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US stock index futures were lacklustre and US cash markets closed for the Independence Day holiday - Newsquawk Asia-Pac Market Open

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Monday, Jul 04, 2022 - 09:13 PM
  • US cash markets were closed for the Independence Day holiday, while European markets were mixed and the STOXX Europe 600 finished with gains of 0.5%.
  • DXY traded slightly firmer but with upside contained amid the holiday-quietened conditions, while AUD strengthened heading into the RBA rate decision.
  • Oil prices strengthened amid supply concerns after Kazakhstan's June oil output fell 22% M/M and Norway's Lederne oil and gas union said workers at Gullfaks A, Sleipner and Gullfaks C will go on strike.
  • Looking ahead, highlights include Australian Services and Composite PMIs, New Zealand NZIER Business Confidence, South Korean CPI, Japanese Services and Composite PMIs, Chinese Caixin Services and Composite PMIs, RBA Rate Decision & 10yr JGB Auction.

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LOOKING AHEAD

  • Australian Services and Composite PMIs, New Zealand NZIER Business Confidence, South Korean CPI, Japanese Services and Composite PMIs, Chinese Caixin Services and Composite PMIs, RBA Rate Decision & 10yr JGB Auction.
  • Click here for the Week Ahead preview

US TRADE

EQUITIES

  • US stock markets were closed for the Independence Day holiday

NOTABLE HEADLINES

  • A rooftop shooter killed at least 6 people and wounded around two dozen at a July 4th parade in the Chicago suburb, while the gunman who was described as a white male about 18-20 years old is still at large, according to CNBC and Reuters.
  • US President Biden said he was shocked by the parade shooting and vowed to keep fighting gun violence, while he also offered the full support of the federal government to help the Highland Park community following the shooting, according to Reuters.

FX

  • DXY traded slightly firmer but with upside contained amid the holiday-quietened conditions.
  • Euro was rangebound with the latest slew of ECB rhetoric not providing much to shift the dial.
  • GBP reversed earlier gains and returned to relatively flat around the 1.2100 level against the dollar.
  • JPY weakened with USD/JPY gaining a firmer footing at the 135.00 handle, while AUD/JPY led the gains ahead of the RBA rate decision.
  • Israeli Interest Rate Decision (Jul) 1.25% vs. Exp. 1.25% (Prev. 0.75%). Israeli central bank stated that inflation is above the upper bound of the target range at 4.1% over the past 12 months but is significantly lower than in most advanced economies.

COMMODITIES

  • UAE’s ADNOC set Murban crude OSP for August at USD 117.53/bbl vs prev. USD 109.68/bbl in July, according to Reuters.
  • Kazakhstan's June oil output fell 22% M/M at 1.19mln BPD amid planned maintenance at the Kashagan oilfield (below OPEC+ quota), according to Reuters sources.
  • UK PM Johnson said there is no doubt they will need more OPEC+ oil, according to Reuters.
  • Norway's Lederne oil and gas union said workers at Gullfaks A, Sleipner and Gullfaks C will go on strike, according to Reuters.
  • Norway’s oil ministry said it is adjusting production permits for several offshore fields in 2022 affecting Troll, Gina Krog, Duva, Oseberg, Aasgard and Mikkel, while Nova is another field which is affected, although the field has not started producing. Furthermore, total gas sales are expected at 122bln cubic metres which is unchanged from previous estimates.
  • Chile’s Codelco copper output fell 6.3% Y/Y in May to 142.9k tonnes, while Chile’s Collahuasi mine copper output fell 15.4% to 49k tonnes and Chile’s Escondida copper output rose 26% to 106.9k tonnes, according to Cochilco cited by Reuters.
  • LME announced a disruption event for aluminium alloy prices on July 4th after hitting the daily price limit.
  • Japanese aluminium premium for July-September shipment set at USD 148/T, -14% QQ, amid weak automaker and parts demand, according to Reuters sources.

GEOPOLITICS

RUSSIA-UKRAINE

  • Russian President Putin said other troops should continue fighting and those that liberated the Luhansk region should rest.
  • Russia's Kremlin said President Putin will not congratulate US President Biden on 4th July due to Washington's unfriendly policies, while the Kremlin said on Japan's proposal to cap Russian oil at half of its current price, that they will need to wait and see, and that other countries may disagree.
  • Russian Foreign Minister Lavrov said they will respond in kind to Bulgaria after diplomatic expulsions.
  • EU is reportedly pushing for an agreement on a 7th sanctions package on Russia before the beginning of the summer holidays at the end of July which may not include gas and nuclear but rather more listings, closing loopholes in previous packages and gold, according to Radio Free Europe/Radio Liberty’s Europe Editor.

OTHER

  • There is no intention from the Iranian side at the moment for another meeting with the EU on the nuclear deal, according to WSJ's Norman.

ASIA

NOTABLE HEADLINES

  • US President Biden is expected to roll back some tariffs on Chinese imports soon, according to WSJ sources which added that what comes next has been pending with President Biden in recent weeks and he could announce his decision this week.
  • Singapore’s central bank is considering placing limits on retail participation in crypto markets, according to Bloomberg.

EUROPEAN TRADE

  • European stock markets traded mixed and the STOXX Europe 600 finished with gains of 0.5%.

NOTABLE HEADLINES

  • UK launched a consultation to modernise and improve tax treatment it provides for foreign sovereign investments, while it proposes reforms that would clarify the rules and expects rules to have a material impact on investment into the UK.
  • ECB VP de Guindos said ECB's commitment to fighting fragmentation should not interfere with, but rather enable, a greater focus on the monetary policy stance.
  • ECB's Nagel objected to the ECB's decision on fighting fragmentation at the June 15th emergency meeting, according to Reuters sources. It was also reported that ECB's Nagel warned the ECB against lowering borrowing costs for the Eurozone's southern members and said focus should be on fighting off inflation which may require more rate hikes than currently projected.
  • ECB's Muller said they should hike by 25bps in July and then by 50bps in September.
  • ECB's Vasle said it is likely that there will be more hikes in Q4 following a move in September, according to Bloomberg.
  • ECB took further steps to incorporate climate change into its monetary policy operations and will tilt corporate bond reinvestments towards firms with better climate performance from October 2022.
  • Italy’s declared a drought emergency in five northern regions, according to AFP News Agency.
  • Irish Finance Minister Donohoe said there is mounting evidence that economic momentum is slowing and he still expects the economy to grow in 2022 and 2023 but risks to the outlook have increased, while he also noted that they will bring forward the Budget 2023 announcement to September 27th from mid-October, according to Reuters.

DATA RECAP

  • EU Producer Prices MM (May) 0.7% vs. Exp. 1.0% (Prev. 1.2%)
  • EU Producer Prices YY (May) 36.3% vs. Exp. 36.7% (Prev. 37.2%)
  • German Trade Balance (EUR)(May) -1.0B vs. Exp. 2.7B (Prev. 3.5B, Rev. 3.0B)
  • German Exports MM (May) -0.5% vs. Exp. 0.9% (Prev. 4.4%)
  • German Imports MM (May) 2.7% vs. Exp. 0.9% (Prev. 3.1%, Rev. 3.5%)
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