Newsquawk

Euro Market Open: Choppy/rangebound equity action ahead of numerous European highlights incl. HICP

02 Mar 2023, 06:49 by Newsquawk Desk

APAC stocks were choppy and mostly traded rangebound after the uninspiring handover from Wall Street.
European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 -0.1% after the cash market closed down 0.5% yesterday.
DXY heads into the European session firmer vs. peers but still on a 104 handle.
10yr UST futures extended on their losses as the 10yr yield rose back above 4.00%.
Looking ahead, highlights include EZ CPI (Flash) & Unemployment Rate, US IJC, Japanese CPI, BoE DMP & ECB Minutes, Speeches from Fed's Waller & Kashkari, ECB's Schnabel, BoE's Pill, Supply from Spain, France & UK

US stocks finished mixed with pressure seen in the aftermath of the weaker-than-expected US ISM Manufacturing PMI data which also showed a return to expansionary territory in the prices paid component to add to the persistent inflationary concerns after the string of hot January prints. There was also hawkish commentary from Fed's Kashkari who suggested he is open to either a 25bps or 50bps hike in March and said is leaning towards a higher terminal rate than his 5.4% dot in December.
SPX -0.47% at 3,951, NDX -0.86% at 11,938, DJI +0.02% at 32,661, RUT +0.08% at 1,898.
Click here for a detailed summary.

NOTABLE HEADLINES

Kansas City Fed Economists wrote "A return to pre-pandemic rates of rent inflation could remain elusive" and tight labour markets suggest "rent inflation is likely to remain elevated even after the dust settles on pandemic-driven swings", according to WSJ.

APAC stocks were choppy and mostly traded rangebound after the uninspiring handover from Wall Street where risk appetite was hampered by the latest ISM data and hawkish Fed rhetoric.
ASX 200 was indecisive as weakness in the financial, tech and consumer sectors offset the resilience in commodity-related industries, with sentiment not helped by a slump in building approvals.
Nikkei 225 failed to sustain early advances with the index stuck around the 27,500 level after data showed Japanese recurring profits declined Y/Y for the first time in eight quarters.
Hang Seng and Shanghai Comp. were mixed with underperformance in Hong Kong as investors booked profits from yesterday’s tech-led rally, while sentiment in the mainland was clouded by several weak earnings and ongoing frictions as the US was reportedly lobbying allies on possible China sanctions should Beijing provide Russia with military aid in Ukraine.
US equity futures (ES -0.5%) were mostly pressured as yields gained and amid losses in Tesla shares on disappointment from the lack of details regarding its Master Plan 3 at the investor day presentation.
European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 -0.1% after the cash market closed down 0.5% yesterday.

DXY clawed back some of yesterday’s losses after losing ground to the strength in the Euro and Yuan, while the recovery overnight was facilitated by further upside in yields.
EUR/USD marginally softened but held on to most of the prior day’s gains in the aftermath of the firmer-than-expected German inflation data and hawkish rhetoric from ECB's Nagel.
GBP/USD was stuck near 1.2000 after its recent choppy performance and balanced comments from BoE Governor Bailey who cautioned against suggesting either that the BoE is done with hiking rates or that the BoE will inevitably need to do more.
USD/JPY was kept afloat by widening yield differentials and after BoJ Board Member Takata stuck to the dovish script regarding the need to maintain massive monetary easing.
Antipodeans softened amid the cautious mood and disappointing Australian building approvals.
PBoC set USD/CNY mid-point at 6.8808 vs exp. 6.8809 (prev. 6.9400)

10yr UST futures extended on their losses as the 10yr yield rose back above 4.00% to levels last seen in November and the 2yr yield printed its highest since 2007 in the aftermath of the jump in US ISM prices paid and hawkish comments from Fed's Kashkari who is open to either a 25bps or 50bps hike this month and is leaning towards a higher terminal rate than he projected in December.
Bund futures continued to decline following yesterday’s firmer-than-expected German CPI print which added to the hot inflation readings seen in France and Spain ahead of today’s EU price data.
10yr JGB futures were initially pressured on spillover selling from their global counterparts but then pared losses after strong demand at the 10yr JGB auction.

Crude futures traded within a thin range near yesterday's peak with headwinds from the cautious mood counterbalanced by demand optimism from Saudi Aramco's CEO.
Saudi Aramco CEO sees very strong oil demand from China and excellent demand in US and Europe.
Spot gold was uneventful with the precious metal restricted by a rebound in the dollar.
Copper futures slightly pulled back from recent advances amid the flimsy risk appetite.

Bitcoin was contained amid the indecisive mood and prodded 23,500 to the downside.
Crypto bank Silvergate is evaluating the ability to survive as an ongoing concern, according to FT.

NOTABLE ASIA-PAC HEADLINES

China may aim for a higher 2023 GDP growth target than the 4.5%-5.5% proposed in November, while its target could range between 5.0%-5.5% and be as high as 6.0%, according to sources involved in policy discussions cited by Reuters.
China's Human Resources Minister said China's employment will continue to improve this year and remains stable overall, while the minister added China's employment is better than expected for January-February, according to Reuters.
US State Department approved the potential sale of F-16 munitions and related equipment to Taiwan for an estimated cost of USD 619mln, according to the Pentagon.

DATA RECAP

Australian Building Approvals (Jan) -27.6% vs. Exp. -8.0% (Prev. 18.5%, Rev. 15.3%)

US is reportedly lobbying allies on possible China sanctions if Beijing gives Russia military aid in Ukraine, according to Reuters citing sources.
Israel's Minister for Strategic Affairs and National Security Adviser are expected to visit Washington early next week for meetings with senior Biden administration officials that will focus on Iran, according to Axios citing officials.

DUP MP Ian Paisley said that the Windsor Framework agreement does not meet the party’s seven tests, according to BBC's Darren Marshall via Twitter.