• APAC stocks traded without a firm direction following a similar lead from Wall Street ahead of NFP; Hong Kong had Friday trade scrapped amid a typhoon signal.
• G10 currencies were largely flat but the JPY gradually edged higher in APAC trade while Antipodeans held a mild downward bias.
• European equity futures are indicative of a steady cash open with the Euro Stoxx 50 future -0.1% after cash closed -0.7% on Thursday.
• US Secretary of State Blinken said 90% of the Gaza ceasefire agreement is agreed upon, but critical issues remain where there are gaps.
• Looking ahead, highlights include German Industrial Output, Trade, EZ Employment (F), US NFP, Canadian Employment, ECB’s Elderson; Fed’s Williams, Waller, and Earnings from Berkeley.  

US TRADE

EQUITIES

• US stocks lacked direction for most of the day but ultimately headed lower late in the session following a slew of mixed US data, as sentiment was initially weighed on by soft ADP which came in beneath the bottom-end of the forecast range. Sectors finished largely in the red with the downside led by Health Care, Industrials, and Financials.
• SPX -0.3% at 5,503, NDX +0.05% at 18,930, DJIA -0.54% at 40,756, RUT -0.61% at 2,132
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury Secretary Yellen said the US labour market has become less tight but continues to create jobs. "We have a good, strong job market, and growth continues at a rapid pace."
• Republican candidate Trump said he will create a Government Efficiency Commission and will end 10 regulations for every new one introduced. He promises to make the US the leader in cryptocurrency and to eliminate taxes on Social Security benefits. For companies manufacturing products in the US, he plans to reduce the corporate tax rate from 21% to 15%. He intends to impose significant tariffs if products are imported from other countries and will use tariffs to encourage domestic production. Trump also proposes opening up portions of federal land for large-scale housing construction in zones that will have ultra-low taxes and minimal regulation. Additionally, he suggests that the US should establish its sovereign wealth fund.

NOTABLE US EQUITY UPDATES

• Broadcom Inc (AVGO) Q3 2024 (USD): Adj. EPS 1.24 (exp. 1.20), Revenue 13.07bln (exp. 12.96bln). Adj. EBITDA 8.22bln (exp. 7.89bln); Sees Q4 revenue about 14bln (exp. 14.13bln). Semiconductor solutions revenue 7.27bln (exp. 7.41bln). Infrastructure software revenue 5.80bln (exp. 5.5bln). Adj. operating income 7.95bln (exp. 7.73bln) Adj. R&D expense 1.47bln (exp 1.47bln). Capital expenditure 172mln (exp 140.5mln). Exec said the Co. is raising FY24 revenue forecasts to USD 51.5bln (prev. USD 51bln; exp. 51.46bln). Shares fell ~6.7% after earnings.
• Intel (INTC) is said to be exploring the sale of part of its stake in Mobileye (MBLY), according to Bloomberg sources; said to be a large stake. Intel also weighing options for its network and edge business.
• Qualcomm (QCOM) has reportedly explored buying pieces of Intel’s (INTC) design business, Reuters sources said.
• Berkshire Hathaway (BRK.B) sold about 18.8mln Bank of America (BAC) common shares for approximately USD 760mln between Sept 3 and Sept 5, according to an SEC filing

APAC TRADE

EQUITIES

• APAC stocks traded without a firm direction following a similar lead from Wall Street, with the tone tentative heading into the much-awaited US jobs report, which could be the determining factor between a 25bps or 50bps cut by the Fed after the central bank shifted its emphasis to the labour market. As a reminder, Fed Vice Chair Williams and Governor Waller will be speaking after the jobs numbers ahead of the Fed's blackout period set to begin this weekend for the September 18th announcement.
• ASX 200 just about held onto gains at one point, with Utilities, Financials, Real Estate and Gold names countering the underperformance in Energy and Tech.
• Nikkei 225 was subdued under the 37k mark (and briefly dipped under 36.5k) with mining and industrial names among the worst performers, whilst Nippon Steel shares fell around 3% amid the ongoing spat with the Biden admin after the US intervened in the Nippon Steel takeover of US Steel amid national security risks.
• Hang Seng saw its Friday trade scrapped amid a typhoon signal.
• Shanghai Comp saw subdued trade amid the broader tentative mood across the market and lack of Stock Connect flows. In terms of newsflow, former PBoC Governor Yi Gang offered a bleak prognosis of the Chinese economy, whilst the PBoC drained a net CNY 1.1916tln for the week via open market operations, marking the biggest weekly net cash withdrawal in eight months, according to Reuters calculations.
• US equity futures traded mixed with the ES and NQ in the red for most of the session (ES briefly dipped under 5,500 and yesterday's low at 5,490) while the RTY and YM eked mild gains.
• European equity futures are indicative of a steady cash open with the Euro Stoxx 50 future -0.1% after cash closed -0.7% on Thursday.

