• European equities are mixed [Euro Stoxx 50 U/C] taking lead from the indecisive trade seen overnight as earnings season kicks into gear
• DXY meanders between 95.875-682 while AUD and GBP outperform in the G10 space
• Looking ahead, highlights include National German CPI, US ADP, FOMC Rate Decision & Press Conference
• EARNINGS: AT&T, Boeing, Mcdonald’s, Microsoft, Facebook, Qualcomm, Paypal, Visa, Tesla

ASIA

Asian stocks traded indecisively with the region tentative heading into this week’s key risk events and as participants also digested better than expected Apple results, which only provided brief support to US equity futures after-hours. ASX 200 (+0.1%) and Nikkei 225 (-0.4%) were both subdued although strength across commodities just about kept the Australian benchmark afloat, while Tokyo stocks were weighed by currency effects and uninspiring corporate updates. Elsewhere, Hang Seng (-0.1%) and Shanghai Comp. (-0.3%) declined at the open amid broad weakness in the region and with China Life Insurance shares heavily pressured after it flagged a 50%-70% drop in FY net, although Chinese markets then rebounded off lows amid a non-committal tone ahead of the looming US-China trade talks and after the PBoC injected liquidity for the 1st time in 8 days. Finally, 10yr JGBs were uneventful with prices stuck to within this week’s tight range amid the indecision seen across the region and with an unchanged BoJ Rinban announcement largely ignored.

PBoC injected CNY 50bln via 14-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.7343 (Prev. 6.7356)

China is expected to present a roadmap on structural reforms to US during this week’s meetings in Washington. (Nikkei)

US

Fed said policymakers will meet as scheduled on Wednesday despite weather conditions causing a late opening of government offices. (Newswires)

Apple (AAPL) - Q1 EPS USD 4.18 vs. Exp. USD 4.17, revenue USD 84.31bln vs. Exp. USD 83.97bln. Q1 iPhone revenue USD 51.98bln vs. Exp. USD 52.67bln. Q1 services revenue USD 10.90bln vs. Exp. USD 10.87bln. Co. expects Q2 revenue to be between USD 55-59bln vs. Exp. USD 58.83bln. Co. shares rose in excess of 5.5% after-market. (Newswires)

UK/EU

Following the vote, UK Labour leader Corbyn has finally agreed to meet with UK PM May. (Newswires)

EU spokesperson also reiterated Brexit deal and backstop will not be renegotiated but added that the EU is ready to consider a Brexit delay. (Newswires)

Labour Source states that Labour leader Corbyn will insist the will of parliament is respected and that no-deal is now off the table when he meets with PM May; adding that he will state his party’s alternative plan must now be the focus of Brexit negotiations. (Newswire)

EU Council President Tusk and UK PM May are to hold a phone call later today regarding Brexit; according to an EU source. (Newswires)

Irish Foreign Minister Coveney said that two years were spent looking for a backstop alternative but have not found one. (Newswires) This comes after the Brady amendment was passed in UK Parliament yesterday which requires the backstop to be replaced by an alternative arrangement

EQUITIES

Major European equities have been indecisive [Euro Stoxx 50 U/C] taking lead from the indecisive trade seen overnight ahead of today’s FOMC rate decision and press conference. Benefitting from sterling effects the FTSE 100 (+1.2%) is the outperforming index, with Burberry (+2.5%) in the green in sympathy with LVMH (+6.3%) after their earnings; and stating they are cautiously confident regarding 2019. Other luxury names such as Kering (+3.4%), Christian Dior (+4.0%) and Pandora (+2.0%) are also up in sympathy with LVMH. Sectors are mixed with outperformance in consumer discretionaries and some underperformance in telecom names. Other notable movers include Atos (+8.1%) who, following their earnings and 2019 guidance confirmation, are at the top of the Stoxx 600. Elsewhere, Novartis (-1.2%) are down following results, where the Co. missed on Q4 sales and operating income, as are Siemens (-1.5%) after their Q1 revenue came in just under expectations; Co. also stating they have made no further concessions on the Alstom (-0.5%) merger and will not pursue it at all costs.

FX

AUD - Firmer than expected Australian Q4 CPI data has helped to revive a flagging Aud/Usd, with the pair back up on the 0.7200 handle and close to daily chart resistance around 0.7207, while Aud/Nzd has rebounded firmly over 1.0500, as the Kiwi continues to meet offers around 0.6850 vs the Usd.

GBP - The next best G10 currency, as initial post-UK Parliamentary Brexit vote downside is reversed to an extent in Cable and Eur/Gbp, with the former reclaiming 1.3100+ status and perhaps deriving some respite from a bounce ahead of the 200 DMA (circa 1.3055). Meanwhile, the cross has recoiled relatively sharply from fresh peaks just shy of 0.8760 towards 0.8715, and perhaps the bulk of noted month end buying interest has now been transacted.

CAD - Another major ‘outperformer’, or at least holding a firmer line vs its US counterpart within a 1.3235-85 range, and still cushioned by the recuperation in crude prices. Ahead, perhaps a little independent impetus via Canadian average weekly earnings data, but in truth this pales against the sheer volume of US releases on tap, and of course the impending FOMC.

JPY/EUR - Both flat to a tad softer vs the Dollar, and very confined in the run up to the Fed, as Usd/Jpy continues oscillate between 109.00-50 amidst undulations in broad risk sentiment, and the single currency remains entrenched in a 1.1400-50 band (with the topside also ‘protected’ by the 200 DMA around 1.1444).

CHF/SEK - The Franc and Krona have extended recent losses/underperformance/retracements, with the Chf perhaps undermined by weaker than forecast Swiss KoF and ZEW sentiment surveys, while the Sek will not have been helped by declines in consumer and industrial confidence that will merely keep the Riksbank on the back-burner. Usd/Chf is hovering above 0.9950 and Eur/Sek just below 10.3900.

DXY - The index and Greenback overall looking to the Fed for more direction, as the DXY meanders between 95.875-682.

FIXED INCOME

Bunds and Gilts are both back on an even keel after forging fresh intraday lows at 164.99 and 123.07 respectively earlier, and the 2 EU benchmarks now look set to bide time until US participants arrive for FOMC day. US Treasuries are a fraction underwater, and with the curve incrementally steeper after yesterday’s mild flattening, as the Fed looms following a veritable deluge of data and the Quarterly Refunding details.

COMMODITIES 

Brent (+0.6%) and WTI (+0.7%) prices are firmer as the complex reacts to the smaller than expected build in yesterday’s API Crude Stocks alongside reports that Saudi Arabia are planning on further oil production cuts and exports next month; additionally, believing that SPR releases are a solution to the US’s Venezuela oil shortage problem. Follows sanctions announced on Monday which aim to stop the proceeds from PDVSA’s crude exports of around 500,00 BPD to the US.

Gold (+0.1%) is trading in the middle of its USD 6/oz range, on a steady dollar ahead of today’s FOMC decision. Elsewhere, Vale’s CEO announced they will take up to 10% of the Co’s output offline to decommission 10 dams following Friday’s dam burst.

Iranian oil minister says the country has a range of options to increase oil income by USD 20bln. (Newswires)