• US stocks were mostly positive with outperformance in the Nasdaq amid the advances in Nvidia after MS named the stock a top pick.
• APAC stocks traded mixed as participants digested key releases including disappointing Chinese activity data and the PBoC’s surprise cuts to its 7-day Reverse Repo and 1-year MLF rates.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up by 0.2% yesterday.
• DXY remains above 103, USD/CNH advanced to 7.3121 post-MLF reduction, AUD leads the majors, EUR/USD sits just above 1.09.
• Highlights include, UK Unemployment, Swedish CPI, German & EZ ZEW, US Import & Export Prices, Retail Sales, Business Inventories, Canadian CPI, Speech from Fed’s Kashkari, Supply from UK & Germany.

US TRADE

EQUITIES

• US stocks were mostly positive and the major indices finished in the green albeit with varying degrees as the Nasdaq outperformed amid the advances in Nvidia (NVDA) after MS named the stock a top pick ahead of earnings and the mega-cap tech names (AAPL, MSFT and AMZN) also saw a decent session. S&P 500 was firmer and the Dow was relatively flat, while the Russell 2000 closed in the red with the downside led by losses in the regional banks.
• SPX +0.57% at 4,489, NDX +1.18% at 15,205, DJIA +0.07% at 35,307, RUT -0.24% at 1,920.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Treasury Secretary Yellen said inflation is coming down and a very large share of Americans feel good about their personal situation, while she feels good about the US economy overall. However, Yellen also commented that China's developments and Russia's war in Ukraine pose uncertainty for the global economy, as well as noted that slowing growth in China could spill over into the US and will have the largest impact on Asian neighbours, according to Reuters.
• Cleveland Fed manufacturing and service sector 1yr ahead inflation expectations fell to 4.3% in July from 5.0% in April which is the lowest reading in two years.
• FDIC Chairman said the US is considering making banks issue long-term debt to boost stability.
• Prosecutors in the US state of Georgia filed legal action against former president Trump and 18 others over 2020 election interference in Georgia, while Trump was charged with 13 counts including violations of the Georgia Rico Act and forgery in the first degree, according to Reuters.
• Hollywood studios made a new offer to screenwriters including concessions on issues such as the use of AI and access to viewer data, according to Bloomberg.

APAC TRADE

EQUITIES

• APAC stocks traded mixed in an event-packed session as participants digested key releases including disappointing Chinese activity data and the PBoC’s surprise cuts to its 7-day Reverse Repo and 1-year MLF rates.
• ASX 200 was firmer with most sectors in the green including the top-weighted financials after earnings from big 4 bank NAB which also announced a share buyback, while the RBA minutes provided little in the way of new information and kept the door open for further rate hikes although the latest Wage Price Index printed softer-than-expected.
• Nikkei 225 benefitted from a strong GDP report which showed Japan's economy expanded by the fastest annualised pace since Q4 2020 but was led by exports as private consumption contracted for the first time in 3 quarters.
• Hang Seng and Shanghai Comp were subdued as the miss on Chinese Industrial Production and Retail Sales overshadowed the PBoC's surprise 10bps and 15bps cuts for the 7-day Reverse Repo and 1-year MLF rates, respectively.
• US equity futures were kept afloat (ES +0.2%) following the prior day's gains with mild upside from the PBoC's rate cuts.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 +0.4% after the cash market closed up by 0.2% yesterday.

FX

• DXY largely ignored the various moving parts in Asia and held onto the prior day’s gains above 103.00.
• EUR/USD was uneventful after recent declines and has since found a platform at the 1.0900 level.
• GBP/USD traded sideways beneath resistance at the 1.2700 level heading into UK jobs and earnings data.
• USD/JPY took a breather following its ascent above 145.00 and had little reaction to the strong GDP data.
• Antipodeans were choppy but ultimately gained as AUD/USD shrugged off the China-related currency headwinds and softer Australian wage growth, while NZD/USD was kept afloat ahead of tomorrow’s RBNZ rate decision.
• PBoC set USD/CNY mid-point at 7.1768 vs exp. 7.2648 (prev. 7.1686)
• Chinese state banks were seen selling dollars vs yuan at the 7.2800 level.

