Newsquawk

Europe Market Open: RBI kept rates unchanged; subdued APAC trade; IJC ahead

08 Jun 2023, 06:35 by Newsquawk Desk

APAC stocks were mostly subdued following the mixed handover from Wall St where tech underperformed as global yields climbed.
RBI kept the key Repo Rate unchanged at 6.50%, as expected, with the decision on rates unanimous.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.5% after the cash market closed down 0.1% yesterday.
DXY is flat and lingering just below the 104 mark, EUR/USD is back above 1.07, USD/JPY retreated below 140.
Looking ahead, highlights include US IJC & Speech from SNB's Jordan.

US stocks were mixed as catalysts in the US remained light with weakness in the S&P 500 and underperformance in the Nasdaq after global yields climbed in the aftermath of the surprise rate hike by the Bank of Canada, while the DJIA was kept afloat and Russell 2000 extended on its recent rally in a continuation of the rotation into small caps.
SPX -0.38% at 4,267, NDX -1.75% at 14,303, DJIA +0.27% at 33,665, RUT +1.78% at 1,888.
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NOTABLE HEADLINES

US President Biden vetoed the lawmaker resolution against his student loan plan, according to Reuters.
US federal prosecutors notified former President Trump that he is a target of a special counsel investigation over classified documents, according to ABC citing sources.

APAC stocks were mostly subdued following the mixed handover from Wall St where tech underperformed as global yields climbed after the surprise BoC rate hike.
ASX 200 traded rangebound as gains in the commodity-related sectors were offset by underperformance in property and tech, while softer trade data from Australia added to the non-committal mood.
Nikkei 225 was initially choppy but eventually retreated firmly beneath the 32,000 level despite the stronger-than-expected upward revisions to Japan's Q1 GDP.
Hang Seng and Shanghai Comp. were lacklustre amid the ongoing growth concerns surrounding the world’s second-largest economy although the losses were stemmed after China's Big 4 banks reduced their deposit rates following calls from the government to help bolster the economy.
US equity futures were restricted after yesterday's mixed performance and the cautious mood in Asia.
European equity futures are indicative of a weaker open with the Euro Stoxx 50 -0.5% after the cash market closed down 0.1% yesterday.

DXY was flat after yesterday’s indecisive mood whereby it initially slipped beneath 104.00 with lows seen following the surprise BoC rate hike, before staging a recovery as yields edged higher.
EUR/USD eked mild gains after having reclaimed the 1.0700 status and after recent commentary from ECB officials continued to point to further rate hikes ahead.
GBP/USD was steady with the prior day’s early momentum halted by resistance just shy of the 1.2500 level.
USD/JPY retreated below 140.00 as the firmer GDP revisions facilitated the pullback from yield-driven gains.
Antipodeans nursed some of yesterday’s losses but with the rebound contained by the indecisive risk tone, softer Australian trade data and a further weakening of the PBoC’s CNY fix.
PBoC set USD/CNY mid-point at 7.1280 vs exp. 7.1282 (prev. 7.1196)
PBoC Vice Governor said they have confidence, conditions and the capacity to maintain stable operations of the FX market, while the FX market, yuan market expectations and cross-border capital flows are relatively stable. Furthermore, the official stated as the Fed nears the end of its rate hike cycle, USD strength is hardly sustainable and the external impact on the yuan is expected to weaken, according to Reuters.

10yr UST futures languished at this week’s lows after having bear-steepened in the aftermath of the Bank of Canada’s surprise rate hike which pushed up global yields.
Bund futures remained subdued firmly beneath the 134.00 level following the recent surprises by central banks abroad and with the latest ECB rhetoric remaining hawkish.
10yr JGB futures were pressured amid spillover selling from global peers and with weaker demand at the enhanced liquidity auction for long-end JGBs.

Crude futures traded rangebound and largely reflected the indecision seen across risk assets.
Russian President Putin held a phone call with Saudi Crown Prince MBS in which they discussed bilateral cooperation and OPEC+ cooperation.
Spot gold nursed some of its recent losses but with the rebound contained amid higher yields.
Copper futures were subdued after yesterday's fluctuations and amid the risk-averse mood in Asia.

Bitcoin traded flat with price action contained firmly beneath the USD 27,000 level.

NOTABLE ASIA-PAC HEADLINES

China National Financial Regulation Administration head Li said they will continue to support Shanghai as a financial centre and that China's economy is continuing its recovery, while the domestic economy is showing resilience and dynamism. Li added that they will step up support for high-tech sectors and comprehensively improve financial regulation, as well as improve private firms' financing environment, according to Reuters.
China securities regulator chairman said they will support technology innovation in a more precise and effective manner, while they will further promote long-term capital to invest in equities and promote product innovation to support bond, equity and M&A financing, according to Reuters.
RBI kept the key Repo Rate unchanged at 6.50%, as expected, with the decision on rates made unanimously and it also maintained the policy stance of remaining focused on the withdrawal of accommodation through a 5-1 vote. RBI Governor Das said the path ahead is now somewhat clearer and uncertainty on the horizon is comparatively less, while he added the MPC will remain vigilant on the evolving situation and growth outlook. Das also said they will take further action promptly and headline inflation is still above target and that being within the tolerance band is not enough.

DATA RECAP

Japanese GDP QQ (Q1 F) 0.7% vs. Exp. 0.5% (Prev. 0.4%)
Japanese GDP Annualised (Q1 F) 2.7% vs. Exp. 1.9% (Prev. 1.6%)
Australian Trade Balance (AUD)(Apr) 11.2B vs. Exp. 14.0B (Prev. 15.3B)
Australian Exports MM (Apr) -5.0% (Prev. 4.0%)
Australian Imports MM (Apr) 2.0% (Prev. 2.0%)

Taiwan Defence Ministry said 37 Chinese aircraft entered Taiwan's air defence zone starting Thursday morning and some of the aircraft flew into the western Pacific, while Taiwan sent an aircraft to keep watch, according to Reuters.

NOTABLE HEADLINES

UK wage growth accelerated in the UK last month despite the cooling labour market in which the median wage cited in UK job adverts rose by 7.2% Y/Y, according to a report in FT citing a cross-country wage tracker published by Indeed.

DATA RECAP