- European bourses are generally firmer, US futures flat/firmer but NQ leads ahead of NVDA earnings after-hours
- Dollar is firmer, AUD fares best post-CPI & EUR underperforms
- Bonds are incrementally firmer awaiting impetus from Fed speak and US 5yr supply
- Crude continues to slip, XAU and base metals hampered by the firmer Dollar
- Looking ahead, DoEs, Fed's Bostic, Supply from the US, and earnings from NVIDIA, Salesforce, and CrowdStrike
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EUROPEAN TRADE
EQUITIES
- European bourses, Stoxx 600 (+0.3%) began the session on a modestly firmer footing. As the morning progressed, some slight divergence was seen in the markets; the DAX 40 (+0.3%) edged to session highs, whilst the FTSE 100 (-0.1%) tilted lower.
- European sectors hold a strong positive tilt; Insurance takes the top spot, propped by post-earning gains in Prudential (+2.7%). Basic Resources is found at the foot of the pile, hampered by broader weakness in underlying metals prices.
- US Equity Futures (ES U/C, NQ +0.2%, RTY U/C) are flat/modestly firmer, with slight outperformance in the NQ ahead of NVIDIA (+0.2%) earnings after-hours. The data docket for the remainder of the day is void of any key data releases, but Fed’s Bostic may help to spur some action.
- Nvidia is expected to report Q2 (USD) EPS of 0.64 and Revenue of 28.48bln. Generally, analysts expect the earnings to show strong results amid sustained AI demand though production delays are in focus (i.e. Blackwell). In terms of reaction, options markets were pricing in a 1.3% swing in the S&P 500 for the first day of trading after Nvidia publishes its results, and a swing of up to 10% in either direction for the stock itself, according to Citi. Report due around 21:20BST/16:20EDT
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FX
- USD has launched a modest fightback vs. peers after a recent run of losses for the Greenback. DXY has been as high as 100.95 with focus on a test of 101. If breached, the next level to the upside will come via the pre-Powell peak at 101.55.
- EUR/USD has continued to pullback from the 1.12 mark and drifted as low as 1.1136 overnight. EZ-specific updates remain light with focus for the region on Friday's inflation metrics.
- GBP is a touch softer vs. the broadly firmer USD but marginally firmer vs. the EUR; Cable down to a 1.3218 base. Cable printed another YTD high on Tuesday at 1.3267. If the uptrend resumes, focus will be on a test of the 1.33 mark.
- JPY the marginal laggard across the majors with not much in the way of specific newsflow for either leg of the pair. USD/JPY has been as high as 144.48 with focus on a potential retest of 145.
- AUD faring better vs. the USD than peers on account of firmer-than-expected inflation metrics overnight. AUD/USD was able to briefly pierce the 0.6800 level, but stopped shy of the 0.6832 YTD peak from Jan 2nd.
- PBoC set USD/CNY mid-point at 7.1216 vs exp. 7.1210 (prev. 7.1249)
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FIXED INCOME
- USTs are firmer, but only by a few ticks with coverage for USTs having now switched to the December contract. Docket ahead has a 5yr auction which follows Tuesday's strong, though not quite as well received as the prior, 2yr tap. USTs in particularly thin parameters just above the 114-00 mark.
- Bunds remain in Sep. with volumes and conditions thin as newsflow remains light ahead of US PCE on Friday. No EGB supply though focus is on a US 5yr later. Pivoting the 134.00 mark in 133.89-134.08 parameters which are entirely within Tuesday's 133.66-134.28 band.
- Gilts have switched to December; no Tier 1 events thus far though BoE's Mann appears on some schedules for later in the session. Currently in a thin 20-tick parameter just below the 99.00 mark.
- UK sells GBP 1.5bln 0.75% 2033 I/L Gilt: b/c 2.94x (prev. 2.89x) and real yield 0.462% (prev. 0.518%).
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COMMODITIES
- Crude benchmarks softer as the geopolitical/crude narrative hasn't fundamentally shifted since late-Monday with the complex continuing to pare that session's geopolitics/Libya-inspired strength. Brent'Oct down to a USD 78.55/bbl base and now below Monday's trough.
- Spot gold under modest pressure as the USD picks up and as the global yield environment remains net-firmer WTD. The yellow metal remains firmer for the week as a whole and by extension above the USD 2500/oz handle.
- Base metals are subdued, reflecting the tepid APAC tone & firmer USD, but with specifics light generally and for the complex specifically in thin summer conditions.
- Libya's Sarir oil field has reduced production to almost a total shutdown, via Reuters citing engineers
- US Private Inventory Data (bbls): Crude -3.4mln (exp. -2.3mln), Distillate -1.4mln (exp. -1.1mln), Gasoline -1.9mln (exp. -1.6mln), Cushing -0.5mln.
- One global aluminium producer reportedly seeks USD 185/t premium in talks, +8% from current quarter, according to Reuters sources.
- India to hold wider consultations with steel industry before imposing curbs on met coke imports, via Reuters citing sources.
- Libya's oil production has reportedly fallen below the 600k BPD mark, via Bloomberg.
- Russia's Kremlin on Russian gas transit to Europe vs Ukraine, says there are alternative routes and plans for Turkish hubs.