FIXED INCOME

• 10yr UST futures were subdued beneath the 110.00 level after yesterday’s continued bear flattening of the treasury curve and with the attention in the US turning to data releases including Empire Manufacturing and Retail Sales.
• Bund futures remained lacklustre as yields held on to their recent upside and with ZEW data ahead.
• 10yr JGB futures saw two-way price action and reversed the early upside after weaker 5yr auction results.

COMMODITIES

• Crude futures traded relatively little changed alongside the mixed signals from the Asia-Pac region.
• US total shale regions September oil production is seen -19k BPD to 9.415mln bpd (prev. saw -15k BPD in August), according to EIA.
• China's July crude oil output rose 1.9% Y/Y to 122.4mln tons and nat gas output rose 7.6% Y/Y to 18.4bcm, while aluminium output rose 1.5% Y/Y to 3.48mln tons, according to the stats bureau.
• India raised its windfall tax on petroleum crude to INR 7100/tonne (prev. 4250/tonne) with effect from August 15th, while it raised the windfall tax on diesel to INR 5.50/litre from 1/litre and raised the windfall tax on aviation turbine fuel to INR 2/litre from nil, according to Reuters citing a notification.
• Spot gold was uneventful amid a steady dollar ahead of US data releases and tomorrow's FOMC Minutes.
• Copper futures were choppy as participants digested the weak Chinese data and the PBoC's rate cuts.

CRYPTO

• Bitcoin was marginally lower with prices constrained by the mixed risk appetite in Asia.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 401bln in MLF and unexpectedly cut the 1-year MLF rate by 15bps to 2.50% from 2.65%, while it injected CNY 204bln via 7-day reverse repos with the rate cut to 1.80% from 1.90%.
• PBoC adviser called for the urgent need to boost residential consumption.
• China NBS said the economy continued to recover in July and the foundation for economic recovery needs to be cemented, while it reiterated to boost domestic demand and noted that domestic demand is not sufficient. China's stats bureau also stated that China's economic recovery faces challenges but expects exports to be basically steady in H2 and said risks for property developers could be gradually resolved due to policy optimisation. Furthermore, the NBS said PPI declines are expected to moderate further and the decline in CPI could be temporary, while it anticipates China's economy to improve as policies gain traction.
• RBA Minutes from the August meeting stated that the Board considered raising rates by 25bps or holding steady and agreed that the case for holding steady was the stronger one, while the Board saw a credible path back to the inflation target with Cash Rates at the current 4.10% level but agreed it was possible some further tightening may be needed which would depend on data and evolving assessment of risks. Furthermore, it stated that inflation is heading in the right direction although service inflation is too high and the Board saw plausible scenarios where inflation took longer than acceptable to return to the target.

DATA RECAP

• Chinese Industrial Production YY (Jul) 3.7% vs. Exp. 4.4% (Prev. 4.4%)
• Chinese Retail Sales YY (Jul) 2.5% vs. Exp. 4.5% (Prev. 3.1%)
• Chinese Urban Investment YTD YY (Jul) 3.4% vs. Exp. 3.8% (Prev. 3.8%)
• Chinese Urban Unemployment Rate (Jul) 5.3% (Prev. 5.2%)
• Japanese GDP QQ (Q2 P) 1.5% vs. Exp. 0.8% (Prev. 0.7%)
• Japanese GDP QQ Annualised (Q2 P) 6.0% vs. Exp. 3.1% (Prev. 2.7%)
• Japanese GDP QQ Private Consumption (Q2 P) -0.5% vs. Exp. 0.1% (Prev. 0.5%)
• Australian Wage Price Index QQ (Q2) 0.8% vs. Exp. 0.9% (Prev. 0.8%)
• Australian Wage Price Index YY (Q2) 3.6% vs. Exp. 3.7% (Prev. 3.7%)

GEOPOLITICS

• Russian Ambassador to the US said the US denied some Russian officials visas to travel to the APEC conference in Seattle, according to Reuters.
• US senior administration official said the upcoming US-Japan-South Korea summit will launch a number of initiatives in technology, education and defence, but is unlikely to produce a three-way security framework. Furthermore, the summit is likely to lead to a mutual understanding about regional defence responsibilities and they are anticipating some steps that will bring the US, South Korea and Japan closer together in the security realm, according to Reuters.