• APAC stocks began the week on the front foot despite last Friday's indecisive performance on Wall St where the major indices traded sideways.
• European equity futures indicate a higher open with Euro Stoxx 50 futures up 0.3% after the cash market closed down 0.2% on Friday.
• A helicopter carrying Iranian President Raisi and Foreign Minister Amir-Abdollahian crashed due to adverse weather conditions with no survivors reported; Iran’s Supreme Leader Khamenei signalled continuity. 
• Spot gold printed a record high of around USD 2,440/oz while copper futures extended on gains and benchmark LME prices hit a fresh all-time peak above USD 11,100/t.
• Looking ahead, highlights include comments from BoE’s Broadbent, Fed’s Bostic & Barr, and earnings from Ryanair & Palo Alto Networks. 
• Holidays: Whit Monday (Switzerland, Norway, Denmark are closed).

20th May 2024

SNAPSHOT

• Click here for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks finished rangebound on Friday in a quiet session with no tier 1 releases and no major incremental newsflow. S&P 500 futures traded sideways throughout most of the session, while US Leading Index for April was the sole data highlight and disappointed expectations.
• SPX +0.12% at 5,303, NDX -0.06% at 18,546, DJIA +0.34% at 40,003, RUT -0.03% at 2,096.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed Chair Powell did not comment on monetary policy or the economy in remarks prepared for delivery to Georgetown Law School’s commencement ceremony, while it was reported on Friday that Powell had tested positive for COVID the day before and was working from home.
• Fed's Bowman (voter) said on Friday that she is monitoring data to assess if policy is sufficiently restrictive and is willing to hike if inflation progress stalls or reverses, while she reiterated her baseline outlook that inflation would decline further with steady policy rates but sees risks. Bowman also said she will remain cautious in rate decisions and sees inflation remaining elevated for some time. She also noted that they have not seen further progress on inflation this year.

APAC TRADE

EQUITIES

• APAC stocks began the week on the front foot despite last Friday's indecisive performance on Wall St where the major indices traded sideways but remained near record levels, while there was also a lack of fresh macro developments over the weekend.
• ASX 200 was led by outperformance in miners after gold and copper prices climbed to fresh record levels.
• Nikkei 225 surged above the 39,000 level with the index unfazed by the mild uptick in yields and absence of fresh drivers.
• Hang Seng and Shanghai Comp conformed to the positive mood but with gains capped in the mainland amid lingering frictions after China sanctioned three US defence contractors for arms sales to Taiwan, while the PBoC provided no surprises with the benchmark LPRs kept unchanged.
• US equity futures were marginally higher alongside the advances seen in Asian counterparts.
• European equity futures indicate a higher open with Euro Stoxx 50 futures up 0.3% after the cash market closed down 0.2% on Friday.

FX

• DXY lacked fresh catalysts over the weekend and Fed Chair Powell also refrained from commenting on monetary policy or the economy in his prepared remarks for Georgetown Law School’s commencement ceremony, while the focus this week will likely be on Fed speakers and FOMC Minutes.
• EUR/USD was kept within a tight range amid quiet newsflow and a light data calendar.
• GBP/USD traded little changed and just about held onto the 1.2700 status, while participants await comments from BoE's Broadbent.
• USD/JPY remained afloat but stalled just shy of the 156.00 handle amid a quiet overnight calendar and mild upside in JGB yields.
• Antipodeans lacked firm direction in the absence of any major data releases, while participants look to tomorrow's RBA Minutes and Wednesday's RBNZ rate decision for catalysts to spur price action.
• PBoC set USD/CNY mid-point at 7.1042 vs exp. 7.2162 (prev. 7.1045)

FIXED INCOME

• 10-year UST futures were muted after last week's choppy performance and pullback from resistance at the 110.00 level.
• Bund futures languished beneath the 131.00 level with lighter volumes likely on Whit Monday.
• 10-year JGB futures trickled lower with long-end yields in Japan up around 3bps each including the 30yr JGB yields which rose to the highest since July 2011, while firmer demand at the latest 10yr inflation-indexed auction did little to spur prices.

