• APAC stocks were mostly higher as the region digested recent market themes and the BoJ policy announcement.
• The BoJ kept policy settings unchanged and refrained from any major hawkish surprises.
• Tech earnings from Alphabet (+11.5%) and Microsoft (+4.3%) topped forecasts and boosted futures after-hours.
• DXY lacked firm direction overnight, JPY softer post-BoJ with USD/JPY on a 156 handle, EUR/USD is back above 1.07.
• Looking ahead, include US PCE, Personal Income, ECB Consumer Expectations Survey, BoJ Governor Ueda, ECB’s de Guindos & SNB’s Jordan, Earnings from Porsche, NatWest, Safran, Colgate, Exxon, Chevron & Phillips 66.

US TRADE

EQUITIES

• US stocks finished lower after a plunge in META post-earnings and with sentiment pressured after a miss on Q1 GDP and hot Core PCE Prices, which introduced upside risks to Friday's March PCE data and saw Fed pricing shift hawkishly. However, the indices closed well off worst levels as semiconductors led the recovery heading into key big tech earnings including from Alphabet (+11.5%) and Microsoft (+4.3%) which topped forecasts and boosted futures after-hours.
• SPX -0.46% at 5,048, NDX -0.55% at 17,430, DJIA -0.98% at 38,085, RUT -0.72% at 1,981.
• Click here for a detailed summary.

NOTABLE HEADLINES

• WSJ's Timiraos posted an article titled "The Dream of Fed Rate Cuts Is Slipping Away" on X which stated that "The cumulative effect of serial disappointments on inflation are reshaping the outlook for rate cuts".

AFTER-MARKET EARNINGS

• Alphabet Inc (GOOGL) Q1 2024 (USD): EPS 1.89 (exp. 1.51), Revenue 80.54bln (exp. 78.59bln); board authorised Co. to repurchase up to an additional 70bln and declared a cash dividend of 0.20/shr.
• Microsoft Corp (MSFT) Q3 2024 (USD): EPS 2.94 (exp. 2.82), Revenue 61.86bln (exp. 60.8bln).
• Intel Corp (INTC) Q1 2024 (USD): Adj. EPS 0.18 (exp. 0.14), Revenue 12.70bln (exp. 12.78bln).
• Snap Inc (SNAP) Q1 2024 (USD): Adj. EPS 0.03 (exp. -0.05), Revenue 1.19bln (exp. 1.12bln).
• Western Digital Corp (WDC) Q3 2024 (USD): Adj. EPS 0.63 (exp. 0.21), Revenue 3.46bln (exp. 3.36bln).

APAC TRADE

EQUITIES

• APAC stocks were mostly higher as the region digested recent market themes including disappointing US data, strong big tech earnings and the BoJ policy announcement.
• ASX 200 underperformed after the prior day's losses caught up with the index on return from holiday.
• Nikkei 225 was initially choppy and briefly dipped into negative territory as participants braced for the BoJ policy announcement and whether the central bank flags a reduction in bond buying, but then surged as the central bank kept policy settings unchanged and refrained from any major hawkish surprises.
• Hang Seng and Shanghai Comp. were underpinned by strength in tech and property, while the constructive mood was also facilitated by a meeting between US Secretary of State Blinken and Chinese Foreign Minister Wang where it was stated that the US-China relationship has stabilised although negative factors are building.
• US equity futures (ES +0.8%) were lifted after-hours with the advances led by the E-mini Nasdaq 100 (+1.1%) owing to the big tech earnings in which Alphabet and Microsoft's results surpassed estimates.
• European equity futures indicate a positive open with the Euro Stoxx 50 future +0.6% after the cash market closed down 1.0% on Thursday.

FX

• DXY lacked firm direction after failing to sustain the uplift from hot Core PCE Prices which sparked a broad-based hawkish reaction and saw money markets push back its first fully priced Fed rate cut to December from November, while participants look ahead to the Fed's preferred inflation metric with the March Core PCE due later.
• EUR/USD traded rangebound after recovering on the back of the dollar recoil to return to the 1.0700 handle.
• GBP/USD struggles to hold on to the 1.2500 status following yesterday's US data-induced fluctuations.
• USD/JPY climbed above the 156.00 level after the BoJ decision which was less hawkish than some were anticipating, while the central bank also refrained from ramping up to a more forceful rhetoric on the currency.
• Antipodeans were capped after mixed data from Australia and weaker consumer confidence in New Zealand.
• PBoC set USD/CNY mid-point at 7.1056 vs exp. 7.2449 (prev. 7.1058).

