- APAC stocks continued their recent rebound but with some of the gains capped as markets digested mixed Chinese trade data.
- USD/JPY rallied to above the 147.00 level in an aggressive reaction to comments from BoJ Deputy Governor Uchida who said they won’t hike rates when markets are unstable and must maintain the current degree of monetary easing for the time being.
- White House said the US has seen some volatility in the economy, but the broader economy is resilient, and the economic team is going to monitor the ongoing situation; US Election Poll showed Harris leads Trump 51% to 48% in National NPR/PBS/Marist poll.
- European equity futures indicate a firmer open with Euro Stoxx 50 futures up 1.3% after the cash market finished with gains of 0.1% Tuesday.
- Looking ahead, highlights include German Industrial Production, Chinese FX Reserves, BoC Minutes, Comments ECB’s Rehn, Supply from the UK, Germany & US, Earnings from ABN AMRO, Continental, Commerzbank, Novo Nordisk, Puma, Siemens Energy, Glencore & Disney.
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US TRADE
EQUITIES
- US stocks rebounded from the recent bloodbath with broad-based gains in which all sectors were in the green although the major indices closed off their best levels as the recovery lost steam in the afternoon and profit-taking was seen heading towards the close amid light fresh catalysts and ongoing geopolitical risks.
- SPX +1.04% at 5,240, NDX +1.02% at 18,078, DJI +0.76% at 38,998, RUT +1.23% at 2,064.
- Click here for a detailed summary.
NOTABLE HEADLINES
- White House said the US has seen some volatility in the economy but the broader economy is resilient and the economic team is going to monitor the ongoing situation.
- US Election Poll showed Harris leads Trump 51% to 48% in National NPR/PBS/Marist poll.
- US Democratic Presidential nominee Harris confirmed Minnesota Governor Walz as her running mate, according to CNN.
APAC TRADE
EQUITIES
- APAC stocks continued their recent rebound but with some of the gains capped as markets digested mixed Chinese trade data.
- ASX 200 was positive albeit with the upside limited as participants reflected on the key data from Australia's largest trading partner.
- Nikkei 225 saw two-way price action in which initially suffered losses but then staged a gradual recovery and was further boosted following comments from BoJ Deputy Governor Uchida who said they won't hike rates when markets are unstable.
- Hang Seng and Shanghai Comp. conformed to the upbeat mood although the advances in the mainland are limited after the PBoC refrained from injecting funds and the latest Chinese trade data printed mixed.
- US equity futures remained in recovery mode but with price action contained within yesterday's parameters.
- European equity futures indicate a firmer open with Euro Stoxx 50 futures up 1.3% after the cash market finished with gains of 0.1% Tuesday.
FX
- DXY reclaimed the 103.00 status mainly due to a surge in USD/JPY with the buck ultimately mixed against its major peers.
- USD/JPY rallied to above the 147.00 level in an aggressive reaction to comments from BoJ Deputy Governor Uchida who said they won’t hike rates when markets are unstable and must maintain the current degree of monetary easing for the time being.
- EUR/USD marginally softened in uneventful trade and approached closer towards another retest of support around the 1.0900 level.
- GBP/USD eked mild gains and returned to the 1.2700 handle but with upside capped amid a lack of fresh catalysts.
- Antipodeans benefitted from the positive risk tone with outperformance in NZD/USD after encouraging jobs data and firmer-than-expected labour cash earnings, while Chinese trade data was mixed as exports disappointed but imports topped forecasts.
- PBoC set USD/CNY mid-point at 7.1386 vs exp. 7.1481 (prev. 7.1318).
- Japan's currency intervention amounted to JPY 5.92tln on April 29th and JPY 3.87tln on May 1st, while the April 29th intervention was a single-day record and surpassed the previous record of JPY 5.62tln on 21st October 2002, according to Ministry of Finance data.
FIXED INCOME
- 10-year UST futures languished at this week's trough after recent bear steepening as the rebound in equities weighed on the curve.
- Bund futures retreated beneath the 135.00 level with German trade data, industrial output and Bund supply due later.
- 10-year JGB futures were initially indecisive amid early fluctuations in Japanese stocks but were then supported by dovish BoJ comments.
COMMODITIES
- Crude futures traded rangebound after recent indecision and as bearish private sector inventory data was counterbalanced by ongoing geopolitical tensions and fears of an imminent retaliation by Hezbollah and Iran against Israel.
- US Private Inventory Data (bbls): Crude +0.2mln (exp. -0.7mln), Distillate +1.2mln (exp. +0.2mln), Gasoline +3.3mln (exp. -1mln), Cushing +1.1mln.
- EIA STEO kept its 2024 world oil demand growth unchanged at a 1.1mln BPD Y/Y increase but lowered its forecast for 2025 world oil demand growth to 1.6mln BPD (prev. 1.8mln BPD).
