• Markets have been quiet due to the mass closures for Labour Day, while the FTSE 100 (+0.1%) is similarly uninspiring
• In FX sterling outperforms but the broadly in line PMI did little for the currency, while NZD underperforms following the weak jobs data
• Looking ahead, highlights include US ADP & Construction Spending, US ISM Manufacturing PMI, FOMC Rate Decision & Press Conference, BoC's Wilkins and Poloz
• Earnings: CVS, Qualcomm. CME Group, Automatic Data Processing, GlaxoSmithKline
• Note: Market Closures for European and Chinese Labour Day Holiday

ASIA-PAC

A quiet tone was observed in Asia-Pacific amid closures in nearly all the major regional bourses for Labour Day, although US equity futures were underpinned after-hours following Apple earnings in which the tech giant beat on top and bottom lines, authorized an additional USD 75bln share repurchase and raised its dividends by 5%. ASX 200 (+0.8%) was positive with the index led higher by tech on contagion from Nasdaq futures and with financials buoyed as ANZ shares rallied nearly 3% after its H1 results, while reports that the US dropped a key demand regarding cyber theft in an effort to accelerate a trade deal with China also added to the optimism although most of the region failed to capitalize with China, Hong Kong, India, Japan, Singapore, South Korea and Taiwan all shut.

US White House reportedly dropped a key demand regarding cyber theft in an effort to accelerate a trade deal with China. (FT)

US Treasury Secretary Mnuchin and USTR Lighthizer have concluded their 'productive' meetings with China's Vice Premier He, talks are to continue in Washington next week. (Twitter)

US

US Senator Ernst said she would be a no on Stephen Moore for the Fed at this point and that she doesn't think Stephen Moore would be approved for the Fed board seat if the vote was held today, while Senator Graham also commented that Steven Moore's nomination would be very problematic. (Newswires)

US Special Counsel Mueller told AG Barr that his summary on the Special Counsel report caused confusion and missed the essence of the report. (Newswires)

GEOPOLITICAL

Venezuela’s Maduro declared victory against a coup of plotters and said armed forces had defeated a small group. There were also reports that Venezuela's Guaido called on the military and civilians to conduct fresh mass protests on Wednesday, while the FAA ordered US air operators to not fly below 26K feet over Venezuela amid political instability and tensions. (Newswires)

US President Trump threatened Cuba with sanctions and embargo over actions in Venezuela, while US Secretary of State Pompeo said US had indications Venezuela's Maduro was ready to leave the country on Tuesday morning but Russian President Putin convinced him to stay, however, Russia and Maduro have denied these claims. (Newswires)

UK/EU

UK PM May is said to have blocked a cabinet attempt to speed up the Brexit process this week with Downing Street overruling Brexiteer ministers that had expected a withdrawal agreement bill to be brought before the commons, while reports noted that PM May is concerned MPs could vote down the bill at the first attempt and potentially trigger a general election. (Huffington Post)

Eurosceptic ministers fear that PM May is preparing to give in to Labour demands on Brexit after they were told an unpalatable result would be better than a disastrous one. (Telegraph)

UK Opposition Labour Party sources suggest there are no cross-party Brexit talks scheduled for today, and given local elections tomorrow, they suspect "nothing this week", according to Sky News' Cohen. (Twitter)

Times’ Shadow Monetary Policy Committee unanimously believe the BoE should hold interest rates this week because the political backdrop is too uncertain to change policy. (Times)

ECB's VP de Guindos (Neutral) says the structurally low profitability of the euro area banking sector remains a concern for financial stability and for monetary policy. The low interest rate environment is with us for the foreseeable future and is caused in large part by durable structural factors, adds that the ECB is open-minded regarding tweaks to the target, adding that officials are yet to discuss changing the target. (Newswires)

UK Markit/CIPS Manufacturing PMI (Apr) 53.1 vs. Exp. 53.0 (Prev. 55.1)

- New export business declines

- Stock-building continues at solid, yet slower, pace

EQUITIES

Mass closures in Europe have extended the quiet tone seen across Asia, with only UK and Danish markets open today in the EU. The FTSE 100 (-0.1%) is relatively flat with sectors also showing no clear standouts. In terms of movers, Sainsbury’s (+4.7%) rose to the top of the index amidst optimistic revenue and profit numbers, alongside a net debt reduction which is ahead of target. To the downside, Persimmon (-1.8%) shares suffer after fire issues were found in houses developed by the company, the company is addressing the issue. State-side, Apple reported earnings aftermarket wherein the tech giant topped estimates on both top and bottom line, whilst Q3 guidance was also above analyst consensus, despite a sharp drop in Q2 iPhone sales. Apple shares spiked higher in excess of 5% post-earnings.

Apple (AAPL) Q2 EPS USD 2.46 vs. Exp. USD 2.36, rev. USD 58.02bln vs. Exp. USD 57.37bln. (Newswires) - Co. authorized additional USD 75bln for share buybacks and raised dividend 5% to USD 0.77. - iPhone net sales USD 31.05bln vs Prev. USD 37.56bln. - iPad net sales USD 4.87bln vs. Prev.  USD 4.01bln. - Mac net sales USD 5.51bln vs. Prev. USD 5.78bln. - Sees Q3 revenue between USD 52.5bln-54.5bln.vs. Exp. USD 52.4bln.

