• European bourses are mixed but with a negative skew while US futures reside just below the neutral mark.
• DXY trades either side of 101.50 with NZD initially outperforming after hawkish-RBNZ action, AUD lags.
• Fixed benchmarks are comparably contained, though pressured, with concession & RBNZ perhaps factoring.
• Crude futures have eased off of APAC highs, given the above, with focus on geopolitics/high-level meetings.
• Looking ahead, highlights include US ADP, International Trade, ISM Services PMI, Speeches from Fed's Mester, ECB's Lane.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed but with a modest negative skew overall, Euro Stoxx 50 -0.3%, in another session of sparse newsflow.
• Sectors are similarly mixed with defensive names faring incrementally better.
• Stateside, futures reside just below the neutral mark and by extension within Tuesday's parameters ahead of ISM Services and Fed speak.
• Click here for more detail.

FX

• DXY trades on either side of 101.50 and briefly dipped under yesterday's low, participants now eye ISM Services and US ADP.
• NZD/USD retraces gains following RBNZ's 50bps rate hike surprise to 5.25%. AUD struggles due to RBA/RBNZ divergence and base metals pullback.
• EUR/USD maintains gains near 1.0950; Eurozone Final PMIs indicate recession likely avoided. GBP/USD trades around 1.2475 after PMI revisions.
• JPY benefits from cautious market sentiment. USD/JPY moves between 131.84 high and 131.31 low, with key support at 131.00 and 130.75.
• Click here for more detail.

FIXED INCOME

• Overall, a comparably contained morning for the fixed complex after a holiday-thinned APAC session ahead of US data and Central Bank speak.
• The modest pressure in core counterparts is perhaps a function of concession from both corporates and sovereign supply this morning alongside hawkish undertones from the RBNZ.
• Specifically, the Bund is at the session low of 135.85 vs the initial 136.56 peak, despite the circa 50-tick decline the benchmark remains an equal distance from Tuesday’s 135.59 trough and thereafter the WTD 135.15 low.
• Stateside, USTs are directionally in-fitting with the above but with magnitudes even more contained.
• Click here for more detail.

COMMODITIES

• WTI May and Brent June futures have come off overnight high price action this morning is seemingly a function of risk after futures traded sideways in APAC hours.
• Spot gold edges higher, with price action relatively contained, but above the USD 2,000/oz mark following the move seen in wake of the US JOLTS data yesterday.
• Base metals are mostly lower amid the soured risk tone and slightly firmer Dollar
• Exxon (XOM) has reportedly ended drilling in Brazil after failing to find oil, but hasn’t ruled out other projects in the country, according to WSJ sources.
• Click here for more detail.

NOTABLE HEADLINES

• EU nations/lawmakers are reportedly likely to agree a deal on the CHIPS act on April 18th, via Reuters citing sources.
• ECB's Vujcic says the biggest part of the rate-hiking cycle is behind the ECB; may need further hikes to address core inflation.

DATA RECAP

• EU S&P Global Composite Final PMI (Mar) 53.7 vs. Exp. 54.1 (Prev. 54.1); Services Final PMI (Mar) 55.0 vs. Exp. 55.6 (Prev. 55.6)
• UK S&P Global/CIPS Services PMI Final (Mar) 52.9 vs. Exp. 52.8 (Prev. 52.8); Composite PMI Final (Mar) 52.2 vs. Exp. 52.2 (Prev. 52.2)-
• German Industrial Orders MM (Feb) 4.8% vs. Exp. 0.3% (Prev. 1.0%)

NOTABLE US HEADLINES

• Fed's Mester (non-voter) said the Fed will need to raise rates above 5% and keep them there for a while, as well as noted that inflation remains too high and that the rate path depends on how much inflation expectations fall. Mester also stated that tightening policy is needed to cool too-hot inflation, while she was very comfortable with the Fed's recent 25bps hike and doesn't share the market outlook for cutting rates this year.
• Former US President Trump gave remarks at Mar-a-Lago after pleading not guilty to charges in New York and suggested that the situation of being charged was election interference.
• Click here for the US Early Morning Note.

