Newsquawk

Europe Market Open: Stocks pressured with yields bid, Central Bank speak & earnings due

16 Jan 2024, 06:35 by Newsquawk Desk

APAC stocks were pressured in the absence of a lead from Wall Street and amid the upside in yields.
European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.6% after the cash market closed lower down 0.6% on Monday.
Risk-aversion has provided the USD with a bid as DXY eyes 103, USD/JPY is back on a 146 handle, antipodeans lag.
Bund futures languished at the prior day's lows after ECB officials suggested it is too soon to cut rates.
Looking ahead, highlights include German CPI (Final), UK Unemployment/Earnings, German ZEW, US NY Fed Manufacturing & Canadian CPI, ECB's Villeroy, BoE's Bailey & Fed's Waller, Supply from UK & Germany, Earnings from Goldman Sachs, PNC Financial Services, Morgan Stanley & Charles Schwab.

NOTABLE HEADLINES

Former US President Trump was called as the winner of the Iowa Republican caucuses from very early on, while Edison Research later announced that Trump has 51.1%, DeSantis has 21.2% and Haley has 19.0% with 95% of estimated Iowa caucus votes in.

APAC stocks were pressured in the absence of a lead from Wall Street and amid the upside in yields.
ASX 200 retreated with miners among the worst hit after lower iron ore output and shipments by Rio Tinto.
Nikkei 225 extended beneath the 36,000 level owing to slightly higher yields and firmer-than-expected PPI data.
Hang Seng and Shanghai Comp conformed to the downbeat mood but with the losses in the mainland initially cushioned after a substantial PBoC liquidity operation, while Beijing reportedly told some institutional investors in recent days not to sell stocks.
US equity futures (ES -0.5%) were subdued after the holiday closure on Monday and with pressure in Asia-Pac bourses.
European equity futures are indicative of a lower open with Euro Stoxx 50 future -0.6% after the cash market closed lower down 0.6% on Monday.

DXY was underpinned as FX trade gradually picked up from the holiday lull and alongside the risk aversion.
EUR/USD retreated beneath 1.0950 despite recent higher EZ yields and ECB's pushback on immediate cuts.
GBP/USD breached 1.2700 to the downside alongside the underperformance seen across cyclical peers.
USD/JPY reclaimed the 146.00 status owing to the firmer dollar, while JPY-crosses were pressured by the subdued mood.
Antipodeans suffered due to their high-beta statuses and with headwinds from disappointing consumer confidence in Australia.
PBoC set USD/CNY mid-point at 7.1134 vs exp. 7.1783 (prev. 7.1084).

10yr UST futures remained subdued after the US holiday closure and in tandem with losses in global peers.
Bund futures languished at the prior day's lows after ECB officials suggested it is too soon to cut rates.
10yr JGB futures retreated at the open amid mild gains in Japanese yields and after firmer-than-expected PPI data, while the latest 5yr JGB auction resulted in lower bid-to-cover and accepted prices compared to the previous month.

Crude futures were indecisive as support from geopolitical tensions was offset by the subdued risk tone.
Spot gold was lacklustre and tested USD 2050/oz to the downside as the dollar gradually strengthened.
Copper futures pulled back overnight with base metals pressured alongside the broad risk aversion.
First Quantum is to reduce operating activities at its Ravensthorpe nickel operation and will cut workforce at the site by 30% after a significant downturn in nickel prices during 2023, combined with higher operating costs in Western Australia.

Bitcoin gained in a continuation of the recent bounce from the USD 42,000 level.

NOTABLE ASIA-PAC HEADLINES

PBoC injected CNY 760bln via 7-day reverse repos with the rate at 1.80% for a CNY 695bln net injection.
Chinese authorities reportedly told some institutional investors in recent days not to sell stocks as the Chinese stock rout resumes, according to FT.

DATA RECAP

MIDDLE EAST

Explosions were reported in different areas in Erbil, northern Iraq and in Syria, according to Al Arabiya IRGC said it attacked and destroyed the espionage headquarters of Israel's Mossad in Iraq's Kurdistan and it targeted Islamic State in Syria in response to the group’s recent terrorist attacks in Iran, according to Reuters.
US State Department said the US strongly condemned Iran's attacks in Erbil on Monday, while US officials said no US facilities were impacted by missile strikes in Erbil, Iraq and there were no US casualties, according to Reuters.
UK PM Sunak signalled the UK could participate in further strikes against Houthi rebels and told MPs that Britain will not hesitate to protect its interests where required, according to FT.
Houthi military spokesman said they consider all American and British vessels and warships participating in aggression against them as hostile targets, according to Reuters.
Iran’s Islamic Revolutionary Guard Corps commanders and advisors are on the ground in Yemen and playing a direct role in Houthi rebel attacks on commercial traffic in the Red Sea, according to SEMAFOR.

OTHER

Ukraine President Zelenskiy asked Switzerland to organise a high-level peace conference, while teams will start on plans today.
North Korea decided to shut down organisations dealing with unification and inter-Korean tourism, while North Korean leader Kim said they do not want war but have no intention to avoid it. Furthermore, Kim said war will destroy South Korea and deal an unimaginable defeat to the US, according to KCNA.
South Korean President Yoon said North Korea's recent missile launch and artillery firing are political acts to divide South Koreans and its provocations will be met with response on a multiplied scale, according to Reuters.

NOTABLE HEADLINES

British pension funds are preparing to "flood the market" with billions of GBP's of private assets, according to Bloomberg. As much as GBP 200bln in assets could be offloaded as rising interest rates provide funds with an opportunity to offload the part of the risk of meeting future liabilities.