- For reference, Co. were around 5% higher in after market trade

FX

GBP/NZD - Flanking the G10 ranks at the start of the new month, as Cable extends gains through more chart resistance levels on the way to circa 1.3073, like the 30 DMA (1.3052), a Fib (1.3053) and daily tech formation (1.3065), eyeing 1.3090 next (55 DMA) before the 1.3100 handle. A broadly in line and less stockpile-inflated UK manufacturing PMI amidst mixed BoE mortgage and consumer data was largely shrugged off, but Sterling also eked more upside vs the Euro as the cross eased a bit further below 0.8600 to test bids just ahead of a 50% retracement (0.8583) following more reports about constructive cross party Brexit talks as discussions are put on hold due to Thursday’s local elections. More immediately, focus on the Fed before the BoE tomorrow – see the Ransquawk headline feed for detailed previews of the 2 events. Conversely, weaker than forecast NZ jobs data has raised the stakes in terms of RBNZ rate cut expectations for next week and Nzd/Usd retreated in response through 0.6650, as the Aud/Nzd cross rebounded firmly from around 1.0560 to just over 1.0600. However, the Kiwi has pared some losses since with the probability of an ease still close enough to 50% for reasonable doubt.

CHF - Another major outperformer or rather beneficiary of a deeper pull-back in the Dollar ahead of the FOMC, as the Franc edges towards 1.0150 and DXY slips to 97.359, very close to a 97.355 Fib and nearer the 30 DMA (97.216).

AUD/EUR - Also firmer vs the Greenback as Aud/Usd consolidates recovery gains around 0.7050 and the single currency builds a foothold above 1.1200. Eur/Usd has eclipsed Fib resistance at 1.1217 and is now approaching convergence at 1.1242 (another Fib and 30 DMA) before 1.1250 and 1.1275 (latter roughly coincides with the 50 DMA).

JPY/CAD - Both narrowly mixed vs the Usd, as the Yen attempts to breach the 30 DMA (111.40) and retest Tuesday’s peaks, while the Loonie continues its recovery from yesterday’s post-Canadian GDP lows within a 1.3400-1.3375 range in advance of the manufacturing PMI and more from BoC’s Poloz and Wilkins.

New Zealand Employment Change (Q1) Q/Q -0.2% vs. Exp. 0.5% (Prev. 0.1%). (Newswires) New Zealand Unemployment Rate (Q1) 4.2% vs. Exp. 4.2% (Prev. 4.3%) New Zealand Participation Rate (Q1) 70.4% vs. Exp. 70.9% (Prev. 70.9%) New Zealand Labour Cost Index (Q1) Q/Q 0.3% vs. Exp. 0.5% (Prev. 0.5%)

FIXED INCOME

Pre-UK data and PMI price activity suggests some front-running or hedging for a bigger than forecast retracement in manufacturing activity, as the 10 year benchmark squeezed up to a new 127.41 Liffe intraday high (+9 ticks vs -10 ticks at worst), but then eased back on the release that was a smidge better than anticipated in the event. However, survey sub-components were less resilient after premature Brexit stock-building given the extended Article 50 deadline to October 31, and Gilts retain an underlying bid in keeping with USTs ahead of ADP, manufacturing PMI and ISM amidst various holidays that are weighing on turnover.

COMMODITIES

The energy market had a stellar performance in April as the benchmarks climbed over 6% amidst intensifying tensions in Venezuela, tightening US sanctions on Iran and ongoing OPEC supply cuts. Ahead of the end of Iranian oil waivers later, oil Journalist Reza Zandi notes that Iranian officials are reportedly discussing three potential Iranian scenarios in OPEC:  1) Iran suspends its membership in OPEC until sanctions are removed, 2) Iran departs from OPEC and 3) Iran continues its membership. In today’s trade, oil prices have reversed a bulk of the April gains following a much wider-than-forecast build in API crude stockpiles (6.8mln vs. Exp. 1.5mln), marking the 4th stock build in April. PVM analysts also highlight the uptrend in US stockpiles which is described as a “deepening pocket of weakness” amid a host of a bullish catalysts. WTI and Brent futures have thus retreated back below/around USD 64/bbl and USD 72/bbl respectively ahead of today’s EIA data wherein the market is geared for a headline build of 1.485mln barrels.  Elsewhere, gold remains within a relatively tight range around 1280/oz ahead of the FOMC rate decision (preview available in the Research Suite) whilst copper mirrors the humdrum tone with most the region away on holiday. Finally, aluminium prices remain pressured following on from the weaker-than-forecast Chinese manufacturing data coupled with producers revising down their demand growth estimates for the year.

Abu Dhabi have launched a second bid round for 5 major exploration blocks which have substantial oil and gas potential., according to an ADNOC statement. (Newswires)

Tanker Trackers report that they are "currently following up on a lead of a POSSIBLE incident involving not one, but two Iranian tankers sailing in parallel in the Red Sea. One of them is said to be leaking". (Twitter)