- APAC stocks traded mixed after the weak handover from Wall St where the major indices fumbled early gains and finished in the red amid soft earnings and geopolitical risks.
- RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained the stance of remaining focused on the withdrawal of accommodation.
- Israel told the US if Hezbollah harms Israeli civilians as part of its retaliation for the assassination of its top military commander, the Israel Defense Force's response would be disproportionate.
- A state of emergency was declared in Russia's Kursk region amid the Ukrainian offensive; Gas prices on watch.
- European equity futures indicate a lower open with Euro Stoxx 50 futures down 0.9% after the cash market finished with gains of 2.0% on Wednesday.
- Looking ahead, highlights include US IJC, Banxico Policy Announcement, Comments from Fed’s Barkin, Supply US, Earnings from Allianz, Deutsche Telekom, Siemens, Antofagasta, Entain & Eli Lilly.
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US TRADE
EQUITIES
- US stocks failed to sustain opening strength and gradually retreated throughout the session to close in the red with underperformance in the small-cap Russell 2000 index and sectors ultimately closed mixed with gains seen in Utilities, Energy and Financials, while Consumer Discretionary, Materials and Tech lagged. There was a lack of major catalysts to spur risk appetite and geopolitical fears remain at the forefront of market concerns with a no-fly notice issued for Iranian airspace on Thursday morning between 01:00-04:00 UTC which was said to be due to military exercises.
- SPX -0.77% at 5,200, NDX -1.16% at 17,867, DJI -0.60% at 38,763, RUT -1.41% at 2,033.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US Democratic presidential candidate Harris said she will take on corporations that engage in illegal price gouging.
APAC TRADE
EQUITIES
- APAC stocks traded mixed after the weak handover from Wall St where the major indices fumbled early gains and finished in the red amid soft earnings and geopolitical risks.
- ASX 200 was dragged lower amid underperformance in the commodity-related stocks including BHP which is reportedly planning to sell Brazilian copper and gold assets it acquired in the takeover of Oz Minerals.
- Nikkei 225 slumped in early trade with losses of as much as 2.5% before briefly staging a full recovery.
- Hang Seng and Shanghai Comp. pared opening losses with the former making its way back towards the psychological 17,000 level, while the mainland also pared early losses but kept within a narrow range amid light catalysts.
- US equity futures were indecisive amid the lack of fresh macro catalysts to spur price action.
- European equity futures indicate a lower open with Euro Stoxx 50 futures down 1.0% after the cash market finished with gains of 2.0% on Wednesday.
FX
- DXY was little changed and just about held above the 103.00 level amid a lack of drivers and a recent quiet calendar, although the attention for the dollar now turns to jobless claims data and comments from Fed's Barkin.
- EUR/USD eked slight gains although remained contained within relatively tight parameters.
- GBP/USD was marginally positive quiet trade and attempted to return above the 1.2700 level.
- USD/JPY saw two-way price action on both sides of the 146.00 level alongside fluctuations in Japanese stocks.
- Antipodeans were firmer with comments from RBA Governor Bullock partially contributing to the gains in AUD/USD in which she noted that they are vigilant to inflation risks and will not hesitate to hike if needed, while NZD/USD was also kept afloat despite softer inflation expectations which saw money markets price an over 80% chance of a RBNZ rate cut next week.
- PBoC set USD/CNY mid-point at 7.1460 vs exp. 7.1821 (prev. 7.1386).
- BoC Minutes stated that the Governing Council see a risk that consumer spending could be significantly weaker than expected in 2025 and 2026 which could be hit by households likely to be renewing their mortgage at higher rates.
FIXED INCOME
- 10-year UST futures recouped some lost ground after yesterday's continued bear steepening amid a slew of corporate issuances and supply, while there was a lack of fresh catalysts and the US 10-year auction was weak but had little effect on prices.
- Bund futures were marginally positive after a recent rebound off support at the 134.00 level.
- 10-year JGB futures were initially lacklustre after the BoJ Summary of Opinions noted some hawkish opinions by officials, while prices were eventually supported in the aftermath of a mixed 30yr JGB auction which attracted a higher bid-to-cover.
COMMODITIES
- Crude futures held on to its gains after advancing on the back of geopolitical risks.
- Libya's NOC declared a force majeure in its Sharara oil field beginning August 7th.
- Spot gold was positive but with upside restricted amid a steady dollar and absence of pertinent catalysts.
