• APAC stocks were choppy and eventually conformed to a mixed picture.
• Shanghai will continue a new round of citywide COVID tests on Friday as the number of positive cases has remained high.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.8% after the cash market closed lower by 0.6% yesterday.
• DXY continues to eye 100 to the upside, whilst USD/JPY ventured above 124 before retreating once again.
• Looking ahead, highlights include Canadian Labour Market Report, ECB's Panetta.

US TRADE

• US stocks finished the day mostly higher with the exception of the Russell, although there was no specific catalyst for the afternoon recovery.
• SPX +0.44% at 4,500, NDX +0.23% at 14,531, DJIA +0.25% at 34,583, R2K -0.50% at 2,007.
• Twitter (TWTR) plans to host Elon Musk for a question-and-answer session with employees after a week of internal outcries over his appointment to the social network’s board of directors, Washington Post reports.
• Tesla (TSLA) CEO Musk says its humanoid will likely be in production next year, whilst Cybertruck will be in production at Giga Texas factory from next year.

Click here for a detailed summary.

NOTABLE US HEADLINES

• Canadian budget sees 2022/23 deficit of CAD 52.8bln vs CAD 58.4bln in Dec; sees 2021/22 deficit of CAD 113.8bln vs CAD 144.5bln. (Click here for the release)

GEOPOLITICS

RUSSIA-UKRAINE

DEFENCE/MILITARY

• Kremlin Spokesman says we have had significant losses of troops, via Reuters
• EU ready to release EUR 500mln for arms to Ukraine, according to AFP citing EU chief.

ENERGY/ECONOMIC SANCTIONS

• EU backs Russian coal embargo in the fifth round of sanctions, according to Reuters.
• EU approves EUR 155bln in French aid for firms hit by Russia invasion, according to Reuters.
• Japan's Industry Ministry plans to reduce Russian coal imports gradually while looking for alternative suppliers, according to Reuters.

OTHER

• China Foreign Minister says Pelosi's planned Taiwan trip 'malicious provocation', according to Reuters.

CENTRAL BANKS

• Fed's Evans (2023 voter) said we are probably going to get to neutral setting by the end of this year or early next; optimistic we can get to neutral, look around and think there's not much more to go, via Reuters.
• Fed's Bostic (2024 voter) said a lack of employment mobility costs the entire economy; Fed's goal is try to have sustaining growth that extends for as long as possible, according to Reuters.
• RBA Financial Stability Review: important that borrowers are prepared for an increase interest rates; global asset markets are vulnerable to larger-than-expected rate increases, via Reuters.
• RBI leave rates unchanged as expected, retains "accommodative" stance as expected; will focus on withdrawing accommodation going forward. RBI is to restore LAF corridor to 50bps and floor to be constituted by SDF, according to Reuters.

APAC TRADE

EQUITIES

• APAC stocks were choppy and eventually conformed to a mixed picture; some weakness was seen shortly after the Chinese cash open.
• ASX 200 bucked the trend and was propped up by its energy and gold names.
• Nikkei 225 was choppy and moved in tandem with action in USD/JPY whilst the KOSPI was weighed on by its chip and telecoms sectors.
• Hang Seng remained pressured by losses across its large constituents - Alibaba and JD.com.
• Shanghai Comp swung between gains and losses but overall remained supported by reports from China's Securities Journal which noted of a potential PBoC RRR in Q2.
• US equity futures trade with little in the way of firm direction.
• European equity futures are indicative of a firmer open with the Euro Stoxx 50 future +0.8% after the cash market closed lower by 0.6% yesterday.

FX

• FX markets were relatively quiet for most of the night but the Buck later picked up some traction.
• DXY saw some modest early weakness but then drifted towards overnight highs of 99.914.
• EUR/USD and GBP/USD subsequently moved lower, with the former moving closer to its YTD low at 1.0804.
• AUD was resilient after the RBA Financial Stability Review suggested its important that borrowers are prepared for an increase in interest rates.
• USD/JPY popped above 124.00 in early APAC trade to a high of 124.23 before meeting sellers, whilst some cited hawkish commentary from an ex-BoJ official.

FIXED INCOME

• 10yr UST futures were offered shortly after the Chinese cash open, with the corresponding cash yield rising to 2.66% - with the current YTD peak at 2.6730%
• Bund futures were more contained vs the US and traded roughly within yesterday's Wall Street range.
• 10yr JGB yields were stable throughout the session but not far off the BoJ's 0.25% cap.

COMMODITIES

• Crude futures gave up mild initial gains as China's COVID update was once again bleak, whilst Shanghai will continue a new round of citywide COVID tests on Friday, with one critical case reported in the city.
• New York will suspend the state gas tax from June 1st to December 31st, according to Reuters.
• Barclays raises oil forecasts by USD 7-8/bb assuming no material disruption in Russian supplies beyond Q2 2022, according to Reuters.
• Spot gold moved towards session lows alongside the rising Dollar, whilst the yellow metal earlier tested its 21 DMA at around 1,935/oz.
• Copper traded on either side of the flat mark amid the indecisive mood across the market.
• Trafigura is set to take large amounts of zinc from LME registered warehouses; LME says it is aware of the tightness in the Zinc market and is monitoring all metals to ensure an orderly market, according to Reuters.

CRYPTO

• Bitcoin was stable around 43.5k, whilst Dogecoin briefly popped higher after the Tesla (TSLA) Cyber Rodeo event made a reference to the crypto using drones.
• Strike payment platform launches Shopify (SHOP) integration, which allows merchants to accept Bitcoin (BTC), according to Bloomberg.

NOTABLE APAC HEADLINES

• China's Shanghai will continue a new round of citywide COVID tests on Friday as the number of positive cases has remained high. There’s one critical case, according to Global Times.
• PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.10% for a net neutral daily position
• PBoC set USD/CNY mid-point at 6.3653 vs exp. 6.3658 (prev. 6.3659)
• RBI Governor Das says India's growth outlook assumes oil at USD 100/bbl, according to Reuters.