US stocks finished lower after weak Q1 GDP and hot Core PCE Prices although futures were lifted after-market on big tech earnings - Newsquawk Asia-Pac Market Open

• US stocks finished lower after a plunge in META post-earnings and with sentiment pressured after a miss on Q1 GDP and hot Core PCE Prices, which introduced upside risks to Friday's March PCE data and saw Fed pricing shift hawkishly. However, the indices closed well off worst levels as semiconductors led the recovery heading into key big tech earnings including from Alphabet and Microsoft which topped forecasts and boosted some futures after-hours.
• USD was ultimately lower on the day despite the index hitting a high of 106.00 in the wake of the Q1 GDP report and hot Core PCE Prices metric which sparked a broad-based hawkish reaction and saw money markets push back its first fully priced Fed rate cut to December from November.
• Looking ahead, highlights include UK GfK Consumer Confidence, Tokyo CPI, Australian PPI and Export/Import Prices Indexes, Singapore Industrial Production, BoJ Policy Decision, Outlook Report & Governor Ueda's Press Conference.

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LOOKING AHEAD

• Highlights include UK GfK Consumer Confidence, Tokyo CPI, Australian PPI and Export/Import Prices Indexes, Singapore Industrial Production, BoJ Policy Decision, Outlook Report & Governor Ueda's Press Conference.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks finished lower after a plunge in META post-earnings and with sentiment pressured after a miss on Q1 GDP and hot Core PCE Prices, which introduced upside risks to Friday's March PCE data and saw Fed pricing shift hawkishly. However, the indices closed well off worst levels as semiconductors led the recovery heading into key big tech earnings including from Alphabet and Microsoft which topped forecasts and boosted some futures after-hours.
• SPX -0.46% at 5,048, NDX -0.55% at 17,430, DJIA -0.98% at 38,085, RUT -0.72% at 1,981.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden said GDP data shows stable growth, but more work is needed.
• US Treasury Secretary Yellen said GDP data shows the strength of the consumer and investment spending and the US is on a downward path for inflation. Yellen said the Fed wants to see additional evidence of a sustainable decline in inflation and Americans are concerned with the high cost of living, while the priority is to lower costs and the Fed's first obligation is to see to it that monetary policy is consistent with price stability. Furthermore, she said the dollar has been strong and there are divergences with other countries, as well as noted that a key factor in dollar valuation is the strength of the US economy.
• Fed pricing showed just 34bps of rate cuts in 2024 vs 42bps before the data and the first fully priced cut moved back to December from November.
• WSJ's Timiraos posted an article titled "The Dream of Fed Rate Cuts Is Slipping Away" on X which stated that "The cumulative effect of serial disappointments on inflation are reshaping the outlook for rate cuts".

AFTER-MARKET EARNINGS

• Alphabet Inc (GOOGL) Q1 2024 (USD): EPS 1.89 (exp. 1.51), Revenue 80.54bln (exp. 78.59bln); board authorised Co. to repurchase up to an additional 70bln and declared a cash dividend of 0.20/shr.
• Microsoft Corp (MSFT) Q3 2024 (USD): EPS 2.94 (exp. 2.82), Revenue 61.86bln (exp. 60.8bln).
• Intel Corp (INTC) Q1 2024 (USD): Adj. EPS 0.18 (exp. 0.14), Revenue 12.70bln (exp. 12.78bln).
• Snap Inc (SNAP) Q1 2024 (USD): Adj. EPS 0.03 (exp. -0.05), Revenue 1.19bln (exp. 1.12bln).
• Western Digital Corp (WDC) Q3 2024 (USD): Adj. EPS 0.63 (exp. 0.21), Revenue 3.46bln (exp. 3.36bln).

DATA RECAP

• US GDP Advance (Q1) 1.6% vs. Exp. 2.4% (Prev. 3.4%)
• US Core PCE Prices Advance (Q1) 3.7% vs. Exp. 3.4% (Prev. 2.0%)
• US Pending Sales Change MM (Mar) 3.4% vs. Exp. 0.8% (Prev. 1.6%)
• US Initial Jobless Claims w/e 207.0k vs. Exp. 215.0k (Prev. 212.0k)
• US Continued Jobless Claims w/e 1.781M vs. Exp. 1.805M (Prev. 1.812M, Rev. 1.796M)
• US KC Fed Composite Index (Apr) -8.0 (Prev. -7.0)
• US KC Fed Manufacturing (Apr) -13.0 (Prev. -9.0)

FX

• USD was ultimately lower on the day despite the index hitting a high of 106.00 in the wake of the Q1 GDP report and hot Core PCE Prices metric which sparked a broad-based hawkish reaction and saw money markets push back its first fully priced Fed rate cut to December from November.
• EUR eventually benefitted from the dollar recoil in which EUR/USD reverted to the 1.0700 handle.
• GBP initially dipped beneath 1.2500 in a knee-jerk reaction to the US data before fully recovering.
• JPY was the laggard and USD/JPY hit a high of 155.74 with markets on high alert regarding intervention, while attention now turns to the looming BoJ policy announcement.
• CBRT maintained its Weekly Repo Rate unchanged at 50% as expected, while it stated the monetary policy stance will be tightened in the case that a significant and persistent deterioration in inflation is foreseen.

