• European bourses are firmer though TSMC’s results have pressured Tech and the Euro Stoxx 50/AEX by extension; SAP due today
• Stateside, NQ lags given pre-market downside in NFLX & TSLA post-earnings
• AUD bolstered by jobs data, Yuan rebounds and EUR underpinned by yields with DXY drifting
• Core benchmarks pullback as Wednesday’s Gilt-driven move eases; yields firmer, short-end leading
• Crude is little changed while Ags. are supported by Russia-Ukraine updates
• Looking ahead, highlights include US IJC, Philly. Fed, Existing Home Sales, EZ Consumer Confidence, CBRT & SARB Policy Announcements. Earnings from SAP.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer aside from the Euro Stoxx 50 -0.1% and AEX -0.5% following TSMC and subsequent pressure in Chip names, such as ASM International -5.0% and ASML -3.2%; reminder, SAP reports after the European close.
• Sectors are mostly firmer, with the exception of Tech, featuring outperformance in Basic Resources after Anglo American's Q2 update with media names also performing well following Publicis.
• Stateside, futures are diverging with the NQ -0.8% lagging following after-hours updates from TSLA -2.9% and Netflix -6.7% ahead of data and more earnings.
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Aussie rejuvenated as another strong jobs report revises RBA rate hike prospects, AUD/USD back on 0.6800 handle and above hefty option expiry interest.
• DXY drifts amidst mixed fortunes for index components and as 100.000 holds after pullback from 100.500+ peak on Wednesday.
• Yuan rebounds following multi-pronged intervention from PBoC and Chinese state banks, with USD/CNY and USD/CNH off overnight peaks circa 7.1900 and 7.2325 respectively.
• Euro underpinned by a retracement in EGBs and decent 1.1200 EUR/USD expiry, Yen benefiting from export bids and big 140.00 barrier defences, but Sterling sill deflated sub-1.3000 following soft UK inflation data.
• PBoC set USD/CNY mid-point at 7.1466 vs exp. 7.2233 (prev. 7.1486)
• Chinese state banks were reportedly seen selling dollars to prop up CNH.
• Click here for more detail.
• Click here for the notable option expiries, NY cut.

FIXED INCOME

• Deeper pullback in debt as UK disinflationary vibes dissipate.
• Bunds down to 133.36 from 133.87 Eurex peak, Gilts retreat from 97.62 to 96.93 before regrouping and T-note nearer base of 112-19+/31 range ahead of IJC, Philly Fed and existing home sales.
• Spanish and French bonds soft after multi-tranche Bono and OAT issuance, but not unduly.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are little change following similar APAC trade amid a lack of fundamentals since Wednesday's US session.
• Ags are underpinned by damage to a Ukrainian port and Russia upping the ante around Black Sea transit.
• Within metals, spot gold is little changed and largely following the USD so far while base metals are supported as sentiment in Europe improves though notes production increases by BHP & Anglo American.
• Ukraine's largest producer and exporter of sunflower oil - Kernel - could need 12-months to restore Ukraine's Chornomorsk facilities, via Bloomberg.
• Click here for more detail.

NOTABLE US HEADLINES

• IBM (IBM) Q2 2023 (USD): Operating EPS 2.18 (exp. 2.01), Revenue 15.48bln (exp. 15.57bln). -1% pre-market
• Tesla (TSLA) Q2 2023 (USD): Adj. EPS 0.91 (exp. 0.82), Revenue 24.93bln (exp. 24.48bln).-3.0% pre-market
• United Airlines (UAL) Q2 2023 (USD): Adj. EPS 5.03 (exp. 4.04), Revenue 14.18bln (exp. 13.91bln). +3.0% pre-market
• Netflix (NFLX) Q2 2023 (USD): EPS 3.29 (exp. 2.86), Revenue 8.19bln (exp. 8.29bln); Streaming paid net additions +5.89mln (exp. +2.07mln). -6.7% pre-market
• Click here for the US Early Morning Note.

NOTABLE EUROPEAN HEADLINES

• EU trade chief Dombrovskis said he is hopeful of a breakthrough in talks with the US regarding the steel dispute but will not support any US proposal that flouts global standards and said the US will not be able to resolve the dispute through a deal that discriminates against other countries, according to FT.
• German Car Association VDA says the improved supply situation led to increased vehicle availability in H1; VDA adjusts market forecast upward.
• UK average two-year fixed mortgage 6.79% (prev. 6.81%), first decrease since May 27th, via Moneyfacts.