FX

• DXY saw flat trade in a 100.93-101.06 APAC range with volatility non-existent ahead of the US jobs report. for references, DXY printed a 100.96-101.37 range yesterday with the trough printed post-ADP.
• EUR/USD was uneventful above 1.1100 in a narrow 1.1106-14 range and within yesterday's 1.1073-1.1119 range. If yesterday's high is breached, then the next level to eye is the 29th August high at 1.1139.
• GBP/USD saw another flat APAC session amid a lack of catalysts with the pair in a tight 1.3169-81 range, near yesterday's peak at 1.3185 (vs low 1.3134), with the next level to the upside the 30th August high at 1.3199.
• USD/JPY edged lower and eventually fell under 143.00 as JPY very gradually tilted higher against major peers amid the cautious tone, but parameters remained relatively narrow. USD/JPY in a 142.90-143.44 range (vs yesterday's 142.83-144.22 range.
• Antipodeans held a downward bias but overall there was uneventful trade across the risk barometers amid a lack of newsflow and ahead of major risk events.
• PBoC set USD/CNY mid-point at 7.0925 vs exp. 7.0927 (prev. 7.0989)

FIXED INCOME

• 10yr UST futures experienced contained pre-NFP trade with futures also taking a breather after yesterday's rally seen across the curve, particularly in the longer end, amid a mixed bag of US data with 2s/10s again failing to sustain an inversion.
• Bund futures consolidated after falling from a 134.29 peak to a 133.82 low yesterday, although the Dec contract closed above 134.00 at 134.05.
• 10yr JGB futures saw little action with APAC traders hesitant to place trades and looking to next week to react to the US NFP data.

COMMODITIES

• Crude futures traded choppy within narrow ranges following a flat Thursday settlement as China woes and the Libyan supply resumption counter the large crude draws this week and bullish OPEC headlines.
• Spot gold was subject to sideways trade in a narrow USD 5/oz range ahead of the US jobs report after posting a USD 2,493.59-2,523.29/oz range yesterday.
• Copper futures were directionless after yesterday's mixed session, and with the base metals complex looking for impetus from the US jobs report.
• OPEC said eight participating countries have agreed to extend their additional voluntary cuts of 2.2mln bpd for two months until the end of November, according to Reuters.
• Citi sees the OPEC+ unwind delay and ongoing geopolitics and financial positioning providing price support at USD 70-72/bbl in Brent. Citi recommends selling on a bounce toward USD 80/bbl Brent, as it looks ahead to move down to the USD 60/bbl range in 2025 as a sizeable market surplus emerges.
• Goldman Sachs pushed back their end-2024 copper price target of USD 12,000/t to after 2025 and lowered the 2025 aluminium price forecast to USD 2,540/t (from USD 2,850/t).
• Citi maintains 0-3-month price forecasts for copper at USD 9,500/t, aluminium at USD 2,500/t, and zinc at USD 2,800/t; "We reiterate our cautious outlook for the base metals complex until after the US election when we expect more clarity on US and China policy and improving manufacturing sentiment as Fed rate cuts progress." (Newswires)

CRYPTO

• Bitcoin posted mild gains overnight but remained well under 57k.

NOTABLE ASIA-PAC HEADLINES

• Former PBoC Governor Yi Gang, speaking at the Bund Summit, stated that China currently faces weak domestic demand, particularly in consumption and investment. He expressed hope that in the near future, China’s GDP deflator will turn slightly positive. Additionally, Yi hopes that the producer price industry will improve to about zero by the end of this year. He suggests that China should return to a proactive fiscal policy and an accommodative monetary policy.
• PBoC injected CNY 141.5bln via 7-day Reverse Repo at a maintained rate of 1.70%.
• PBoC drained a net CNY 1.1916tln for the week via open market operations, marking the biggest weekly net cash withdrawal in eight months, according to Reuters calculations.
• HKEX confirmed no trading on Friday in securities and derivatives markets due to the issuance of Typhoon Signal No. 8. Stock Connect trading is also suspended for the day. No securities clearing and settlement services will be provided for the day.
• Japan Finance Minister Suzuki said there is a need to examine the impact of potential investment tax hikes on the economy and stock prices when asked about the preproposal, according to Reuters.

DATA RECAP

• Japanese All Household Spending YY (Jul) 0.1% vs. Exp. 1.2% (Prev. -1.4%)
• Japanese All Household Spending MM (Jul) -1.7% vs. Exp. -0.2% (Prev. 0.1%)
• Japanese Foreign Reserves (Aug) 1.236T (Prev. 1.219T)

GEOPOLITICS

MIDDLE EAST

• US Secretary of State Blinken said 90% of the Gaza ceasefire agreement is agreed upon, but critical issues remain where there are gaps; Incumbent on both parties to get to yes on remaining issues.
• "The Israeli army withdraws from Jenin and its camp after 10 days of military operations", according to Sky News

US-CHINA

• US Commerce Department unveiled the latest export curbs and targets China with new quantum, chip-related export curbs and latest global controls exempt countries with similar measures, according to Bloomberg. Rules align with those from Japan, the Netherlands, and other allies.

EU/UK

NOTABLE HEADLINES

• No notable news.

DATA RECAP

LATAM

• BCB Director Guillen said the external scenario has become a bit more benign since the latest rate decision. He noted the GDP surprise; growth was primarily led by consumption, and there is a tight labour market. Inflation expectations have not shifted significantly, continue to be deanchored, and keep him uncomfortable. Guillen mentioned that monetary policy must be conducted to bring inflation expectations back in line. The FX intervention was really about providing liquidity. He does not favour updating the neutral rate every quarter in real time and is comfortable with the current estimate of the neutral rate.