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Risk-off experienced across most markets on the final day of the month, quarter, and half-year - Newsquawk US Market Open

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Thursday, Jun 30, 2022 - 11:21 AM
  • Risk-off experienced across most markets on the final day of the month, quarter, and half-year
  • European bourses are lower across the board; US equity futures succumb to the downside with NQ underperforming
  • In FX, DXY extends above 105.000, Yen regroups as yields drop, EUR/USD inches lower towards 1.04
  • Debt in demand on safe haven grounds rather than duration as curves steepen on less hawkish/more dovish market pricing
  • WTI and Brent front-month futures are resilient to the broader risk downturn and firmer Dollar as OPEC+ member members gear up for today’s meeting
  • Looking ahead, highlights include US PCE & Chicago PMI, JMMC/OPEC+ Meetings, Speech from ECB’s Lagarde

 

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30th June 2022

  • Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

  • Russian President Putin said Russia will answer in kind if NATO infrastructure is deployed to Finland and Sweden, while he doesn't rule out tensions will emerge in Russia's relations with Finland and Sweden after they decided to join NATO and said there is no use setting an end date to the "special military operation" in Ukraine, according to RIA and IFAX.
  • Russia has withdrawn troops from Snake Island; Russia said it withdrew troops as a gesture of good will, via Tass; Separate reports suggest Russia has withdrawn following a series of heavy attacks.
  • Deputy chairman of Russia's Security Council Medvedev said in certain circumstances, sanctions may be seen as an act of aggression and justification for war.
  • Britain unveiled GBP 1bln of new military aid for Ukraine, according to AFP News Agency.

OTHER

  • US State Department spokesperson said no progress was made in indirect talks with Iran, according to Reuters.

EUROPEAN TRADE

EQUITIES

  • It’s been a downbeat session for global equities thus far as sentiment deteriorates further.
  • European bourses are lower across the board, with losses extending during early European hours.
  • European sectors are all in the red but portray a clear defensive bias.
  • Stateside, US equity futures have succumbed to the glum mood, with the NQ narrowly underperforming.
  • Click here for more detail.

FX

  • DXY extends on gains above 105.00, but could see more upside on safe haven demand and residual rebalancing flows over fixes - EUR/USD inches towards 1.0400 to the downside.
  • Yen regroups as yields drop and risk sentiment deteriorates to compound corrective price action.
  • Franc unwinds some of its recent outperformance and Loonie lose traction from oil ahead of Canadian GDP.
  • Swedish Crown unable to take advantage of hawkish Riksbank hike in face of risk aversion - Eur/Sek stuck in a rut close to 10.7000.
  • Pound finds some underlying bids into 1.2100 and Kiwi at 0.6200, while Aussie holds above 0.6850 with encouragement from China’s services PMI that also propped the Yuan.
  • Click here for more detail.

FIXED INCOME

  • Bonds on bull run into month, quarter and half year end - Bunds top 148.00 at best, Gilts approach 113.50 and 10 year T-note just a tick away from 118-00.
  • Debt in demand on safe haven grounds rather than duration as curves steepen on less hawkish/more dovish market pricing.
  • Italian supply comfortably covered to keep BTP futures propped ahead of US PCE data and yet another speech from ECB President Lagarde.
  • Click here for more detail.

COMMODITIES

  • WTI and Brent front-month futures are resilient to the broader risk downturn, and firmer Dollar as OPEC+ member members gear up for what is expected to be a smooth meeting.
  • Spot gold is uneventful but dipped under yesterday's low, with potential support at the 15th June low at USD 1,806.59/oz.
  • Base metals are softer across the board amid the broader risk profile. Dalian and Singapore iron ore futures were on track for quarterly losses.
  • Ship with 7,000 tonnes of grain leaves Ukraine port, according to pro-Russia officials cited by AFP.
  • Click here for more detail.

NOTABLE EUROPEAN HEADLINES

  • Riksbank hiked its Rate by 50bps to 0.75% as expected, and said the rate will be raised further and it will be close to 2% at the start of 2023. Bank said the balance sheet its to shrink faster than previously flagged, and suggested that policy rate will increase faster if needed. Click here for details.
  • Riksbank's Ingves said inflation over forecast probably not enough for Riksbank to hold extra policy meeting in summer. Ingves added that if the situation requires a 75bps hike, then Riksbank will carry out a 75bps hike.

NOTABLE EUROPEAN DATA

  • German Unemployment Chg SA (Jun) 133k vs. Exp. -6.0k (Prev. -4.0k) In terms of the upside surprise, Reuters notes "German unemployment rises in June as Ukrainian refugees look for work ".
  • German Unemployment Rate SA (Jun) 5.3% vs. Exp. 5.0% (Prev. 5.0%)
  • EU Unemployment Rate (May) 6.6% vs. Exp. 6.8% (Prev. 6.8%, Rev. 6.7%).

CRYPTO

  • Bitcoin posts further losses with prices dipping under USD 19,000.

APAC TRADE

EQUITIES

  • APAC stocks were varied at month-end amid a slew of data releases including mixed Chinese PMIs.
  • ASX 200 was dragged lower by weakness in energy, miners and the top-weighted financials sector.
  • Nikkei 225 declined after disappointing Industrial Production data and with Tokyo raising its virus infection level.
  • Hang Seng and Shanghai Comp. were somewhat mixed with Hong Kong indecisive and the mainland underpinned after the latest Chinese PMI data in which Manufacturing PMI printed below estimates but Non-Manufacturing PMI firmly surpassed forecasts and along with Composite PMI, all returned to expansion territory.

NOTABLE APAC HEADLINES

  • NATO Secretary General Stoltenberg said China's growing assertiveness has consequences for the security of allies, while he added China is not our adversary, but we must be clear-eyed about the serious challenges it presents.
  • US blacklisted 5 Chinese firms for allegedly helping Russia in which Connec Electronic, King Pai Technology, Sinno Electronics, Winnine Electronic and World Jetta Logistics were added to the entity list which restricts access to US technology, according to WSJ.
  • Japan's government cut its assessment of industrial production and noted that production is weakening, while it stated that Japan's motor vehicle production declined 8% M/M and that industrial production likely saw the largest impact of Shanghai's COVID-19 lockdown in May, according to Reuters.
  • Tokyo metropolitan government will reportedly increase COVID infections level to the second-highest, according to FNN.

DATA RECAP

  • Chinese NBS Manufacturing PMI (Jun) 50.2 vs. Exp. 50.5 (Prev. 49.6)
  • Chinese NBS Non-Manufacturing PMI (Jun) 54.7 vs. Exp. 50.5 (Prev. 47.8)
  • Chinese NBS Composite PMI (Jun) 54.1 (Prev. 48.4)
  • Japanese Industrial Production MM (May P) -7.2% vs. Exp. -0.3% (Prev. -1.5%)
  • Japanese Industrial Production YY (May P) -2.8% vs. Exp. 4.2% (Prev. -4.8%)
  • New Zealand NBNZ Business Outlook (Jun) -62.6% (Prev. -55.6%)
  • New Zealand NBNZ Own Activity (Jun) -9.1% (Prev. -4.7%)
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