- Spot gold was contained amid gains in the dollar and a lack of haven demand.
- Copper futures were subdued and have failed to benefit from the positive risk tone with prices stuck near the USD 4/lb level amid mixed Chinese trade data
CRYPTO
- Bitcoin gained alongside the positive risk tone and tested the USD 57,000 level to the upside.
NOTABLE ASIA-PAC HEADLINES
- BoJ Deputy Governor Uchida said their interest rate path will obviously change if as a result of market volatility, economic forecasts, view on risks, and likelihood of achieving the projection change, while he added that they won't hike rates when markets are unstable and they must maintain the current degree of monetary easing for the time being. Uchida said Japan is not in an environment where they would be behind the curve unless they hike rates at a set pace, as well as noted that a weak yen and subsequent rise in import costs pose upside risks to inflation. Furthermore, Uchida said if the economy and prices move in line with projections, it is appropriate to adjust the degree of monetary easing but also commented that Japan's real interest rate is very low, monetary conditions are very accommodative and that the scheduled tapering of bond buying likely won't cause major changes in the degree of monetary easing.
DATA RECAP
- Chinese Trade Balance (USD)(Jul) 84.65B vs. Exp. 99.0B (Prev. 99.05B)
- Chinese Exports YY (USD)(Jul) 7.0% vs. Exp. 9.7% (Prev. 8.6%)
- Chinese Imports YY (USD)(Jul) 7.2% vs. Exp. 3.5% (Prev. -2.3%)
- Chinese Trade Balance (CNY)(Jul) 601.9B (Prev. 703.7B)
- Chinese Exports (CNY)(Jul) 6.5% (Prev. 10.7%)
- Chinese Imports (CNY)(Jul) 6.6% (Prev. -0.6%)
- New Zealand HLFS Job Growth QQ (Q2) 0.4% vs. Exp. -0.2% (Prev. -0.2%)
- New Zealand HLFS Unemployment Rate (Q2) 4.6% vs. Exp. 4.7% (Prev. 4.3%)
- New Zealand HLFS Participation Rate (Q2) 71.7% vs. Exp. 71.3% (Prev. 71.5%)
- New Zealand Labour Cost Index QQ (Q2) 0.9% vs. Exp. 0.8% (Prev. 0.8%)
- New Zealand Labour Cost Index YY (Q2) 3.6% vs. Exp. 3.5% (Prev. 3.8%)
GEOPOLITICAL
MIDDLE EAST
- Israel estimates that Hezbollah will attack before Iran, according to Israel's Kann News. Israel Broadcasting Corporation also reported that estimates indicate Hezbollah will carry out the attack before Iran and will use precision missiles, according to Al Arabiya. Furthermore, a source via X reported that Israeli intelligence said a possible Hezbollah attack could occur in the next 24-48 hours.
- Israel's Channel 12 News reported that advanced preparations and planning are underway within the Israeli Military for the launch of pre-emptive strikes against Hezbollah targets in Lebanon, prior to their coordinated attack against Israel with Iran.
- IDF struck a building in a Lebanese village targeting Hezbollah operatives, according to Times of Israel.
- Hezbollah Leader Nasrallah said their response is coming which will be strong and effective. It was also reported that Hezbollah congratulated Yahya Sinwar on being selected as Hamas leader and said that Sinwar's choice confirms that the enemy's goals of killing leaders have failed to achieve their goal.White House does not believe the response has begun yet against Israel from Iran or Hezbollah.
- US President Biden spoke with Qatar and Egypt's leaders on efforts for a Gaza ceasefire and to de-escalate Middle East tensions.
- US Secretary of State Blinken said they have communicated directly to Iran and Israel that no one should escalate the conflict in the Middle East, while he added that Gaza hostage negotiations have reached the final stage and it is critical that parties work to finalise the agreement as soon as possible. Blinken also said everyone in the region should understand that further attacks only perpetuate conflict, instability, and insecurity for everyone.
- US Defence Secretary Austin said the US will not tolerate attacks on US personnel in the Middle East and that they are sure Iran-backed militia was behind the attack on US troops in Iraq, according to Reuters. Austin also said they are ready to deploy more troops to the region if they see a threat to their interests and the security of allies, according to Al Arabiya.
OTHER
- Australia, Canada, the Philippines and the US are to hold joint maritime exercises on August 7th-8th in the South China Sea. It was later reported that China's military organised a joint combat patrol over the sea and airspace near the Scarborough Shoal in the South China Sea.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves aims to follow a "Canadian model" to consolidate GBP 360bln of smaller local government pension schemes to aid in boosting investment and "fire up the economy", according to The Times.
