14th March 2019

·        Trade deal sentiment rocked after US & China said to delay Trump/Xi meeting until April

·        Major European indices [Euro Stoxx 50 +0.3%] are firmer, but off of bests after Trump/Xi delay

·        Dollar respite as G10 counterparts falter

·        EU Council President Tusk says will appeal for a longer extension if the UK finds a delay necessary

·        Looking ahead, highlights include, US Import/Export Prices & Jobless Claims, HoC Vote on Extending the Brexit Negotiating Period, US Treasury Secretary Mnuchin budget testimony, ECB's Lane, BoC's Wilkins Speaking

ASIA

Asian stocks were initially higher across the as the region took early impetus from the US, where sentiment was underpinned by favourable data. This saw all US major indices finish positive with the S&P 500 at a 4-month high and in turn spurred the momentum in Asia, although the risk tone was eventually clouded as participants digested Chinese data. ASX 200 (+0.3%) and Nikkei 225 (U/C) both gained at the open with energy the outperformer in Australia after oil prices hit their best levels since November, while SoftBank shares were among the top gainers in the Japanese benchmark after reports it is in discussions regarding a USD 1bln investment into Uber’s self-driving unit. Chinese markets instigated a turnaround but with the downside in the Hang Seng (+0.1%) limited by notable strength seen in China’s oil majors and as China Unicom rallied post-earnings, while Shanghai Comp. (-1.2%) underperformed and fell below the 3000 level following mixed data with Retail Sales inline with expectations and Industrial Production at a 17-year low. Finally, 10yr JGBs were lacklustre amid upside in Tokyo stocks and as the BoJ began its 2-day policy meeting, although there was a different picture in the longer-end as both 20yr and 30yr JGB yields fell to November 2016 lows.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set CNY mid-point at 6.7009 (Prev. 6.7114)

Chinese Industrial Production YTD (Feb) Y/Y 5.3% vs. Exp. 5.6% (Prev. 6.2%); weakest in 17 years. (Newswires) Chinese Retail Sales YTD (Feb) Y/Y 8.2% vs. Exp. 8.2% (Prev. 9.0%)

US

China and US are said to delay Trump-Xi meeting until April, as according to sources. (Newswires)

US President Trump says he is prepared to veto if necessary, referencing the National Emergency vote today by the US Senate on Border Security & the Wall. (Twitter)

UK/EU            

*For reference a Brexit analysis post including potential amendments is available on the headline feed

Tory MPs will be given a free vote on a government motion for a "short technical extension" to Brexit; according to BBC's Norman Smith citing sources. (Twitter)

EU Council President Tusk says he will appeal to the EU27 to be open to a long extension if the UK finds it necessary to rethink Brexit strategy and build consensus around it. (Twitter)

UK PM May reportedly prepares a 3rd vote on the Brexit deal and is also said to warn Tory rebels to back her deal by next week or risk a long extension to Article 50. Separately, ERG’s Francois also said he would not back PM May’s deal. (Newswires/Times/Guardian)

Over 100 UK MPs have backed an amendment to today's motion on delaying Brexit to stop a people's vote from taking place; according to PoliticsHome. (PolitcsHome) While reported indicate that Brexiteer Tory MPs are lining up "in their dozens" to vote against the Government's Article 50 motion tonight, according to The Sun's Political Editor Tom Newton Dunn. (Sun)

Indications of a plan for a cross-party amendment forcing the government to hold indicative votes. Which could be a very big deal if tabled., Sky's Rigby.

UK Shadow Chancellor McDonnell says Labour will back a limited extension, adding that it is possible the EU may insist on a longer extension period. (BBC/Sky)

ERG member confirms that they were shown a new draft of Attorney General Cox's legal advice, which is built around Rees-Mogg's suggestion of using Article 62 of the Vienna Convention, which lays out how a country can unilaterally terminate an agreement., ITV's Brand. (Twitter)

GEOPOLITICAL

US plans to test-launch missiles later this year after President Trump recently pulled out of the Nuclear Force Treaty. (Newswires) US Senate voted 54-46 to end US support for the Saudi-led war in Yemen. (Newswires)

EQUITIES

Major European indices are in positive territory [Euro Stoxx 50 +0.2%] initially following the positive sentiment on Wall Street where the S&P 500 finished at a 5-month high and above the key 2800 level; although indices have fallen off sharply off of session highs following reports that the meeting between US President Trump and Chinese Premier Xi is delayed to at least April. While this has been seen as a potential outcome for a while markets were still taken by surprise hence the significant drop from session high. Sectors have strengthened throughout the session to all being firmly in the green, after a somewhat mixed start to the session for sectors; with IT names the initial notable laggard. Notable movers include K+S Group (+7.3%) at the top of the Stoxx 600 after their FY18 EBITDA beat on expectations, alongside the Co. presenting strong EBITDA guidance for 2019. At the bottom of the Stoxx 600 are Lufthansa (-5.3%) after the Co. cut its growth plans as higher fuel costs weighed on earnings. Elsewhere, RWE (+0.3%) shares have been volatile since opening lower by around 2% after the Co. posted earnings below expectations, the turnaround in shares may be due to the Co. stating that they are confident the timetable for a E.ON (-0.1%) deal can be adhered to, after highlighting a potential delay to it in the event of a hard Brexit.

