Newsquawk

Europe Market Open: Equities pressured ahead of numerous Central Bank speakers; DXY steady

10 Jan 2024, 06:35 by Newsquawk Desk

APAC stocks mostly declined after the flimsy handover from Wall St and tentativeness ahead of key inflation data and earnings.
European equity futures are indicative of a lower open with Euro Stoxx 50 futures -0.3% after the cash market closed up by 0.4% on Tuesday.
DXY is steady above the 102.50 mark, USD/JPY is approaching 145 following soft Japanese wage data.
Australian monthly CPI data was softer than expected but remained well above the 2%-3% inflation target.
BTC was volatile after an unauthorised post by the official US SEC account on X falsely claimed the approval of spot BTC ETFs.
Looking ahead, highlights include Norwegian CPI, US MBA, Wholesale Sales, Chinese M2 Money Supply, BoE's Bailey & Breeden, ECB’s de Guindos & Schnabel, Fed’s Williams, Supply from UK, Germany & US.

US stocks were mostly subdued which saw the S&P 500 and NDX finish little changed with risk assets in a holding pattern amid light catalysts ahead of US CPI data on Thursday and bank earnings releases on Friday, while Russell 2000 underperformed as small caps suffered from a rebound in yields alongside rampant global supply.
SPX -0.15% at 4,756, NDX +0.17% at 16,678, DJI -0.42% at 37,525, RUT -1.05% at 1,968.
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NOTABLE HEADLINES

Fed's Barr said the Fed is considering changes to the Basel endgame operational risk calculation and fee-based income. Barr also commented that the Bank Term Funding Programme created during the Spring crisis was only for emergency and said potential new exploratory stress test scenarios would not be used to set capital requirements.

APAC stocks mostly declined after the flimsy handover from Wall St and tentativeness ahead of key inflation data and earnings.
ASX 200 was dragged lower by the mining, materials and resources sectors, while monthly CPI data was softer than expected but remained well above the 2%-3% inflation target.
Nikkei 225 surged above 34,000 for the first time in over three decades, while soft wages added to the case for a delayed BoJ exit.
Hang Seng and Shanghai Comp were subdued amid the lack of any major positive drivers and a tepid PBoC liquidity operation, while HSBC and Citigroup lowered their Hang Seng Index targets due to earnings and China policy doubts.
US equity futures traded sideways with participants unwilling to commit before tomorrow's US CPI report.
European equity futures are indicative of a lower open with Euro Stoxx 50 futures -0.3% after the cash market closed up by 0.4% on Tuesday.

DXY struggled for direction with catalysts light as markets await the US CPI data on Thursday.
EUR/USD was uneventful despite recent ECB comments but held on to the 1.0900 status.
GBP/USD retested 1.2700 to the downside amid a lack of catalysts and with BoE's Bailey scheduled to speak later.
USD/JPY extended above 144.50 alongside the rally in Japanese stocks and after soft wages data.
Antipodeans kept afloat but with upside capped amid the mostly negative risk tone and with AUD also briefly pressured after softer-than-expected monthly CPI data from Australia.
PBoC set USD/CNY mid-point at 7.1055 vs exp. 7.1618 (prev. 7.1010)

10yr UST futures traded indecisively and on both sides of the 112.00 level with markets in a holding pattern ahead of US inflation data and amid rampant supply.
Bund futures were lacklustre after a recent failure to hold above 136.00 and as a 10yr German bond auction looms.
10yr JGB futures initially benefitted after soft wage data added to the case for the BoJ to prolong its exit but then faded most of the gains following a soft 10yr JGB auction.

Crude futures marginally extended on the prior day's rebound as they continued to claw back some of Monday's heavy losses, albeit with the rebound capped after mixed private sector inventory data.
US Energy Inventory Data (bbls): Crude -5.2mln (exp. -0.7mln), Gasoline +4.9mln (exp. +2.5mln), Distillate +6.9mln (exp. +2.4mln), Cushing -0.6mln.
US EIA STEO raised the forecast for 2024 world oil demand growth by 50k BPD to a 1.39mln BPD Y/Y increase and sees 2025 world oil demand to reach 103.67mln BPD which is an increase of 1.21mln BPD from 2024.
Algeria's Energy Minister discussed oil and gas investments with ExxonMobil (XOM), according to a statement.
Spot gold was uneventful amid a steady dollar and lack of pertinent drivers leading up to Thursday's CPI data.
Copper futures found some slight reprieve from the prior day's selling after it found a floor around USD 3.76/lb.

Bitcoin was ultimately flat overnight but saw some volatility and briefly dipped beneath USD 46,000 after a breach and unauthorised post by the official US SEC account on social media platform X, which falsely claimed the approval of spot BTC ETFs.
It was initially reported that the SEC granted approval for Bitcoin ETFs for listing on all registered national securities exchanges. However, the US SEC then noted that Bitcoin ETFs had not received approval on Tuesday and SEC Chair Gensler said the SEC account on X was compromised which resulted in an unauthorised post.

NOTABLE ASIA-PAC HEADLINES

US and Chinese defence officials held policy coordination talks at the Pentagon on Monday and Tuesday in their first such in-person meetings since before the pandemic, according to Bloomberg.
China's Defence Ministry said it urges the US to reduce military deployment and provocations in the South China Sea and to stop providing support to provocations of certain countries. Furthermore, it urged the US to abide by the One China Principle and stop arming Taiwan, while it added that the US should strictly restrain front-line forces and stop hyping up security issues, according to Reuters.

DATA RECAP

Israeli military said it killed the southern Lebanon commander of Hezbollah's aerial unit. However, it was later reported that Lebanon's Hezbollah denied Israel's claims of killing its aerial unity commander.
US Navy said four warships from Operation Prosperity Guardian were engaged in fighting and that around 50 merchant vessels were in the area of what was the largest attack so far by Houthi militias on merchant vessels in the Red Sea, according to CNBC. It was later reported that US and British forces shot down 21 drones and missiles fired from Yemen, according to AFP News Agency.
US, EU, UK and partner nations issued a joint statement which condemned North Korea's export and Russia's procurement of North Korean ballistic missiles and Russia's use of missiles against Ukraine on December 30th. In relevant news, the White House said National Security Adviser Sullivan discussed North Korea's transfer of missiles to Russia in a call with South Korean counterpart.
North Korean leader Kim called South Korea the country's "principal enemy" and said he has "no intention of avoiding war" with South Korea, according to state media, according to Yonhap and KCNA.

NOTABLE HEADLINES

ECB’s Villeroy said must remain vigilant on inflation data and short of any surprises, 2024 will be the year of the ECB's first rate cuts. Villeroy said decisions will be based on data and will not be stubborn or rushed, while he added they will cut rates this year when the inflation outlook is solidly anchored at 2%.