DATA RECAP

• EU Current Account SA, EUR (May) 9.1B (Prev. 4.0B)
• Eurostat revisions suggest Eurozone avoided a winter recession whilst output stagnated in Q1. Revises Q1 GDP forecast to 0.0% from -0.1%.

GEOPOLITICS

• White House warned that Russia may expand their targeting of Ukrainian grain facilities to include attacks against civilian shipping in the Black Sea, according to Reuters.
• US sanctioned 14 Iraqi banks in a crackdown on Iran’s dollar trade after uncovering that they engaged in money laundering and fraudulent transactions in which some may have involved sanctioned individuals, according to WSJ.
• China's ambassador to Washington said China's top priority is to stop Taiwan's Vice President from visiting the US next month, according to Reuters.
• Belarusian military is to undertake exercises with Russia's Wagner Group fighters near the border with Poland, according to the Belarusian Defence Ministry. Subsequently, Poland says they are prepared for a number of scenarios.
• Russian Kremlin says Poland's decision to bolster its border with Belarus because of Wagner's presence is a cause for concern; calls Poland aggressive and the hostile attitude requires heightened attention.
• IRGC Commander has warned of reprisals to any Co. that is willing to unload Iranian oil from the seized tanker, via Tasnim; would hold the US responsible for such action.

APAC TRADE

• APAC stocks traded mixed following on from the choppy performance stateside as participants digested the latest data releases, corporate earnings results and performance updates.
• ASX 200 was positive with the mining industry underpinned after the world’s largest miner BHP reported higher quarterly iron ore output and with its full-year production at a record high, while the latest jobs data topped forecasts but could also be seen as a double-edged sword with further scope for the central bank to hike rates.
• Nikkei 225 was the worst performer after the latest trade data showed weaker-than-expected exports and a wider contraction of imports, although the trade balance returned to a surplus for the first time in almost 2 years.
• Hang Seng and Shanghai Comp diverged with Hong Kong lifted by early strength in the property sector after the PBoC eased cross-border funding for firms and financial institutions, while the mainland was lacklustre after the central bank unsurprisingly maintained benchmark lending rates and despite the latest guidelines for the promotion of the private economy.
• TSMC (2330 TT) Q2 (TWD): Net Profit 181.8bln (exp. 172.5bln), Capex 8.17bln (prev. 9.94bln). Gross margin 54.1% (exp. 53.3%). Q3 Guidance: Revenue 16.7-17.5bln (exp. 19.1bln), Operating Margin 38-40% (exp. 41.3%), Gross Margin 51.5-53.5% (exp. 53.6%); cuts 2023 revenue guidance, now seen down ~10% in USD terms (decline by mid-single digits). Production in Arizona pushed out to 2025 according to Chairman, evaluating building a fab in Germany, continues to expand capacity in Taiwan. Seeing strong demand for AI, hard to fulfil all customer AI demand for backend especially advanced packaging. Will lift capacity as soon as possible. China's economic recovery is weaker than what the Co. thought it would be; though AI demand is good, it is not enough to offset weaker overall end-market demand due to macro weakness.

NOTABLE ASIA-PAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Jul) 3.55% vs Exp. 3.55% (Prev. 3.55%)
• PBoC 5-Year Loan Prime Rate (Jul) 4.20% vs Exp. 4.20% (Prev. 4.20%)
• PBoC eased cross-border funding through the macro-prudential adjustment parameter for firms and financial institutions which was raised to 1.50 from 1.25, according to Reuters.
• China is reportedly considering mortgage easing to spur buying in the large cities, according to Bloomberg.
• Japanese gov't cuts its economic growth forecast for the current FY to 1.3% (prev. view 1.5%), consumer inflation 2.6% (prev. view 1.7%) exceeding the BoJ's 2.0% target.

DATA RECAP

• Japanese Trade Balance Total Yen (Jun) 43.0B vs. Exp. -46.7B (Prev. -1372.5B)
• Japanese Exports YY (Jun) 1.5% vs. Exp. 2.2% (Prev. 0.6%); Imports YY (Jun) -12.9% vs. Exp. -11.3% (Prev. -9.9%)
• Australian Employment (Jun) 32.6k vs. Exp. 15.0k (Prev. 75.9k); Unemployment Rate (Jun) 3.5% vs. Exp. 3.6% (Prev. 3.6%)
• Australian Participation Rate (Jun) 66.8% vs. Exp. 66.9% (Prev. 66.9%)
• Australian NAB Business Confidence (Q2) -3 (Prev. -4)