• APAC stocks traded mixed as the cautious mood from Wall Street reverberated into Asia-Pacific, with macro newsflow overnight on the lighter side; Tokyo underperformed.
• DXY was caged in a tight range as traders look ahead to the US ISM Services data for impetus following Monday's dovish Manufacturing print.
• YouGov/Sky News Snap Debate Poll: PM Sunak won the first head-to-head election debate [Sunak 51%, Starmer 49%].
• European equity futures are indicative of a firmer cash open with the Euro Stoxx 50 future +0.5% after cash closed -1.0% on Tuesday.
• Looking ahead, highlights include EZ, UK, Canadian & US Services & Composite PMIs, US ADP National Employment, US ISM Services, NBP and BoC Policy Announcement, BoC's Macklem & Rogers, and Supply from the UK and Germany.

US TRADE

EQUITIES

• US stocks closed mixed in overall contained trade. The risk tone throughout the session was cautious. Cash equities opened with a soft bias, and after some fleeting choppiness post-JOLTs data, resumed to the downside as growth concerns continued to weigh on traders' minds.
• SPX +0.15% at 5,291, NDX +0.29% at 18,655, DJIA +0.36% at 38,711, RUT -1.25% at 2,034
• Click here for a detailed summary.

NOTABLE HEADLINES

• Treasury Secretary Yellen said the Treasury never tries to time the market in debt management. She added the issuance of Treasury Bills is in line with historical averages. Market participants believe that short-term rates will come down. She said short-term bill issuance is in line with recommendations from the TBAC. Yellen said there is nothing about issuing short-term debt that creates a 'sugar high' for the economy, according to Reuters.
• A group backed by BlackRock (BLK) and Citadel Securities is planning to start a new national stock exchange in Texas, according to WSJ.
• Tesla (TSLA) CEO Musk said his current best guess for Nvidia (NVDA) purchases by Tesla is USD 3-4bln this year, via a post on X.
• Nike (NKE) has cut staff in its European HQ as part of a multiyear cost-cutting plan, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as the cautious mood from Wall Street reverberated into Asia-Pacific, with macro newsflow overnight on the lighter side.
• ASX 200 was modestly firmer with defensive sectors among the better performers, whilst lagging sectors include gold names, mining stocks, and energy companies. Little immediate reaction was seen on commentary from RBA Governor Bullock and the softer-than-expected Q1 GDP report.
• Nikkei 225 was the regional laggard and dipped under the 38,500 mark with mining and industrial firms among the losers, whilst autos continued to feel the woes of the latest safety scandal in the country.
• Hang Seng and Shanghai Comp varied with the former propped up by auto stocks after some firms were permitted to test out advanced levels of autonomous driving. Mainland markets shrugged off the improvement in Caixin Services PMI which also noted "China’s economy is generally stable and remains on the road to recovery."
• US equity futures held a modest upward bias (ES +0.2%) following the prior day's cautious trade as participants look ahead to the US ADP and ISM Service today ahead of Friday's US jobs report.
• European equity futures are indicative of a firmer cash open with the Euro Stoxx 50 future +0.5% after cash closed -1.0% on Tuesday.

FX

• DXY was caged in a tight 104.12-22 APAC range amid a lack of catalysts and within yesterday's 103.99-104.33 range. Traders look ahead to the US ISM Services data for impetus following Monday's price action to the dovish ISM Manufacturing print.
• EUR/USD was uneventful in a 1.0877-85 range with EUR/GBP also trading sideways as participants gear up for Thursday's ECB announcement.
• GBP/USD traded horizontally in a 1.2766-80 range with no action seen during the UK election debate, which offered little in the way of fresh updates but a snap debate poll saw PM Sunak as the better performer - albeit only just.
• USD/JPY gradually inched higher and back above the 155.50 mark as the pair outperformed following the underperformance during the Tuesday European and US sessions and as JGB yields were on the back foot.
• Antipodeans were both modestly firmer following a data deluge for Australia and New Zealand, although only the improvement in Chinese Caixin Services PMI provided some impetus to the pairs.
• PBoC set USD/CNY mid-point at 7.1097 vs exp. 7.2418 (prev. 7.1083)

FIXED INCOME

• 10-year UST futures saw sideways trade overnight and consolidation after yesterday's bid sparked by the soft JOLTS report which printed at the lowest since February 2021.
• Bund futures were uneventful and holding a 130.30-41 range vs yesterday's 129.81-130.78 parameter as European players look ahead to Final PMIs and a 2030 Bund auction.
• 10-year JGB futures were firmer and playing catch-up to the price action in Western peers after the complex was lifted by the soft US JOLTS metrics ahead of the US jobs report on Friday.

