Newsquawk

Europe Market Open: APAC benefitted from Politburo action as attention turns to heavyweight earnings

25 Jul 2023, 06:30 by Newsquawk Desk

APAC stocks traded mostly higher amid a rally in Chinese stocks after the Politburo’s support pledges.
European equity futures are indicative of a marginally softer open with the Euro Stoxx 50 -0.1% after the cash market closed down by 0.2% yesterday.
DXY is a touch softer but remains on a 101 handle, EUR/USD is stuck below 1.11, AUD marginally outperforms.
Crude futures held on to most of their recent spoils after climbing to 3-month highs amid China's stimulus hopes.
Looking ahead, highlights include German Ifo, US Consumer Confidence, Supply from UK, Italy & US, Earnings from EssilorLuxottica, Kering, LVMH, UniCredit, Unilever, Microsoft, Alphabet, Visa, Moody's & GE.

US stocks ultimately gained in what was a choppy session ahead of the upcoming risk events and as participants digested PMI data from both sides of the Atlantic which saw a bout of weakness in the Eurozone and the UK figures, while the US data was more mixed but accompanied with some dire commentary and warning of persistent inflation. Nonetheless, all major US indices finished higher with mild outperformance in the DJIA which extended its win streak to an 11th consecutive day, while Chinese ADRs were also lifted after China's Politburo announced support pledges.
SPX +0.40% at 4,554, NDX +0.14% at 15,448, DJIA +0.52% at 35,411, RUT +0.28% at 1,965.
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NOTABLE HEADLINES

FDIC warned US banks regarding the manipulation of their deposit numbers, according to WSJ which noted that Bank of America (BAC) and Huntington National Bank (HBAN) had the biggest revisions to their uninsured deposit numbers.

APAC stocks traded mostly higher amid a rally in Chinese stocks after the Politburo’s support pledges, although gains for the rest of the region were capped after soft global PMIs and with some cautiousness heading into risk events.
ASX 200 was positive with the index led by gains in the mining and energy sectors amid recent strength in underlying commodity prices owing to the Chinese stimulus hopes.
Nikkei 225 lagged as speculation remained rife regarding this week’s BoJ meeting with source reports noting the central bank is to consider a large increase in its 2023 inflation outlook and could raise its forecast to around 2.5%.
Hang Seng and Shanghai Comp were boosted with gains led by a surge in property and tech stocks after the Politburo’s support pledges which lifted the Hang Seng Tech Index by around 5%, while the Hang Seng Mainland Properties Index rose by a double-digit percentage from early on as the Politburo’s statement omitted the language that homes are not for speculation.
US equity futures were rangebound with the attention stateside turning to the incoming big tech earnings.
European equity futures are indicative of a softer open with the Euro Stoxx 50 -0.1% after the cash market closed down by 0.2% yesterday.

DXY marginally softened although held onto the majority of the prior day’s gains after having benefitted from the weak PMI data releases from across the pond and a rebound in US treasury yields.
EUR/USD saw a slight reprieve from recent underperformance but remained beneath the 1.1100 handle.
GBP/USD partially nursed its data-induced losses after finding support around the 1.2800 level.
USD/JPY was rangebound with mild headwinds from reports of a potential upgrade to BoJ inflation forecasts.
Antipodeans were underpinned amid the Chinese stimulus hopes and a stronger yuan owing to the PBoC’s firmer reference rate setting, while Chinese state banks were seen intervening in the onshore and offshore spot FX markets.
PBoC set USD/CNY mid-point at 7.1406 vs exp. 7.2044 (prev. 7.1451)
China's major state-owned banks were seen selling dollars in the offshore and onshore spot FX markets in early Asian trades, according to sources cited by Reuters.

10yr UST futures were lacklustre after yesterday’s bear flattening ahead of supply and in the wake of PMI data, while a large block trade was seen before the 2yr auction which was better-than-average but not as strong as the previous.
Bund futures slightly softened after fading some of the initial knee-jerk reaction to the dismal German PMI data.
10yr JGB futures traded rangebound amid the ongoing speculative noise regarding this week’s BoJ meeting and following mixed results at the 40yr auction.

Crude futures held on to most of their recent spoils after climbing to 3-month highs amid China's stimulus hopes.
Russian Deputy PM Novak supported proposals to limit the number of oil product exporters.
Russian Finance Ministry plans to cut the discount it uses to set taxes on the country's crude oil exports to USD 20/bbl from USD 25/bbl currently, according to Finance Minister Siluanov cited by Reuters.
Kazakh Energy Minister said there are no issues with shipping Kazakh crude via Russia amid Black Sea tensions.
Spot Gold rebounded off the prior day's lows as the greenback gave back some of its recent gains.
China's H1 gold output rose 2.2% Y/Y to 178.6 metric tons and gold consumption rose 16.4% Y/Y to 554.9 metric tons, according to Reuters citing state media.
Copper futures benefitted from the mostly positive risk and outperformance in Chinese markets.

Bitcoin marginally extended on losses and approached closer towards the 29,000 level to the downside.
Binance and CEO Zhao are planning to seek a dismissal of the CFTC complaint, according to Bloomberg.

NOTABLE ASIA-PAC HEADLINES

China's NDRC held a meeting with private firms including ANTA (2020 HK), NIO (9866 HK) and TCL where it listened to the companies' opinions and suggestions on the current economic situation, according to Reuters.
China's Ministry of Water Resources said water levels of some rivers in China's eastern and northeastern regions are exceeding warning marks and it has launched a level four emergency response to flooding in Sichuan and Fujian. . Fujian authorities issued an early warning to the public in which it warned ships and workers operating in nearby seas to return to ports in time, while it was also reported that the Fujian province upgraded its typhoon emergency response to level 3 which is the third-highest level as Typhoon Doksuri moves closer, according to Xinhua

DATA RECAP

White House said the US does not support attacks inside of Russia when asked about the drone strikes in Moscow.
Japan launched a protest against North Korea over its missile launch, while it noted that North Korea's missile launch is unacceptable and threatens not only Japan but also the regional and international society's peace and stability.
China's government said a delegation led by Politburo member Li Hongzhong is to visit North Korea from July 26th.

NOTABLE HEADLINES

UK pensions regulator warned that pension fund trustees must consider widening the range of their investments including in start-ups and other illiquid assets or face "robust intervention", according to FT.