GEOPOLITICS

• US President Biden and French President Macron held a call on Tuesday in which they discussed China and mentioned a willingness to engage China to accelerate the end of the Ukraine war, according to Reuters.
• Israeli police reported clashes inside the Al-Aqsa Mosque in Jerusalem and Hamas called on Palestinians to march to Jerusalem to defend the Al-Aqsa Mosque, according to AFP News Agency. Furthermore, Saudi and Jordanian Foreign Ministries condemned Israeli for storming the Al-Aqsa Mosque, while it was later reported that Israeli planes conducted a strike on Gaza following rockets from the enclave amid tensions in Al-Aqsa, according to Reuters.
• Iran foiled a drone attack against the ministry of defense complex in Isfahan, via Tasnim; subsequently, "The political and security deputy of the Iranian governor of Isfahan denies what was reported by the Iranian Tasnim Agency of an attempt to launch a drone attack on a compound of the Ministry of Defense in the province", according to Sky News Arabia.
• US nuclear-capable fighter jets fly over the Korean Peninsula, in drills aimed at deterring N.Korea, Sky News Arabia reports.
• Belarus Air Defense will hold drills near Poland between April 5-7th.

CRYPTO

• Bitcoin is modestly firmer within narrow and familiar parameters that have been in play for several weeks; currently, holding at the mid-point of USD 28.08-28.76k boundaries.

APAC TRADE

• APAC stocks traded mixed after the negative lead from Wall St where risk assets were pressured as weak JOLTS data stoked growth concerns, with trade also hampered by the closures in the Greater China region.
• ASX 200 was rangebound with early support from strength in healthcare, tech and gold-related stocks although gains were later pared amid weakness in the commodity-related sectors and confirmation of a contraction to PMIs.
• NZX 50 wiped out initial gains and was pressured after the RBNZ delivered a more aggressive than expected rate hike of 50bps and signalled a further rate increase to return inflation to its target.
• Nikkei 225 underperformed and fell below 28,000 amid broad weakness across sectors and as retailers including index heavyweight Fast Retailing failed to benefit from the recent monthly comparable store sales updates.
• Foxconn (2317 TT) March sales -21.1% Y/Y, Q1 +3.9% Y/Y; Q2 outlook expects to see a Q/Q and Y/Y decrease due to the seasonal off peak period and a high base from unseasonably strong pull-in in H1-2022.

NOTABLE ASIA-PAC HEADLINES

• Taiwan President Tsai is to meet with US House Speaker McCarthy today at 10:00PDT (18:00BST/13:00EDT)
• RBNZ raised the OCR by 50bps to 5.25% (exp. 25bps hike), while it stated that the OCR needs to increase and the Committee agreed it must continue to raise the OCR to return inflation to the 1%-3% target and to fulfil its remit. RBNZ Board discussed a 25bp and 50bps hike at this meeting and the Committee expects to see a continued slowing of domestic demand, as well as a moderation in core inflation and inflation expectations with the extent of this moderation to determine the direction of future monetary policy. MPC also agreed the OCR needs to be at a level that will reduce inflation and inflation expectations to within the target range over the medium-term and members observed inflation is still too high and persistent, while they viewed risks to inflation pressure from fiscal policy as skewed to the upside.
• RBA Governor Lowe said the decision to hold rates steady does not imply interest rate rises are over and noted that the board expects that some further tightening of monetary policy may well be needed. Lowe also commented that it was prudent to hold rates steady this month to allow more time to assess the impact of past increases and that this approach is consistent with their practice in earlier interest rate cycles. Furthermore, Lowe said the board is prepared to have a slightly slower return to the inflation target than some other central banks, while he said that he is not 100% certain they will have to hike rates again but added that the balance of risks lean toward further rate rises.

DATA RECAP

• Japanese Services PMI (Mar F) 55.0 (Prelim. 54.2)
• Japanese Composite PMI (Mar F) 52.9 (Prelim. 51.9)
• Australian Services PMI (Mar F) 48.6 (Prelim. 48.2)
• Australian Composite PMI (Mar F) 48.5 (Prelim. 48.1)