FX

DXY - Some respite for the Dollar and index after Wednesday’s relatively sharp sell-off, as the steeper reversal from recent 97.000+ highs stopped at the 96.371 level that coincides with technical support on some charts. However, the rebound was at least partly if not mainly due to external factors with several major counterparts undermined bearish impulses or running out of bullish momentum in the case of Sterling. The DXY is just shy of a recovery high inches above 96.750, and the 30 DMA at 96.602 could be key in terms of a firmer rebound or fade before another leg down towards the next downside technical level ahead of 96.000, which comes in at 96.283.

AUD/NZD/GBP/JPY - It’s a 4-horse race to avoid being last G10 currency to Thursday’s (EU session) finishing post, as the Aussie is undermined by data again, albeit Chinese this time rather than domestic, and fresh reports about a delay to the eagerly awaited Trump-Xi Summit to sign off a trade pact. Aud/Usd has slipped back further from near 0.7100 at one stage to 0.7050 and the Kiwi in sympathy with Nzd/Usd now around 0.6817 vs 0.6865 at best. Meanwhile, the Pound has pulled back following another Brexit-related spurt that catapulted Cable to circa 1.3340 before a retreat through 1.3300 to 1.3250. Sterling got an extra boost from the 2nd UK Parliamentary vote this week that saw a no deal in any guise rejected by MPs, in principle at least. Attention now turns to an extension of the March 29 Article deadline, and the strong prospect of that being approved has prompted PM May to tentatively schedule a 3rd MV sometime before next week’s EU Summit. Elsewhere, Usd/Jpy has backed off from circa 111.73 overnight peaks on the aforementioned breaking US-China news, but the headline pair remains above a key chart level in the form of the 200 DMA (111.43) and could be prone to further upside if the BoJ is as dovish as expected tomorrow, or even more. Note, for a full preview of the impending policy meeting please refer to the Ransquawk Research Suite.

CHF/EUR/CAD - All holding up better against the Buck revival, as the Franc hovers close to the top of a 1.0050-30 range and perhaps finds some traction from firmer than forecast Swiss import/producer prices (albeit still deflationary in y/y terms). Meanwhile, the single currency is keeping its head above 1.1300, marginally, but shy of Fib resistance (1.1327 represents a 38.2% retracement of this year’s 1.1570-1.1177 move) after another hefty 2019 German GDP forecast downgrade (0.6% from 1.1% per Ifo) and the Loonie is back below 1.3300 vs its US rival against the backdrop of toppy oil prices and ahead of Canadian house price data then a speech from BoC’s Wilkins.

FIXED INCOME

No further, or at least not much more follow-through selling at the lows in core debt prefaced a period of consolidation, and the less positive headlines about no meeting between US President Trump and his Chinese counterpart this month also sparked a mild safe-haven bid that lifted Bunds to a marginal new Eurex session high of 164.40 (-7 ticks vs -36 ticks at worst). Meanwhile, Gilts still lag but are back near the top of the range and US Treasuries ditto. Ahead, weekly claims and import/export prices ahead of housing data plus a testimony from Mnuchin and the last of this week’s UK Parliament Brexit votes (but far from the final chapter in the long-running saga as an extension appears likely, not to mention a 3rd MV possibly next Wednesday).

COMMODITIES

WTI (-0.2%) and Brent (-0.1%) futures have slipped following reports that a Trump-Xi summit may be delayed until April vs. prior expectations of an end-March summit. As such WTI and Brent futures fell back into their respective one-month long range of around USD 3.50/bbl. This summit push-back has however been touted for a while as USTR Lighthizer recently noted that sticking points remain in talks. Elsewhere, Iraqi Energy Minister emerged on the wires stating that the nation will decrease crude exports to average 3.5mln BPD from USD 3.62mln BPD in order to comply with OPEC’s output curbs. As a heads up, OPEC’s monthly oil report will be published today at 1200GMT/0800EDT. The metals market is largely on the backfoot amid a pick-up in the USD wherein the yellow metal breached USD 1300/oz to the downside. Gold is now back below its 50 DMA at 1303/oz ahead of its 100 DMA at 1271/oz. Elsewhere, copper erased its three-day gains amidst a firmer Buck couple with a turnaround in risk sentiment after the Trump-Xi meeting.

US is seeking to reduce Iran oil sales by about 20% to below 1mln bpd from May and is likely to renew sanctions waivers to Iranian oil buyers but could deny waivers to countries not using them, according to sources. (Newswires)

CME lowered COMEX 5000 silver futures margins by 8.4% to USD 3300 per contract and lowered COMEX copper futures margins by 11.1% to USD 2400 per contract. (Newswires)

Iraqi Oil Minister says the current oil price range of USD 60-65/bbl is "relatively comfortable", but the nation is seeking a higher price for crude oil than current prices. Iraq has cut oil export average to 3.5mln BPD (vs. Prev. 3.62mln). (Newswires)