- Copper futures were rangebound near multi-month lows amid the cautious risk sentiment.
CRYPTO
- Bitcoin steadily gained overnight and climbed above the USD 57,000 level.
NOTABLE ASIA-PAC HEADLINES
- BoJ Summary of Opinions from the July 30th-31st meeting stated one member said they must be mindful of upside risks to inflation and a member said a tight labour market and rise in import prices from a weak yen will likely keep inflation under upward pressure. There was also the opinion that it is appropriate to raise the interest rate given that the economy and prices are moving in line with forecasts and there is a need for vigilance to upside inflation risk. Furthermore, a member said there is no change to the fact that the BoJ is supporting the economy even upon raising rates as a nominal rate of 0.25% is very accommodative, while one member said given the environment surrounding inflation, it is good time to consider small rate hike and a member also said the BoJ should eventually raise rates to levels deemed neutral to economy, which is likely at least around 1%.
- RBA Governor Bullock said they are vigilant to inflation risks and will not hesitate to hike if needed, while she added the board considered a hike on Tuesday and current rates are still deemed to meet the inflation mandate. Bullock said core inflation is not expected to return to the 2–3% target range until the end of 2025 and based on current information, the RBA does not anticipate rates coming down quickly. Furthermore, she said the RBA does not react to individual economic numbers and if the economy declines faster than expected, the RBA would consider cutting rates but sees the need for more evidence to alternate the rate stance.
- RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained the stance of remaining focused on the withdrawal of accommodation in which 4 out of 6 members voted in favour of the rate decision and policy stance. RBI Governor Das said India's growth remains strong and inflation is broadly on a declining trajectory. Furthermore, Das said they want inflation to progressively align with the target and noted the food component of inflation remains stubborn but added that going forward, the base effect on inflation will wear out.
DATA RECAP
- New Zealand 2yr Inflation Expectations (Q3) 2.0% (Prev. 2.3%)
- New Zealand 1yr Inflation Expectations (Q3) Q1 2.4% (Prev. 2.73%)
GEOPOLITICAL
MIDDLE EAST
- Flight Radar said Egypt issued a "curious" NOTAM (no fly notice) instructing Egyptian airlines to avoid Iranian airspace between 01:00-04:00 UTC on August 8th which Flight Radar noted was curious as Egyptian carriers route around Iran already as a normal procedure. Egypt's civil aviation ministry later confirmed it sent a notice to all Egyptian airlines to avoid flying over Iranian airspace on August 7th and 8th due to military exercises, while the UK also issued a NOTAM warning pilots against flying over Beirut, Lebanon.
- Iran’s UN envoy said Tehran’s “priority is to punish the aggressors” responsible for Haniyeh's assassination in Tehran and preventing the repetition of terrorist attacks by Israel. This follows a report that US officials said Iran may be rethinking launching a multi-pronged attack on Israel, while they do anticipate an Iranian response to the Haniyeh killing but think Tehran seems to have recalibrated and the US does not expect an imminent attack.
- Hezbollah reportedly looks increasingly like it may strike Israel independent of whatever Iran may intend to do, according to two sources familiar with the intelligence cited by CNN.
- Israeli officials think the target for Hezbollah's response could be the IDF headquarters in the centre of Tel Aviv or the Mossad headquarters and other key intelligence bases in northern Tel Aviv, according to Axios's Ravid.
- Israel told the US if Hezbollah harms Israeli civilians as part of its retaliation for the assassination of its top military commander, the Israel Defense Force's response would be disproportionate, according to two officials cited by Axios.
- White House said that they continue talks with partners and leaders in the Middle East, including Qatar and Egypt and urge a de-escalation, according to Al Jazeera. It was separately reported that hostage negotiations are stuck and that no date has been set for their resumption, according to Al Jazeera citing Israeli Broadcasting Authority sources.
- Saudi Deputy Foreign Minister said Haniyeh's assassination is considered a 'blatant violation' of Iran's sovereignty.
- Yemen's Houthis said they targeted two US destroyers in the direction north of the Red Sea.
OTHER
- Russia's Medvedev said Russia must press on to Odesa, Kharkiv, Dnipro, Mykolaiv, Kyiv, and further, while he added that Russia will stop only when it finds it acceptable and beneficial.
- A state of emergency was declared in Russia's Kursk region amid the Ukrainian offensive.
EU/UK
DATA RECAP
- UK RICS House Price Balance (Jul) -19 vs. Exp. -10 (Prev. -17)
