• Equities are in the green, except for the AEX, which is weighed on by poor ASML results; Luxury bellwether LVMH gains post-earnings
• Dollar is lower though still above 106.00, Antipodeans outperform and GBP benefits post-CPI
• USTs incrementally firmer, Gilts gapped lower following hotter-than-expected CPI though have pared to near unchanged
• Crude is pressured as markets await geopols updates, XAU is firmer, benefiting from recent Dollar weakness
• Looking ahead, Fed Beige Book, Comments from ECB’s Lagarde & Schnabel, BoE’s Bailey, Greene & Haskel, Fed’s Bowman & Mester. Earnings from Citizens Financials & Abbott.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.4%) are mostly firmer, with the exception of the AEX (-0.2%), hampered by poor ASML (-3.5%) results. Luxury name LVMH (+2.5%) leads the CAC 40 (+1%) higher.
• Sectors hold a positive tilt; Basic Resources tops the pile, benefiting from broader strength in underlying metals prices, namely iron. Consumer Products is lifted by Luxury bellwether LVMH, as well as post-earnings strength in Adidas (+8.1%). Tech is found at the foot of the pile after the poor ASML metrics.
• US Equity Futures (ES +0.3%, NQ +0.3%, RTY +0.3%) are modestly firmer and are trading towards session highs. UAL (+4.9%) benefits post-earnings, after reporting solid metrics and noting that demand remained strong.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from: LVMH, ASML & Adidas.
• Click here for more details.

FX

• USD is losing ground vs. peers but holding above the 106 mark after printing a 106.51 high yesterday; the "hawkish comments" from Chair Powell on Tuesday were unable to provide further sustained support.
• EUR is enjoying some reprieve vs. the USD after finding a base just above the 1.06 mark yesterday. No revisions to EZ CPI will have come as a relief but talk from FX strategists continues to favour a potential approach to 1.05.
• GBP is firmer vs. both the USD and EUR post-UK inflation metrics which came in slightly firmer-than-expected. As such, BoE rate cut bets have been scaled back with the first fully-priced cut pushed back to Nov. from Sept. Cable has eclipsed yesterday's 1.2472 peak with attention now on a potential test of 1.25.
• JPY is firmer vs. the USD but to a lesser extent than peers. That will be of little consolation to JPY bulls given the recent surge in the pair. Yesterday was defined by a sharp sell-off in the European afternoon; suspected by some to be intervention.
• Antipodeans are both top of the leaderboard vs. the USD. NZD is digesting the latest NZ inflation metrics. Headline prints were in-line but some stickiness was seen in underlying data.
• PBoC set USD/CNY mid-point at 7.1025 vs exp. 7.2404 (prev. 7.1028)
• Click here for more details.

FIXED INCOME

• USTs are firmer by a handful of ticks as the benchmark lifts slightly from Tuesday's Fed-induced hawkish action. Currently at a high of 107-25+ from Tuesday's 107-13+ contract low which was spurred by Fed speak.
• Bund price action is directionally in-fitting with USTs and were unreactive to the unrevised Final HICP metrics; impetus today will be from several ECB speakers including Schnabel (Hawk). Bunds at the mid-point of 130.99-131.36 parameters with the contract low just below at 130.97.
• Gilts gapped lower by around 11 ticks before slipping further to a 96.01 trough and new contract low below Tuesday's 96.03 base after hotter-than-expected March CPI numbers. Gilts have since pared and are modestly firmer on the session, holding around 96.37.
• UK sells GBP 3.75bln 4.00% 2031 Gilt: b/c 2.97x (prev. 3.0x), average yield 4.218% (prev. 4.085%), tail 1.4bps (prev. 2.2bps)
• Germany sells EUR 0.805bln vs exp. EUR 1.0bln 0.00% 2050 & EUR 0.802bln vs exp. 1.0bln 2.50% 2054 Bund
• Click here for more details.

