• European indices [Euro Stoxx 50 +0.3%] are volatile, following on from the somewhat mixed performance of their Asian counterparts
• China’s MOFCOM spokesman stated that they have no information regarding a US visit to Beijing
• Looking ahead, highlights include US Building Permits, Housing Starts, Initial Jobless Claims & Philadelphia Fed Business Index, Canadian Manufacturing Sales, ECB’s de Guindos & Coeure, Fed’s Kashkari & Brainard, BoC’s Poloz & Wilkins
• Earnings: Applied Materials, Baidu, NVIDIA, Walmart

ASIA-PAC

Asian equity markets were mixed as blue-chip earnings and the US blacklisting of Huawei as well as 70 of its affiliates overshadowed the positive lead from Wall St, where sentiment was underpinned by reports that President Trump plans to delay the decision on tariffs for auto imports by up to 6-months. ASX 200 (+0.7%) and Nikkei 225 (-0.6%) were mixed in which the commodity-related sectors led the intraday recovery in Australia and as a higher Unemployment Rate stoked calls for an RBA rate cut, while Tokyo trade was pressured by disappointing earnings including Japan’s megabanks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group. Hang Seng (U/C) and Shanghai Comp. (+0.6%) were initially subdued with underperformance seen in tech and telecoms following US President Trump’s national emergency declaration on foreign companies posing threats to US telecommunications, although strength in property names after firmer Chinese House Price data helped reverse the losses. 10yr JGBs were initially supported as they tracked recent upside in T-notes and amid weakness in Tokyo stocks, although gains were capped after the 5-year JGB auction results were relatively inline with the previous albeit with a weaker b/c.

US President Trump signed an executive order declaring national emergency to address threats to telecommunication networks from some foreign firms as expected, while the US Commerce Department placed Huawei and 70 affiliates on its trade blacklist which means licences will be required in order for US companies to sell products to Huawei. (Newswires)

US delegation could head to China for trade talks as early as next week. (Axios) However, in the piece, Axios quoted comments from a Senior US Official on Tuesday that a trade deal with China is not close.

China's MOFCOM says the nation firmly opposes bullying by the US, adding that China will have to take countermeasures if the US keeps pressing along

- They have no information regarding a US visit to Beijing adds that It is not true that President Trump and Xi must meet in order to resolve the trade war

- Urges the US to cancel the tariffs on Chinese goods as soon as is possible, in order to prevent causing a recession like impact on the world economy

- China's 3 matters of principle must be resolved before any trade deal can be reached with the US; will never make concessions regarding important matters of principle

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set CNY mid-point at 6.8688 (Prev. 6.8649)

Chinese House Prices (Apr) Y/Y 10.7% (Prev. 10.6%). (Newswires)

US

China sold USD 20.5bln of US government bonds during March which was the largest amount sold in over 2 years. (FT)

UK/EU

UK PM May is to be warned that she faces the prospect of confidence vote on June 12th if she does not agree to step down before summer, according to reports in the Telegraph. In related news, UK PM May will tell the executive of the 1922 Committee she needs several more weeks to pass key Brexit legislation in meeting tomorrow, according to FT's political correspondent Laura Hughes. (Telegraph/FT)

ITV Political Editor Peston tweeted Labour MP Emily Thornberry said her party will vote against WAB and signalled cross-party talks may collapse as soon as tomorrow, while Conservative MPs Vaizey and Bridgen agree PM May will be out next month. (Newswires/Twitter)

UK PM May spokesman says there will be more official talks with Labour regarding Brexit in the coming days. (Newswires)

ECB's Visco says that monetary policy can rely on a wide range of tools to support an economy, and the ECB stand ready to fulfill its mandate if necessary, it is a mistake to believe that monetary policy would be disarmed if the Euro Area falls into a recessions which leads to deflation. (Newswires)

GEOPOLITICAL

US has ordered the suspension of all commercial and cargo flights to and from Venezuela. (Newswires)

US President Trump is reportedly seeking a diplomatic way to resolve tensions with Iran according to reports, while Washington Post stated Trump is not convinced the time is right to attack Iran. (Newswires/Washington Post)

Iran Foreign Minister Zarif said the country remains committed to the Iran nuclear deal and exercise maximum restraint despite US withdrawal from the deal, while he believes US escalation is unacceptable. (Newswires)

Yemen-based Saudi coalition states that the recent drone attacks on Saudi Oil pipelines are considered a 'war crime', according to Al Arabiy. (Newswires)

Saudi Vice Minister of Defense says the attacks by the Houthis vs. Aramco facilities show they are an Iranian "tool"; Tehran orders are acts that threaten current political efforts. (Newswires)

EQUITIES

European equities have been volatile [Eurostoxx 50 +0.3%] following on from a mostly positive lead in Asia. Sectors are mixed with outperformance in material names (amidst rising base metal prices) whilst consumer discretionary lags as EU auto names pare back some of yesterday’s tariff-spurred gains. In terms of individual movers, Thyssenkrupp (+6.5%) shares rose to the top of the DAX after reports that Finland’s Kone (+3.8%) are exploring the viability of a bid for Thyssenkrupp’s EUR 14bln elevator division. Meanwhile, Thomas Cook (-18.4%) shares opened lower by over 20% after posting a Q1 pre-tax loss of EUR 1.465bln which came alongside a warning that “challenging” trading over the peak summer season would impact FY earnings, although the Co. did note that they have received multiple bids for all and parts of the group airline. Finally, Ubisoft (-12.4%) rests at the foot of the Stoxx 600 despite posting record sales figures, after a delay to its open-world game “Skull & Bones” into the next FY.