FIXED INCOME

• 10-year UST futures were lacklustre after recent data spurred a further unwinding of Fed rate cut pricing.
• Bund futures languished at the prior day's lows following a slump beneath the 130.00 level.
• 10-year JGB futures found some relief in late trade after the BoJ maintained its policy settings and refrained from any major surprises despite a recent report from the Jiji news agency that the BoJ was set to consider measures to reduce its government bond purchases.

COMMODITIES

• Crude futures were marginally higher after fully reversing the losses from "stagflationary" US data.
• Spot gold was rangebound amid an uneventful dollar and after yesterday's data-induced swings.
• China's Jan-March gold consumption rose 5.94% Y/Y to 308.91 metric tons and its gold output for that period rose 1.16% Y/Y to 85.96 metric tons, according to the Gold Association.
• Copper futures remained bid and extended on their best levels in nearly 2 years.

CRYPTO

• Bitcoin traded indecisively with price action on both sides of the USD 64,500 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ kept its policy settings unchanged with the short-term interest rate target at 0.0%-0.1%, as expected, with the decision made unanimously, while it dropped the reference from the statement that it currently buys about JPY 6tln worth of JGBs per month but stated that it will conduct JGB, commercial paper and corporate bond buying in line with the decision in March. BoJ said it must be vigilant to FX and market moves and their impact on the economy and prices but noted no excessive behaviour is seen in Japan's asset market and financial institutions' practices. Furthermore, it stated that if trend inflation rises, the BoJ will likely adjust the degree of monetary easing but also added to expect accommodative monetary conditions to continue for the time being. In terms of the latest Outlook Report, Board Members' Real GDP median forecast for Fiscal 2024 was cut to 0.8% from 1.2% but the Fiscal 2025 median forecast was maintained at 1.0%, while the Core CPI Fiscal 2024 median forecast was raised to 2.8% from 2.4% and Fiscal 2025 median forecast was raised to 1.9% from 1.8%.
• Chinese Foreign Minister Wang said in a meeting with US Secretary of State Blinken that the China-US relationship has stabilised but negative factors are building, while he added that sliding into conflict with the US would be a lose-lose situation that they ask the US not to interfere with China's internal affairs. Furthermore, Blinken said there is no substitute for face-to-face diplomacy and they need to avoid miscalculations, while he hopes the US and China can make progress on agreements, citing fentanyl, military-to-military ties and AI risks.
• US is pushing allies in Europe and Asia to tighten restrictions on exports of chip-related technology and tools to China amid rising concerns about Huawei's development of advanced semiconductors, according to FT sources. US wants Japan, South Korea, and the Netherlands to use existing export controls more aggressively, including stopping engineers from their countries servicing chipmaking tools at fabs in China.
• ByteDance reportedly prefers shutting down the app rather than a sale if it exhausts all legal options and the algorithms TikTok relies on are deemed core to ByteDance’s overall operations, making the sale of the app unlikely, according to Reuters sources.

DATA RECAP

• Tokyo CPI YY (Apr) 1.8% vs. Exp. 2.6% (Prev. 2.6%)
• Tokyo CPI Ex. Fresh Food YY (Apr) 1.6% vs. Exp. 2.2% (Prev. 2.4%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Apr) 1.8% vs. Exp. 2.7% (Prev. 2.9%)

GEOPOLITICS

MIDDLE EAST

• Hezbollah said it shelled an Israeli force with artillery at the site of Al-Malikiyah and achieved a direct hit, according to Al Jazeera.
• UK navy warship shot down a Houthi missile targeting a merchant vessel, according to a statement.
• Houthi military spokesman said the Iran-backed group targeted “Israeli” ship MSC Darwin in the Gulf of Aden, according to Iran International.

OTHER

• US official said the US could announce as soon as Friday USD 6bln in new weapon purchases for Ukraine.
• North Korean leader Kim supervised the test-firing of multiple launch rockets, according to KCNA.
• China's Defence Ministry said Chinese and French militaries established a dialogue mechanism for cooperation between theatre commands, according to Reuters.

EU/UK

NOTABLE HEADLINES

• ECB's Panetta said they must weigh the risk of monetary policy becoming too tight, while he added that timely and small rate cuts would counter weak demand and could be paused. Furthermore, he stated that hesitations in adjusting rates would hurt investment and productivity, while large rate cuts could create a credibility issue.

DATA RECAP

• UK GfK Consumer Confidence (Apr) -19.0 vs. Exp. -20.0 (Prev. -21.0)