COMMODITIES

• A subdued session for crude thus far as markets still await Israel's response to the Iranian attacks from over the weekend; Brent Jun fell under USD 90/bbl to notch a current USD 89.40-90.17/bbl range.
• Precious metals are higher across the board but to varying degrees. Spot silver (+1.2%) outperforms, with spot palladium (+0.5%) firmer and spot gold (+0.1%) just about in the green. XAU rebounded from intraday lows to the top of a USD 2,372-91/oz range.
• Base metals are mostly higher, with the rally in iron ore prices overnight offering optimism for the sector. 3M LME copper is now back on a USD 9,500/t handle.
• US Energy Inventory Data (bbls): Crude +4.1mln (exp. +1.4mln), Cushing -0.2mln, Gasoline -2.5mln (exp. -0.9mln), Distillate -0.4mln (exp. -0.3mln).
• TC Energy (TRP) responded to an incident in Yellowhead County involving NGTL which affected a section of the pipeline that was shut down, while there are no reported injuries.
• Russia's primary oil refining oil capacity has been revised up April to 4.4mln tons; refining capacity is set to fall in May by 39% from April to 2.791mln ton, via Reuters calculations.
• US President Biden has directed his administration to work with Mexico to stop Chinese evasion of metals tariffs, according to the White House; calls on trade reps to consider increasing the tariff rate on Chinese steel and aluminium products to 25% (currently averages 7.5%)
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt raised the possibility of further tax cuts before the next general election as he counts on recent national insurance cuts and prospects of lower interest rates to improve the ruling Conservative party's fortunes, according to FT.
• ECB confirms renumeration ceiling for Euro Area for deposits and adjusts remuneration of other non-monetary policy decisions

DATA RECAP

• UK CPI YY (Mar) 3.2% vs. Exp. 3.1% (Prev. 3.4%); All Services 6.0% vs Exp. 5.9% (prev. 6.1%); MM 0.6% vs. Exp. 0.4% (Prev. 0.6%); click here for more detail.
• UK Core CPI YY (Mar) 4.2% vs. Exp. 4.1% (Prev. 4.5%); MM (Mar) 0.6% vs. Exp. 0.5% (Prev. 0.6%)
• EU HICP Final MM (Mar) 0.8% vs. Exp. 0.8% (Prev. 0.6%); HICP Final YY (Mar) 2.4% vs. Exp. 2.4% (Prev. 2.4%)
• EU HICP-X F&E MM (Mar) 0.9% vs. Exp. 0.8% (Prev. 0.6%); HICP-X F,E,A&T Final YY (Mar) 2.9% vs. Exp. 2.9% (Prev. 2.9%); HICP-X F&E Final YY (Mar) 3.1% vs. Exp. 3.1% (Prev. 3.1%); HICP-X F, E, A, T Final MM (Mar) 1.1% vs. Exp. 1.1% (Prev. 1.1%)
• South African CPI YY (Mar) 5.3% vs. Exp. 5.4% (Prev. 5.6%); CPI MM (Mar) 0.8% vs. Exp. 0.9% (Prev. 1.0%); Core Inflation YY (Mar) 4.9% vs. Exp. 4.9% (Prev. 5.0%); Core Inflation MM (Mar) 0.7% vs. Exp. 0.8% (Prev. 1.2%)

NOTABLE US HEADLINES

• Tesla (TSLA) Shanghai Megapack factory will start construction in May and begin mass production in Q1'25

EARNINGS

• ASML (ASML NA) Q1 (EUR): Revenue 5.29bln (exp. 5.39bln). Bookings 3.61bln (exp. 4.63bln). Adj. EPS 3.11 (exp. 2.68). 2024 outlook unchanged; Guides Q2 revenue between 5.7-6.2bln (exp. 6.62bln)
• Results from LVMH (MC FP) and Adidas (ADS GY) were release within US hours on Tuesday, in the European morning the stocks are firmer by 4% and 8% respectively.
• United Airlines Holdings Inc (UAL) - Q1 2024 (USD): Adj. EPS -0.15 (exp. -0.57), Revenue 12.50bln (exp. 12.45bln). PRASM USD 15.79 (exp. 15.68)Revenue passenger miles 57.43bln (exp. 57.36bln). Available seat miles 71.67bln (exp. 71.19bln). Load factor 80.1% (exp. 80.7%). Co. said the demand environment remained strong. (PR Newswire) Shares rose 5.2% pre-market. +5.3% in pre-market trade