COMMODITIES

• Crude futures traded flat with a soft bias as the crude continued to digest the OPEC+ meeting during Tuesday's session before encountering a surprise build in private stockpiles.
• Spot gold saw horizontal trade for most of the session but then drifted higher after breaching overnight resistance around USD 2,330/oz as it tested its 50 DMA (USD 2,336.64/oz) to the upside.
• Copper futures consolidated after the prior day's retreat which saw 3M LME copper fall back under the USD 10,000 level.
• US Private Energy Inventory Data: Crude +4.05mln (exp. -2.3mln), Cushing +0.983mln, Distillates +4.03mln (exp. +2.5mln), Gasoline +1.98mln (exp. +2mln).
• A group of US representatives ask the DoJ to probe potential antitrust conspiracies among US oil producers, OPEC and OPEC+, according to a statement.
• US Energy Secretary Granholm said the global oil market is well stocked and feels comfortable that there will be no huge increase in oil and gas prices in the 'next short while'. The US could boost the rate of replenishing the Strategic Petroleum Reserve as maintenance work at two sites winds down. Work at SPR will be finished by the end of year. Creating a Strategic Resilience Reserve for stockpiles of critical minerals with allies to help energy transition is a good idea. US talking with allies on critical minerals production, stockpile goals, could release details 'soon'. Granholm said even OPEC countries recognize there is only so much they can do to manipulate oil prices. Granholm said 'We should all be concerned' about oil industry consolidation. The US aims to complete the LNG export review in Q1 2025. She doesn’t expect permitting a pause to damage US competitiveness in the global LNG market.
• UAE's ADNOC set July Murban crude OSP at USD 83.93/bbl (prev. USD 89.14/bbl in June).
• Aluminium name Novelis has postponed its IPO due to market conditions; Novelis will continue to evaluate the timing of the offering in the future, according to PR Newswire.

CRYPTO

• Bitcoin held a modestly firmer bias and traded on either side of the USD 71,000 level.

NOTABLE ASIA-PAC HEADLINES

• Some Chinese AI chip firms are reportedly designing less powerful processors to retain access to TSMC (TSM /2330 TT) production in the face of US sanctions, according to Reuters sources.
• RBA Governor Bullock expected Q1 GDP growth to be quite low; the economy is weak and that is showing up in consumption; not ruling anything in or out on policy. Looking for a soft landing for the economy. Inflation is coming down but only slowly. The board won't hesitate to act on rates if inflation does not come down as expected. Still judges inflation risks as balanced. Q2 inflation data will be important for monetary policy, not the single most important thing.
• PBoC injected CNY 2bln via 7-day reverse repos with the rate at 1.80%.
• Fitch affirmed India at BBB-, outlook Stable.

DATA RECAP

• Chinese Caixin Services PMI (May) 54.0 (Prev. 52.5); "China’s economy is generally stable and remains on the road to recovery."
• Australian Real GDP QQ SA (Q1) 0.1% vs. Exp. 0.2% (Prev. 0.2%, Rev. 0.3%)
• Australian Real GDP YY SA (Q1) 1.1% vs. Exp. 1.2% (Prev. 1.5%, Rev. 1.6%)
• Australian GDP Chain Price Index (Q1) 0.8% (Prev. 2.0%)
• Australian Final Consumption Exp QQ SA (Q1) 0.6% (Prev. 0.2%)
• Australian Gross Fixed Capital Exp SA (Q1) -0.9% (Prev. -0.2%)
• Australian Judo Bank Composite PMI Final (May) 52.1 (Prev. 52.6)
• Australian Judo Bank Services PMI Final (May) 52.5 (Prev. 53.1)
• Australian AIG Manufacturing Index (May) -31.1 (Prev. -13.9)
• Australian AIG Construction Index (May) -68.1 (Prev. -25.6)
• New Zealand Export Prices SA (Q1) -0.3% vs. Exp. 1.5% (Prev. -4.2%)
• New Zealand Terms of Trade QQ (Q1) 5.1% vs. Exp. 1.6% (Prev. -7.8%)
• New Zealand Import Prices SA (Q1) -5.1% vs. Exp. -1.0% (Prev. 3.8%)
• New Zealand Export Volumes SA (Q1) 6.3% (Prev. 2.6%)
• South Korean GDP Growth QQ Revised (Q1) 1.3% (Prev. 1.3%)
• South Korean GDP Growth YY Revised (Q1) 3.3% (Prev. 3.4%)
• Japanese JibunBK Services PMI Final SA (May) 53.8 (Prev. 53.6)
• Japanese JibunBK Composite Op Final SA (May) 52.6 (Prev. 52.4)
• Japanese Overall Lab Cash Earnings (Apr) -2.1% (Prev. 0.6%, Rev. 1.0%)
• Japanese Overtime Pay* (Apr) -0.6% (Prev. -1.5%, Rev. -0.5%)

GEOPOLITICS

MIDDLE EAST

• US State Department said Israel is ready to implement a ceasefire deal, according to Bloomberg.
• Israeli military chief of staff said Israel is prepared to shift offense along the Northern border with Lebanon, nearing a decision point.
• "Israeli tanks penetrate downtown Rafah for the first time since the start of the Israeli invasion of the area", according to Sky News Arabia.
• Hamas said it cannot agree to an agreement that does not secure a final ceasefire and Israeli withdrawal, according to Al Jazeera.
• Israel Ministry of Defense said it has signed an agreement with the US government for a third squadron of F-35 stealth aircraft for the Israeli Air Force, according to Reuters.
• US military said in the past 24 hours, Iranian-backed Houthis launched two anti-ship ballistic missiles (ASBM) from Houthi-controlled areas of Yemen into the Red Sea

OTHERS

• White House said US President Biden will attend the G7 leaders summit in Apulia, Italy on June 13-14. They will advance efforts to make use of Russia's immobilised sovereign assets to help Ukraine.
• Taiwan Defence Ministry said in the past 24 hours, 26 Chinese Air Force planes were detected operating around Taiwan.
• China Maritime Safety Administration said they are to shut an area in the Northern Yellow Sea from June 5-7 due to planned live firing.

EU/UK

NOTABLE HEADLINES

• YouGov/Sky News Snap Debate Poll: PM Sunak won the first head-to-head election debate [Sunak 51%, Starmer 49%]. Snap YouGov poll of 1,657 viewers reveals how people feel each party leader performed, and who they think came across best.