NFP pull-back and as markets await US inflation data.
• European equity futures indicate a lower open with the Euro Stoxx 50 future -0.5% after the cash market closed down 0.3% on Friday.

FX

• DXY was little changed in a post-NFP lull and after a quiet weekend of macro news as the Fed entered into a blackout period and with the focus for the dollar this week on Tuesday's CPI data.
• EUR/USD traded sideways amid a lack of pertinent drivers.
• GBP/USD flatlined around the 1.2850 level in tandem with the lack of conviction across the FX space.
• USD/JPY trickled beneath 147.00 as yields edged slightly higher after last week's hawkish source reports.
• Antipodeans were restricted by the mostly negative risk tone and quiet overnight calendar.

FIXED INCOME

• 10-year UST futures kept afloat after recent gains and a lack of fresh major catalysts.
• Bund futures traded steadily with marginal upside capped beneath the 134.00 level.
• 10-year JGB futures were subdued but off Friday's lows after suffering from hawkish BoJ source reports.

COMMODITIES

• Crude futures were subdued following Friday's reversal and despite the ongoing geopolitical tensions after a failure to reach a Gaza ceasefire agreement before Ramadan which begins today.
• Saudi Arabia plans to reduce Arab heavy crude supply to term customers in Asia next month due to oil field maintenance, according to Reuters sources.
• Saudi Aramco CEO said FY saw lower crude oil prices and lower volumes sold but noted that 2023 saw global oil demand reach record levels despite geopolitical tensions and they expect the global oil market to remain healthy this year, while he considers supply and demand to be in reasonable balance. Saudi Aramco CEO said they are ready and able to react to market opportunities and can increase maximum capacity if needed. Furthermore, they are interested in LNG in the US and are looking at further opportunities to invest in China, as well as see significant growth in oil demand in China and Asia, according to Reuters.
• Qatar set April marine crude OSP at Oman/Dubai + USD 0.25/bbl and land crude OSP at Oman/Dubai + USD 0.05/bbl, according to a pricing document cited by Reuters.
• Spot gold paused after recently whipsawing to fresh record levels and back in the aftermath of the NFP report.
• Copper futures were contained amid the subdued risk environment and iron ore futures dropped around 5% amid weak China demand.

CRYPTO

• Bitcoin was marginally lower and retreated beneath the USD 69,000 level.

NOTABLE ASIA-PAC HEADLINES

• China’s Housing Minister said they should let some property developers go bankrupt or restructure according to legal and market-based rules, while the official stated that commercial banks have approved over CNY 200bln of loans for housing projects as of February under the coordinated mechanism. The minister said home sales will improve in an orderly and forceful way and China is to improve the supply of government-supported affordable housing, while they will work with the top financial regulator to guide cities to set up the property funding coordination mechanism. Furthermore, it was also stated that the priorities this year are work on construction kick-offs, housing quality and construction security.
• China’s Human Resources Minister said overall employment pressure has not eased and structural problems remain in the jobs market, while the minister added that they are confident they can keep stable employment and that demand for jobs is high in AI and big data sectors, according to Reuters.
• Chinese regulators held meetings with financial firms to discuss China Vanke (2202 HK) debt, while regulators asked large Vanke lenders to enhance financing support and asked private debt holders to discuss maturity extension, according to Reuters sources.
• US President Biden’s administration is weighing sanctions on several tech companies including memory chipmaker ChangXin Memory Technologies, according to Bloomberg.
• Hong Kong's top market regulator called for an expansion of the Stock Connect and is seeking to lower the asset threshold for mainland China investors to CNY 100k, according to Bloomberg.

DATA RECAP

• Chinese CPI MM (Feb) 1.0% vs. Exp. 0.7% (Prev. 0.3%)
• Chinese CPI YY (Feb) 0.7% vs. Exp. 0.3% (Prev. -0.8%)
• Chinese PPI YY (Feb) -2.7% vs. Exp. -2.5% (Prev. -2.5%)
• Japanese GDP Revised QQ (Q4) 0.1% vs. Exp. 0.3% (Prev. -0.1%)
• Japanese GDP Revised Annualised (Q4) 0.4% vs. Exp. 1.1% (Prev. -0.4%)

GEOPOLITICS

MIDDLE EAST

• US President Biden said it is always possible that there could be a Gaza ceasefire before Ramadan and he was not giving up, while he said he believes Israeli PM Netanyahu is “hurting Israel more than helping Israel” with his approach to the war against Hamas in Gaza and must pay more attention to the innocent lives being lost. Furthermore, Biden warned that an assault on Rafah is a “red line” but added that he is not going to cut off weapons to Israel and didn’t specify what the "red line" meant, in an MSNBC interview.
• Israeli PM Netanyahu said he intends to push ahead with an invasion of Rafah and insisted his priority is to prevent another terror attack like the October 7th Hamas raid, according to POLITICO.
• Israel conducted a raid targeting agricultural land near the Egyptian-Palestinian border in the Al Salam neighbourhood in Rafah, according to a correspondent cited by Al Jazeera.
• Five civilians were killed and nine were injured in an Israeli strike on a border village in southern Lebanon, according to Reuters.
• US Central Command said US Army vessel General Frank S. Besson departed for the eastern Mediterranean to provide humanitarian aid to Gaza by sea and is carrying the first equipment to establish a temporary pier vital for humanitarian supplies, according to Reuters.
• US Central Command said US Navy vessels and aircraft along with multiple coalition navy ships and aircraft shot down 15 one-way attack UAVs, while it was later reported that the US military downed a total of at least 28 uncrewed aerial vehicles in the Red Sea on Saturday, according to Reuters.
• UK Defence Minister said HMS Richmond shot down two drones on Friday night to repel a Houthi attack, while it was also reported that the French military destroyed four combat drones heading towards the European naval mission in the Gulf of Aden.

OTHER

• German Foreign Minister Baerbock is open to a missile swap with the UK to arm Ukraine, according to dpa.
• US and Japan are considering defence cooperation which could help Ukraine with the two sides looking at an arms arrangement ahead of a summit next month, according to Yomiuri.

EU/UK

NOTABLE HEADLINES

• UK PM Sunak is reportedly mulling curbs to welfare spending to fund the government’s ambition of further tax reductions, according to The Sunday Times.
• Exit polls suggest Portugal’s centre-right coalition is on course to narrowly defeat the incumbent socialists but fall well short of a majority in Sunday’s closely fought snap general election, according to The Guardian. It was later reported that Portugal's socialist leader Pedro Nuno Santos conceded defeat and the leader of the centre-right democratic alliance Luis Montenegro claimed victory.