• European stocks are largely dictated by earnings, telecoms gain on potential Vodafone unit IPO
• Post-earnings: Amazon (AMZN) -1.5%, Alphabet (GOOGL) +8.2% and Intel (INTC) +4.8% pre-market
• DXY gains after clearing some tech barriers ahead of Tier 1 data
• Looking ahead, highlights include US Q2 GDP, Baker Hughes Rig Count
• Earnings - McDonald’s, Phillips 66, AbbVie, Aon, Colgate-Palmolive, Twitter

ASIA-PAC

Asian equity markets traded negatively as the region conformed to the downbeat global risk tone post-ECB, while disappointing earnings also added to the glum. ASX 200 (-0.4%) and Nikkei 225 (-0.5%) were lower with tech and financials leading the declines in Australia, while sentiment in Tokyo was dampened by disappointing results including Nissan. Elsewhere, Hang Seng (-0.7%) and Shanghai Comp. (+0.2%)were subdued after further PBoC inaction resulted to a net weekly liquidity drain of CNY 410bln with underperformance in Hong Kong after poor trade data for June in which Exports slipped 9.0% Y/Y and as protesters planned to take their rally to the Hong Kong International Airport. Finally, 10yr JGBs were subdued as they mirrored the lacklustre tone in USTs and European counterparts after a less dovish than hoped ECB, although downside was also stemmed amid weakness in stocks and the BoJ’s presence in the market today.

PBoC skipped open market operations for a net weekly drain of CNY 410bln vs. Prev. CNY 460bln net injection W/W. (Newswires) PBoC set CNY mid-point at 6.8796 (Prev. 6.8737)

Tokyo CPI (Jul) Y/Y 0.9% vs. Exp. 1.0% (Prev. 1.1%). (Newswires) Tokyo CPI Ex. Fresh Food (Jul) Y/Y 0.9% vs. Exp. 0.8% (Prev. 0.9%) Tokyo CPI Ex. Fresh Food & Energy (Jul) Y/Y 0.8% vs. Exp. 0.7% (Prev. 0.8%)

US

US House approved 2-year budget and debt limit deal as expected through 284 vs. 149 votes. (Newswires)

GEOPOLITICS

North Korea confirmed it tested a new type of short-range ballistic missile yesterday and its leader Kim stated South Korea has been bringing in weapons for attack, while he added that North Korea must keep developing weapons to eliminate national security threats and that the missile firing was a warning to South Korea's warmongers. (KCNA)

Officials confirmed Iran tested a medium-range ballistic missile yesterday. (Newswires) US Secretary of State Pompeo warned Turkey not to deploy Russian S-400 systems or face more sanctions. (RT)

UK/EU

UK Number 10 sources suggests that there are no plans for a general election in September and the plan remains to leave the EU on October 31st, according to Spectator's Forsyth. (Newswires)

Italian Deputy PM Salvini states that if Economy Minister Tria says there is no room for a tax cut in the 2020 budget, the problem "is either him or me". (Newswires)

ECB Survey of Professional Forecasters (SPF) CPI -2019: 1.3% (Prev. 1.4%) -2020:  1.4% (Prev. 1.5%) -2021: 1.5% (Prev. 1.6%)

GDP -2019: 1.2% (Prev. 1.2%) -2020: 1.3% (Prev. 1.4%) -2021: 1.4% (Prev. 1.4%)

EQUITIES

European stocks are relatively directionless amid another earnings-driven morning for the region [Eurostoxx 50 +0.4%] following on from a mostly negatively Asia-Pac handover post-ECB. Sectors are mixed with clear outperformance seen in telecom names as the sector is bolstered by FTSE-giant Vodafone (+9.5%) after the Co. announced a potential IPO of its Towerco unit alongside its numbers. On the flipside, material names lag, heavily weighted on by Anglo American (-5.0%) after metals tycoon Agarwal sold his stake in the mining name. Elsewhere, gains in the consumer discretionary sector is capped by Kering (-6.2%) after the fashion name open lower in excess of 9% amid disappointing Gucci sales. Meanwhile, optimistic numbers from Intel (+4.8% pre-market) buoyed the European chip names ASM (+3.8%) and STMicroelectonics (+2.6%) and Infineon (+0.8%). Finally, Bayer (+1.4%) shares have received further reprieve after a US judge lowered the verdict against the Co. in the Roundup case to USD 86.7mln from USD 2.2bln. State-side, after-hours yesterday, Amazon (-1.5% pre-market) earnings missed on top and bottom line, whilst Alphabet (+8.5% pre-market) beat on both top and bottom line and advertising revenues topped expectations.

