US EARLY MORNING: Stock futures are flat ahead of services ISM data

OVERNIGHT: On Wall Street, stocks were firmer on Thursday after "pause" chatter from Fed's Bostic unwound earlier losses (see here). Asia-Pac stocks traded mostly higher amid tailwinds from the US (see here); the Nikkei 225 outperformed peers after data which showed Tokyo-area headline and core inflation began to soften, while the Unemployment Rate edged lower. China shares gained after strong Caixin Services and Composite PMI data which showed the fastest pick-up in activity since August, but upside was capped heading into China’s ‘Two Sessions’ (see here for our Two Sessions primer). In Europe, stocks started the last session of the week on the front foot supported by strong leads from Wall Street and APAC trading; data showed Germany's trade surplus widening by more than expected in January (see here). Final Services and Composite PMI data out of France was revised up a touch for February, the German measures were revised down, while the aggregate Eurozone readings were revised lower too. 

US PRE-MARKETS: After the Bostic-inspired bounce on Thursday, US equity futures have traded around flat through the overnight session ahead of ISM services data due later today, where the headline is expected to pare back a touch. Treasury yields are lower by 3-5bps, with moderate flattening seen. The Dollar Index is sub neutral, back under 105.00. The macro tone into the end of the week (and ahead of next week’s data slate, which includes the key jobs data) will be shaped by the ISM data, and there will be particular attention on the prices component, after a hot reading within the manufacturing data earlier in the week exacerbated hawkish repricing of the expected course for rates this year. ING says that following the grim December numbers and encouraging January ones, the ISM services will tell us which of the last two reads was the aberration in the series; "all seems to point to December being a one-off drop, and levels above 54.0 will be enough to endorse the Fed’s hawkish tone and support USD," the Dutch bank writes.

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03 Mar 2023 - 09:31- Data- Source: Newsquawk

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