COMMODITIES

• Crude futures were rangebound but remained around last week's best levels as prices took a breather from recent advances.
• Spot gold printed a record high of around USD 2,440/oz after buying picked up as Shanghai commodities trade got underway.
• Copper futures extended on gains which saw benchmark LME prices hit a fresh all-time peak above USD 11,100/ton after China's recent property support efforts.
• Iraqi PM said there is no progress in talks with oil companies to resume exports from Kurdistan to Turkey, according to Reuters.
• Libya began operating the new pipeline from its North Hamada oilfield with the initial transfer capacity expected at 2k bpd, according to the National Oil Corporation cited by Reuters.
• Ukrainian intelligence sources said the SBU and military drones struck an oil refinery and airfield in Russia’s southern Krasnodar region in an overnight attack, according to Reuters.
• US was reported on Friday to have bought 3.3mln bbls of oil for the SPR.

CRYPTO

• Bitcoin edged mildly higher overnight alongside the positive risk environment.

NOTABLE ASIA-PAC HEADLINES

• Chinese Loan Prime Rate 1Y (May) 3.45% vs. Exp. 3.45% (Prev. 3.45%)
• Chinese Loan Prime Rate 5Y (May) 3.95% vs. Exp. 3.95% (Prev. 3.95%)
• China MOFCOM announced symbolic sanctions against Boeing Defense, Space & Security, General Atomics Aeronautical Systems Inc. and General Dynamics Land Systems Inc. which were added to China's “unreliable entity” list for providing weapons to Taiwan.
• China’s Mofcom launched an anti-dumping probe into polyoxymethylene copolymers (used in electronics and cars) from the EU, US, Taiwan and Japan, according to FT.
• Taiwan's President Lai was sworn in and called on China to stop threatening Taiwan politically and militarily, while he called on Taiwan and China to take on the global responsibility of maintaining peace and stability in the region. President Lai said they seek peace but cannot have illusions and must work together with democratic countries to form deterrence and avoid war, as well as noted that Taiwan will maintain the status quo and cannot make any concessions on democracy and freedom.
• South Korea plans to partially lift the short-selling ban in June, according to Yonhap.

GEOPOLITICS

MIDDLE EAST

• A helicopter carrying Iranian President Raisi and Foreign Minister Amir-Abdollahian crashed due to adverse weather conditions, according to state TV. Iran’s Supreme Leader Khamenei reassured Iranians the country’s management would not be affected by the incident and that no disruption would occur in Iran’s state affairs, while it was later confirmed that all passengers including President Raisi were killed in the crash.
• Israel’s Gantz demanded that the war cabinet agree to a six-point plan for the Gaza conflict by June 8th which should lay out a post-war vision for Gaza governance and equitable Israeli military conscription. Furthermore, Gantz warned his party would quit the emergency coalition government if Israeli PM Netanyahu does not meet expectations, according to Reuters.
• White House National Security Adviser Sullivan discussed with Israelis methods to ensure the defeat of Hamas while minimising harm to civilians, while Sullivan reiterated US President Biden's longstanding position on Rafah and proposed a series of concrete measures to ensure more aid flows into Gaza. Furthermore, Sullivan held constructive meetings in Saudi Arabia and briefed Israeli PM Netanyahu on the Saudi meetings and the potential that may now be available for Israel and the Palestinians, according to Reuters citing the White House.
• US Central Command said Houthis launched an anti-ship ballistic missile into the Red Sea and struck M/T Wind which is a Panamanian-flagged, Greek-owned oil tanker which caused flooding and resulted in a loss of propulsion and steering. However, the crew was able to restore propulsion and steering, and there were no casualties reported, according to Reuters.

OTHER

• Ukrainian forces destroyed a Russian Black Sea fleet minesweeper, according to the Ukrainian navy.
• Russia’s Defence Ministry said Russian forces took control of Starytsia in Ukraine’s Kharkiv region, according to TASS. In relevant news, Russia's Defence Ministry said Russia shot down US ATACMS missiles and drones Ukraine used to attack Russian regions overnight, according to Reuters.
• North Korea said it would reconsider measures necessary for improving the overall nuclear deterrence posture after the recent US subcritical nuclear test, while it added that the US subcritical nuclear test fuels an international nuclear arms race, according to KCNA.

EU/UK

NOTABLE HEADLINES

• Rightmove said asking prices for UK homes hit a record high in the four weeks to mid-May although the pace of increase was the slowest YTD.
• ECB's Vasle said on Friday that he is awaiting data and open to possibilities on the rate path, while he added that cutting rates in June would be 'reasonable'.

DATA RECAP

• UK Rightmove House Price Index MM 0.8% (Prev. 1.1%)