Huawei set to beat Apple (AAPL) with world's top chip despite US ban, Nikkei reports, citing sources. (Newswires)

FX

AUD/NZD - The Antipodean Dollars are extending losses and underperformance on the back of increasingly dovish RBA and RBNZ policy outlooks, with expectations building for another 50 bp easing from both Central Banks on top of the rate cuts already administered in the current cycle. In contrast, consensus for the Fed has narrowed to ¼ point for starters and seems unlikely to change materially barring a major development between now and next week’s FOMC. Hence, Aud/Usd has slipped further below 0.6950 towards 0.6925 and July 10’s 0.6911 base beckons before 0.6900, while Nzd/Usd is looking vulnerable under 0.6650 given no real support ahead of 0.6600 and the mtd trough way down at 0.6568.

ZAR - The Rand continues to reel after its brief post-SARB rebound on the threat of a SA rating downgrade and bearish technical impulses following the break of 14.0000 against the Buck, with key Fib resistance also breached at 14.1360 on the way to 14.1780 and the next chart target looming just shy of 14.2000 in the form of the 200 DMA (14.1920).

DXY - Amidst broad Greenback gains vs G10 and other counterparts, the index has finally cleared a key technical hurdle of its own at 97.767 and is now nudging 98.000 ahead of US GDP data that could provide more impetus or hamper further advances.

JPY/GBP/EUR/CHF/CAD - All on the backfoot, as the Yen fails to glean any traction from mixed Japanese inflation data ahead of the BoJ meeting and meanders between 105.57-73 parameters, while Cable has topped out around 1.2520 yet again and saw stops tripped through trend-line support circa 1.2445 to 1.2425 low. Elsewhere, the single currency has drifted back down from post-ECB rebound highs not far from 1.1200, but holding above the minor new pre-Draghi presser 2019 low and the Franc remains off recent highs in 0.9900-20 and 1.050-38 respective bands vs the Dollar and Euro respectively, with perhaps some acknowledgement of a 25 bp SNB rate cut call from UBS. Similarly, the Loonie is softer within a 1.3157-83 range and prone to the aforementioned US data ahead of Canada’s May budget balance.

EM - Unlike the depreciating Zar, the Try is still unwinding initial post-CBRT losses as Turkish President Erdogan applauds the bold 425 bp move and concurs with the more cautious approach towards further easing between now and the end of the year. The Lira is holding ‘comfortably’ above 5.7000 vs the Buck and the Rouble seems almost as content or prepared for the CBR to cut rates again, with Usd/Rub around 63.1000 and at the lower end of 63.2500-0695 parameters.

FIXED INCOME

Bunds, Gilts and US Treasuries have all steadied the ship after fading and slipping through near term chart supports into negative territory as the ECB fall-out resumed along with a stock market rebound and SPF projections that did not really provide or add clarity over probable stimulus in September. The respective 10 year debt futures posted fresh intraday lows of 173.96, 131.79 and 127-065, but are now off worst levels again in contrast to the Italian benchmark that is back below 140.00 within a 140.40-139.35 range vs yesterday’s 141.60 contract peak and weighed down by renewed coalition Government angst. Ahead, US GDP looks set to be the major event in terms of market-moving data.

COMMODITIES

Little to report on the energy front as WTI and Brent futures are relatively flat following the decline in the complex heading into yesterday’s settlement. The former currently hovers just above the 56/bbl ahead of its 50 and 200 DMAs at 56.73/bbl and 57.03/bbl respectively, whilst the latter resides around the 63.50/bbl mark. Looking at this week’s performance so far, both benchmarks are currently poised to post gains, albeit off highs. WTI and Brent kicked the week off around 55.70/bbl and 62.60/bbl and have reached highs of 57.62/bbl and 64.64/bbl respectively, bolstered by geopolitical woes. Next up, traders will be eyeing the US Q2 GDP release as the next potential catalyst, with headline expectations of 1.8% annualized growth (Prev. 3.1% in Q1) which would mark the lowest quarterly growth rate since early 2016. Elsewhere, gold is flat despite a firmer Buck as the yellow metal eyes the US tier 1 data release at 1330BST. The precious metal looks set to end the week on the backfoot (weekly range: 1411-33/oz) as the gains seen from rising geopolitical tensions earlier in the week was erased during the ECB press conference yesterday. Meanwhile, copper is lackluster and has dipped below the 2.70/lb amid the cautious risk tone and is currently at the bottom of the weekly 2.68-76/lb range thus far. Finally, Dalian iron ore prices climbed over 3% overnight with traders citing a rise in demand as smaller steel mills take advantage of the production curb on larger competitors amid pollution.