GEOPOLITICS

MIDDLE EAST

• Iranian ground forces commander said any action by the Zionist entity against us will be met with greater force than last Saturday's operation, according to Al Jazeera
• White House's Sullivan said the US will impose new sanctions targeting Iran in the coming days which will include Iran's missile and drone program, as well as entities supporting the IRGC and its defence ministry, while the US anticipates its allies and partners will soon be following with their own sanctions.
• Several Iran-related bills passed the committee stage of the US Senate Tuesday that enhance sanctions on Iran’s leaders and require the President to sanction ships, ports, and refineries carrying or processing Iranian oil, according to Iran International via X.
• Iranian Admiral says they are to escort Iranian commercial ships to the Red Sea given the regions tensions, via Tasnim; "We are ready for confrontation at all levels and any mistake from the enemies will be met with a wide attack", via Al Jazeera. "If Israel makes any strategic mistake, it will receive a strong blow"

OTHER

• US Defense Secretary Austin spoke with Chinese Defence Minister Dong for the first time in the latest effort to stabilise ties. China's Defence Minister said China and the US should explore ways to get along with each other and the Taiwan issue is 'core of China's core interests' and must never be hurt, while he added the US side should recognise China's firm position, as well as respect China's territorial sovereignty and maritime rights and interests in the South China Sea.

CRYPTO

• Bitcoin is modestly firmer and back above USD 63.5k, Ethereum narrowly holds above USD 3k.

APAC TRADE

• APAC stocks traded mixed as the region picked up the pieces from the prior day's heavy selling but with the recovery limited after the choppy performance stateside amid Fed commentary and geopolitical concerns.
• ASX 200 eked mild gains albeit with upside capped by a lacklustre mining sector after Rio Tinto's quarterly production update which showed a decline in iron output and shipments from a year ago.
• Nikkei 225 was choppy after somewhat mixed trade data and recent speculation of FX intervention.
• Hang Seng and Shanghai Comp. were varied with the mainland underpinned by supportive measures with China's Financial Regulator vowing to allocate more credit resources to support manufacturing industry development and will continuously increase the proportion of medium to long-term loans for the sector, while financial institutions in Shanghai are to provide CNY 2tln in funding to support innovative technology companies over the next three years under an initiative backed by the PBoC.

NOTABLE ASIA-PAC HEADLINES

• PBoC said the China and US financial working teams held a meeting and both sides conducted professional, pragmatic, candid and constructive communication on monetary policy and financial stability, as well as financial regulatory cooperation. China's Finance Ministry said China expressed concern over US economic and trade restrictions against China and made further responses on the issue of production capacity at the economic work group meeting.
• Japanese Chief Cabinet Secretary Hayashi says closely watching FX moves, "prepared for full measures"; rapid FX moves undesirable, important for FX to move in a stable manner reflecting fundamentals; no comment on policies related to FX.
• China's CPCA says NEV retail sales +32% Y/Y to 260k between April 1-14th

DATA RECAP

• Japanese Trade Balance Total (JPY)(Mar) 366.5B vs. Exp. 299.9B (Prev. -379.4B, Rev. -377.8B)
• Japanese Exports YY (Mar) 7.3% vs. Exp. 7.0% (Prev. 7.8%); Imports YY (Mar) -4.9% vs. Exp. -4.7% (Prev. 0.5%)
• New Zealand CPI QQ (Q1) 0.6% vs Exp. 0.6% (Prev. 0.5%); YY (Q1) 4.0% vs Exp. 4.0% (Prev. 4.7%)
• RBNZ Sectoral Factor Model Inflation Index (Q1) 4.3% (Prev. 4.5%)