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NOTABLE DATA RECAP
- EU Money-M3 Annual Growth (Jul) 2.3% vs. Exp. 2.7% (Prev. 2.2%); Loans to Non-Fin (Jul) 0.6% (Prev. 0.7%); Loans to Households (Jul) 0.5% (Prev. 0.3%)
NOTABLE US HEADLINES
- US Democratic Presidential Candidate Harris and her VP candidate Waltz will be interviewed on CNN this week Thursday, according to Reuters.
- Apple (AAPL) cuts about 100 services jobs as part of priority shift, according to Bloomberg.
- CAICT shipments of phones within China +30.5% Y/Y at 24.2mln handsets in July. Shipments of foreign branded phones, including Apple (AAPL) iPhones within China, +2.7% Y/Y in July, via Reuters calculations based on the data.
GEOPOLITICS
MIDDLE EAST
- Israeli, US, Egyptian and Qatari negotiators were meeting in Doha on Wednesday for "technical/working level" Gaza ceasefire talks, via Reuters citing sources.
- The Israeli army launched a large-scale operation against militants in various parts of the northern West Bank, according to Al Jazeera citing Israel Channel 14.
- "Hundreds of Israeli soldiers take part in the operation in the northern West Bank with full air cover", according to Sky News Arabia.
- Israeli operation in the West Bank is expected to last for days, according to Israel Channel 14. Sky News Arabia suggested "Israeli operation in Tulkarm and Jenin [in West Bank] is expected to last for a long time, up to weeks", according to Sky News Arabia.
- "Israel's Channel 14: The army mobilized thousands of soldiers from special units in preparation for the large-scale operation in the northern West Bank", according to Al Jazeera.
- "Israeli army storms Aida camp in the southern West Bank", according to Al Arabiya.
- An Israeli delegation from the Mossad, the IDF and the Shin Bet will travel to Doha on Wednesday to continue talks with US, Qatari and Egyptian officials to close the remaining gaps in the Gaza hostage and ceasefire deal, via Axios' Ravid.
RUSSIA-UKRAINE
- Several oil tanks reportedly on fire at Glubokinskaya oil depot after Ukraine's drone attack in Russia's Rostov region, according to Reuters citing Telegram reports.
CRYPTO
- Bitcoin slips below USD 60k, with Ethereum also lower and holds beneath USD 2.5k.
APAC TRADE
- APAC stocks traded subdued but mostly within tight ranges following a mixed lead on Wall Street, whilst volume in APAC remained low amid thin summer trade.
- ASX 200 was pressured by Telecoms and Energy, whilst the hotter-than-expected Aussie CPI sent the index lower, albeit briefly.
- Nikkei 225 was hindered by the recent upside in the JPY, although price action was contained to tight ranges. Losses lead by Banks and Miners. No notable reaction was seen to BoJ Deputy Governor Himino who noted financial and capital markets remain unstable and the BoJ needs to monitor their developments with the utmost vigilance.
- Hang Seng and Shanghai Comp initially traded in tight ranges but the Hang Seng later extended on losses with Hong Kong seeing its earnings pick up in pace - Meituan and BYD traded lower ahead of earnings.
NOTABLE ASIA-PAC HEADLINES
- BoJ Deputy Governor Himino said financial and capital markets remain unstable, and BoJ needs to monitor their developments with the utmost vigilance. He added the BoJ will adjust the degree of monetary accommodation if it has growing confidence that its outlook for economic activity and prices will be realized, and the central bank needs to closely monitor developments in recent market volatilities including weaker stocks and stronger JPY.
- Alibaba (BABA/ 9988 HK) converted its secondary listing on the Hong Kong Exchange into a primary listing; says the Co. is now a dual primary listed firm on the NYSE and HKEX.
- PBoC injected CNY 277.3bln via 7-day Reverse Repo at a maintained rate of 1.70%
NOTABLE APAC EARNINGS
- Meitu (1357 HK) H1 (CNY) Revenue 1.62bln (exp. 1.72bln), Gross Profit 1.05bln, Gross Margin 64.9%, adj. Net 0.27bln. Did not recommend dividend distribution.
- BYD (0285 HK) H1 (CNY) Revenue 78.58bln (exp. 74.35bln), Gross Profit 5.38bln, EPS 0.67. Does not recommend distribution of an interim dividend.
- Li Auto (2015 HK) Q2 (USD): Revenue 4.4bln, +10.6% Y/Y, Vehicle Sales 4.2bln; total deliveries 108,581 vehicles. Expects Q3 deliveries of between 145-155k; sees Q3 total revenue to be between USD 5.4-5.8bln.
- Meituan (3690 HK) Q2 (CNH): Revenue 82.25bln (exp. 80.42bln), adj. EBITDA 14.99bln (exp. 12.15bln), adj. Net 13.6bln (exp. 10.94bln)
DATA RECAP
- Australian Weighted CPI YY (Jul) 3.5% vs. Exp. 3.4% (Prev. 3.8%)
- Australian CPI SA YY (Jul) 3.60% (Prev. 3.90%, Rev. 3.80%); MM (Jul) 0.00% (Prev. 0.40%, Rev. 0.30%)
- Australian Construction Work Done (Q2) 0.1% vs. Exp. 0.7% (Prev. -2.9%)