CRYPTO

• US SEC is expected to deny spot Ether ETFs next month, according to industry sources cited by Reuters.

FIXED INCOME

• Treasuries bear-flattened after the hot Q1 core PCE prices introduced upside risks to Friday's March data.

COMMODITIES

• Oil prices were firmer in choppy trade after losses on stagflationary headline US GDP data were unwound through the session.
• Iran set May Iranian light crude price to Asia at Oman/Dubai plus USD 2.25/bbl (prev. plus USD 1.95/bbl in April).
• Oil loadings from Russia's western ports are expected to decline by around 1mln metric tons in May vs. April, according to sources and calculations by Reuters.
• Russia's government said gasoline and diesel fuel production stabilised in April and supply to the domestic market exceeds last year’s level.
• Russia warned Kazakhstan that its oil transit to Germany is at risk over service payment, according to sources via Reuters.
• European Commission plans to propose a ban on transhipments of Russian LNG in the next Russia sanctions package and is expected to propose new restrictions on three Russian LNG projects in the new package, according to Reuters citing sources.

GEOPOLITICAL

MIDDLE EAST

• Senior US administration official said the US and 17 other countries are to release a statement calling on Hamas to release hostages as a pathway to end the Gaza crisis, while it was stated that the deal on the table would bring an immediate and prolonged ceasefire in Gaza and allows an unrestricted return to northern Gaza.
• Hamas official Abu Zuhri said Hamas will not be swayed by US pressure on the issue of Gaza hostages and they are firm on the demand that Israel end the Gaza war as part of any deal to release hostages.
• UK navy warship shot down a Houthi missile targeting a merchant vessel, according to a statement.

OTHER

• Russia is reportedly considering decreasing the level of diplomatic relations with the US in case of a confiscation of Moscow's assets, according to RIA.
• Belarus was reported to have thwarted an attack on Minsk by drones launched from Lithuania, according to TASS citing the Belarusian security service. However, the Lithuanian army said it has not taken and is not taking any hostile action against other states, according to a Lithuanian army spokesperson.
• Belarusian President Lukashenko said the probability of incidents on the Belarusian-Ukrainian border is quite high, while he added that around 120k Ukrainian servicemen are deployed near the border and that Belarus has moved several battalions of fully operational readiness to the border.
• North Korea and Russia are to sign several documents on cooperation in agriculture, according to TASS.

ASIA-PAC

NOTABLE HEADLINES

• ByteDance was said to be mulling selling TikTok without its algorithm, according to Reuters citing The Information. However, ByteDance later said it has no plans to sell TikTok and that media reports are untrue. It was also reported that Bytedance is to prefer shutting down the app rather than a sale if it exhausts all legal options and the algorithms TikTok relies on are deemed core to ByteDance’s overall operations, making the sale of the app unlikely, according to Reuters sources.
• Huawei-led consortium, backed by funding from the Chinese government, reportedly aims to produce high-bandwidth memory chips by 2026, according to The Information.
• US is pushing allies in Europe and Asia to tighten restrictions on exports of chip-related technology and tools to China amid rising concerns about Huawei's development of advanced semiconductors, according to FT sources. US wants Japan, South Korea, and the Netherlands to use existing export controls more aggressively, including stopping engineers from their countries servicing chipmaking tools at fabs in China.
• US Treasury Secretary Yellen said the position has been that currency intervention is only acceptable in exceptional and very rare circumstances, while she also said they would be prepared to use authority to sanction Chinese banks if necessary.
• BoJ is to reportedly consider measures to reduce its government bond purchases, according to JiJi although did not specify a timeframe, while such a move would likely lead to a lowering of the BoJ’s JGB holdings and usher in a phase of quantitative tightening.
• Japan’s Economy Minister will attend Friday's BoJ policy meeting, according to the cabinet office.

EU/UK

NOTABLE HEADLINES

• ECB's Muller said not comfortable starting with back-to-back cuts, according to Bloomberg.
• ECB's Panetta said must weigh the risk of monetary policy becoming too tight, while he added that timely and small rate cuts would counter weak demand and could be paused. Furthermore, he stated that hesitations in adjusting rates would hurt investment and productivity, while large rate cuts could create a credibility issue.
• ECB's Schnabel said they may face a bumpy last mile of disinflation and wage growth seems to be easing in line with projections.