- US stocks were mixed after rebounding from the initial financial-induced losses that were triggered by downbeat updates from Ally Financial (ALLY)(-17.6%) and JPMorgan (JPM)(-5.2%) just after the cash open which resulted in a clear flight-to-quality. Nonetheless, the major indices then gradually recovered from their lows despite the absence of any obvious catalysts although there was a slightly more encouraging update from Bank of America (BAC), while market focus turned to upcoming key events including the US Presidential Election Debate overnight and Wednesday's US CPI data release.
- USD was little changed with the DXY confined to within a thin range amid a quiet data calendar.
- Looking ahead, highlights include Australian MI Inflation Expectations, US Presidential Debate, Comments from BoJ's Nakagawa, Supply from Australia.
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LOOKING AHEAD
- Highlights include Australian MI Inflation Expectations, US Presidential Debate, Comments from BoJ's Nakagawa, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were mixed after rebounding from the initial financial-induced losses that were triggered by downbeat updates from Ally Financial (ALLY)(-17.6%) and JPMorgan (JPM)(-5.2%) just after the cash open which resulted in a clear flight-to-quality. Nonetheless, the major indices then gradually recovered from their lows despite the absence of any obvious catalysts although there was a slightly more encouraging update from Bank of America (BAC), while market focus turned to upcoming key events including the US Presidential Election Debate overnight and Wednesday's US CPI data release.
- SPX +0.45% at 5,496, NDX +0.90% at 18,829, DJIA -0.23% at 40,737, RUT Flat at 2,097.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Vice Chair for Supervision Barr said Basel and Global Systemically Important Bankssurcharge re-proposals would together increase capital for GSIBs by 9% and that the original plan would have raised their capital by 19%. Barr said he will recommend regulators re-propose 'Basel endgame' and Global Systemically Important Banks surcharge bank capital rules, while changes to the Basel re-proposal would exempt banks under USD 250bln in assets from most new requirements except for recognising unrealized gains and losses of securities.
- Fed's Bowman said concerns for stress tests include volatility and transparency.
- WSJ's Nick Timiraos said economists who produce detailed inflation forecasts expect the August CPI to have been relatively mild, as was July. Furthermore, he noted the median of these forecasts has the core CPI up 0.21%, which would hold the 12-month rate at 3.2%, while headline CPI is seen decelerating to 2.5%.
- Apple (AAPL) lost a fight against a EUR 13bln EU tax order to Ireland and said EU regulators are trying retroactively to change the rules. It was later reported that Apple expects to record a one-time tax charge in Q4 of up to ~USD 10bln and said the ECJ confirmed the European Commission's 2016 state aid decision.
FX
- USD was little changed with the DXY confined to within a thin range amid a quiet data calendar and as the attention turns to the looming US Presidential Debate and US CPI report.
- EUR marginally softened in which EUR/USD gradually pulled back from resistance near 1.1050, while there were little specific drivers as participants await Thursday's ECB meeting.
- GBP eked mild gains in two-way trade after somewhat varied jobs and earnings data including a substantial beat in Employment Change and softening Average Earnings growth.
- JPY benefitted from an early safe-haven bid amid an initial risk-off tone stateside and although sentiment eventually improved, USD/JPY continued its retreat beneath the 143.00 level.
FIXED INCOME
- T-notes bull steepened ahead of the Presidential Debate and US CPI, while there was also a very strong 3yr auction, disappointing financial updates, and a tumble in crude.
COMMODITIES
- Oil prices tumbled to multi-year lows amid several bearish themes, as opposed to one specific driver.
- US Private Inventory Data (bbls): Crude -2.8mln (exp. +1.0mln), Distillate +0.2mln (exp. +0.3mln), Gasoline -0.5mln (exp. -0.1mln), Cushing -2.6mln.
- OPEC MOMR (September) noted demand growth for 2024 was revised down 80k BPD (reflects mainly actual data), while the 2025 forecast was revised down by 40k BPD.
- EIA STEO sees 2024 world oil demand of 103.1mln BPD (prev. 102.9mln BPD M/M) and sees 2025 demand of 104.6mln BPD (prev. 104.5mln BPD).
- NHC said Francine is now moving north-northeastward across the western Gulf of Mexico, with new tropical storm warnings and storm surge warnings issued.
- US Port of New Orleans said terminal operations are to be shut as storm Francine approaches Louisiana and service is to resume on September 12th following damage assessments.
- Russia's Lukoil is set to resume oil supplies via the Druzhba pipeline to Slovakia and Hungary in October after Hungary's MOL said it had struck deals to transport crude through Belarus and Ukraine via the pipeline, according to Reuters citing sources.
- Cochilco sees 2024 average copper prices at USD 4.18/lb (prev. USD 4.30/lb) and 2025 at USD 4.25/lb which is unchanged from the prior.
GEOPOLITICAL
- US Secretary of State Blinken said Russia has received shipments of Iranian ballistic missiles and Russia will use these in the coming weeks, while he added that Russia is sharing tech that Iran is seeking including on nuclear.
- US issued fresh Iran and Russia-related sanctions which target Iranian air and Russian vessels, according to the Treasury Department website.
- Ukraine Foreign Ministry spokesman said Kyiv will consider its options and could even cut ties with Tehran if Russia uses Iranian missiles in the Ukraine war.
- Russia's Kremlin said it is difficult to imagine any agreements on Ukraine while Ukrainian troops are in the Russian Kurks region.
ASIA-PAC
NOTABLE HEADLINES
- BoJ sees little need to hike interest rates next week although officials are not ruling out another hike later this year or in early 2025 contingent on the economy and market, according to Bloomberg sources.
- China's Vice Commerce Minister said China is willing to engage in dialogue and consultations to appropriately resolve China-EU economic and trade frictions.
- EU is to lower proposed tariffs on Tesla (TSLA) and other EVs from China with Tesla's tariff rate reportedly to fall to under 8% from 9%, according to Bloomberg sources.
EU/UK
NOTABLE HEADLINES
- German Finance Minister Lindner said the German government sees democratic and fiscal problems in Draghi's proposal of EU joint borrowing, while he added they are the anchor of stability in Europe and if Germany broke EU fiscal rules, others would follow.
DATA RECAP
- UK Employment Change (Jul) 265k vs. Exp. 115k (Prev. 97k)
- UK ILO Unemployment Rate (Jul) 4.1% vs. Exp. 4.1% (Prev. 4.2%)
- UK Average Earnings (Ex-Bonus)(Jul) 5.1% vs. Exp. 5.1% (Prev. 5.4%)
- UK Average Week Earnings 3M YY (Jul) 4.0% vs. Exp. 4.1% (Prev. 4.5%, Rev. 4.6%)