FX

USD - The Dollar is holding above Wednesday’s post-US data lows, but stands narrowly mixed vs G10 counterparts as the US-China trade dispute continues via recriminations over the cause of the derailment in talks that has sparked another round of reciprocal tariffs. However, the DXY is stuck in a narrow band either side of the 97.500 mark that has been pivotal for a while, and very close to the 30 DMA (94.428) between 97.565-438.

NZD/EUR/CAD/JPY/AUD/CHF - All marginally firmer vs the Greenback, with the Kiwi outperforming or clawing back more losses than other so be precise from sub-0.6550 levels to circa 0.6580. Meanwhile, the single currency is holding above 1.1200 after reclaiming big figure+ status yesterday on the EU auto tax reprieve, but unable to breach the 30 DMA (1.1222) convincingly amidst increasingly dovish ECB market expectations and another potential clash between Italy and the EU on budget policy intentions. The Loonie has also rebounded from recent lows and a post-Canadian CPI dip to test resistance ahead of 1.3400 with some positive momentum coming from reports that the Canada, Mexico and the US are close to clinching a deal on steel tariffs (Peso paring losses as well as Usd/Mxn eyes 19.0000). Usd/Jpy continues to straddle 109.50 as the Yen retains a safe-haven bid, but also contends with more decent option expiry interest (1.55 bn from 109.15 to 109.25 and 2.2 bn between 109.40-55). Elsewhere, the Aussie has recovered from its latest slump in wake of more weak data on balance (labour report) and a dip through 0.6900 stops with the aid of underlying bids/short covering, and Aud/Usd has now absorbed supply said to be sitting around 0.6910 and above to trade back up around 0.6933. Lastly, funding for a proposed acquisition has been touted as a factor behind recent Franc strength, but Usd/Chf has bounced towards 1.0100 from a few pips above 1.0050 and Eur/Chf has crossed over 1.1300 again.

GBP - Brexit and related UK political uncertainty is still haunting Sterling along with other global and geopolitical risk, with Cable retreating a tad further towards 1.2800 and Eur/Gbp inching close to 0.8750 as PM May meets the 1922 group in just under an hour.

EM - The Rand is showing a degree of resilience in the face of somewhat negative reviews from Moody’s on SA’s credit outlook with Usd/Zar hovering at the lower end of 14.2650-1525 trading parameters and perhaps being drawn or attracted to an unusually large expiry at the 14.0000 strike (1.365 bn).

Australian Employment Change (Apr) 28.4k vs. Exp. 14.0k (Prev. 25.7k). (Newswires) Australian Full Time Employment Change (Apr) -6.3k (Prev. 48.3k) Australian Unemployment Rate (Apr) 5.2% vs. Exp. 5.1% (Prev. 5.0%)

Australian Participation Rate (Apr) 65.8% vs. Exp. 65.7% (Prev. 65.7%)

South Korea President Moon says fiscal policy needs to be more actives to raise jobs and urges parliament for speedy approval of additional budget. (Newswires)

FIXED INCOME

The latest advance in debt futures and decline in cash yields has stalled even though remarks from China show little sign of easing in trade tensions with the US, and knowledge about a meeting in Beijing to try and restore relations. 10 year benchmarks have all eased back from best levels towards intraday lows after Bunds faded at 167.27, Gilts at 129.03 and US Treasuries at 124-27, with the notable exception of Spanish Bonos that saw decent buying interest on their way up to a 153.31 high and have only drifted back a few ticks since. Ahead, another potential Brexit game-changer as UK PM May meets the 1922 mob at 11.30BST and then a raft of US data before more global Central Bank speakers.

COMMODITIES

A positive session thus far for WTI (+0.7%) and Brent (+0.5%) futures as tensions in the Middle East drift back into focus. The former remains above USD 62.00/bbl and in close proximity to USD 62.50/bbl whilst its Brent counterpart floats comfortably above the USD 72.00/bbl mark. On the Iranian front, ship tracking data showed that a tanker carrying Iranian oil (in violation with US sanctions) has unloaded its cargo of almost 130k tonnes of oil near Zhousan, in China. Iran will remain a focus as the JMMC convene this weekend in Jeddah, with ministers expected to discuss whether the supply gap from Iranian sanctions will need to be filled, and hence whether the output curb deal will need to be extended until the end of the year.  In terms of technicals, analysts at PVM highlight resistance at 63.09 (21 DMA) in WTI and 72.60 in Brent (short-term DMA) which they believe will be tested today given the optimism emanating from Trump’s decision to delay EU auto tariffs, progress regarding the Canadian and Mexican aluminium and steel tariffs and concerns of supply disruptions from Middle Eastern tensions. Looking at metals, gold remains choppy below the 1300/oz level and flirts with its 100 DMA at 1296.82 ahead of its 50 DMA (1291.69). Elsewhere, copper prices are poised to notch a third day of gains amid a weakening buck and optimism surrounding Trump’s auto tariff delays with the red metal now back above 2.75/lb ahead of its 200 DMA at 2.7604.

Iraq oil Ministry reportedly denied that ExonnMobil workers are to evacuate from work sites in Iraqi territory. (Newswires)