US stocks pared losses and finished flat with the rebound helped after the BoC signalled the end of rate hikes - Newsquawk Asia-Pac Market Open

• US stocks were little changed after earlier losses pared gradually through the session. The weakness initially stemmed from the tech sector after Microsoft's lacklustre cloud unit guidance which also initially weighed on Amazon, although equities gradually clawed back losses and were aided by the dovish BoC rate decision.
• USD softened with lows seen after the Bank of Canada rate decision which gave an explicit signal to a pause in its tightening cycle with participants expecting the Fed to follow suit given the BoC was the first to tighten policy and now the first to pause. CAD weakened despite the BoC’s 25bp rate hike which was as expected and the central bank gave an explicit signal to pause rate hikes at this level providing the economy evolves broadly in line with its forecasts.
• Looking ahead, highlights include South Korean GDP, Japanese Services PPI, Philippines GDP & Singapore Industrial Production, BoJ Summary of Opinions from January Meeting, 40yr JGB Auction. Holiday Closures in Australia, China, Taiwan, India & Vietnam.

View the full premarket movers and news report.

Or why not try Newsquawk's squawk box free for 7 days?

LOOKING AHEAD

• Highlights include South Korean GDP, Japanese Services PPI, Philippines GDP & Singapore Industrial Production, BoJ Summary of Opinions from January Meeting, 40yr JGB Auction. Holiday Closures in Australia, China, Taiwan, India & Vietnam.

US TRADE

EQUITIES

• US stocks were little changed after earlier losses pared gradually through the session. The weakness initially stemmed from the tech sector after Microsoft's (MSFT) lacklustre cloud unit guidance which also initially weighed on Amazon (AMZN), although equities gradually clawed back losses and were aided by the dovish BoC rate decision.
• SPX -0.02% at 4,016, NDX -0.27% at 11,815, DJI +0.03% at 33,744, RUT +0.25% at 1,890.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US President Biden is close to naming the next National Economic Council head as current NEC Director Deese is expected to leave soon and Fed Vice Chair Brainard is said to have emerged as the top contender, according to Washington Post sources. However, no decision has been made yet and President Biden is also said to be considering other candidates including Deputy Treasury Secretary Adeyemo.
• US Senator Manchin (D) said House Speaker McCarthy agreed not to propose social security or Medicare cuts as part of talks over the debt ceiling with US President Biden, according to Punchbowl.
• US Senator Manchin is to reportedly introduce a bill to delay EV tax credit due to disagreements over how to implement the programme, according to WSJ.
• Long-stalled West Coast port labour talks are reportedly showing no signs of progress, extending uncertainty for US retailers who rely on the coast to import goods from Asia, according to WSJ citing sources.

FIXED INCOME

• Treasuries saw mild bull-steepening in choppy trade after a dovish BoC rate hike and a strong 5yr UST auction.

FX

• USD softened with lows seen after the Bank of Canada rate decision which gave an explicit signal to a pause in its tightening cycle with participants expecting the Fed to follow suit given the BoC was the first to tighten policy and now the first to pause.
• CAD weakened despite the BoC rate hike, as the central bank gave an explicit signal to pause rate hikes at this level providing the economy evolves broadly in line with its forecasts.
• EUR gained against the dollar with EUR/USD back above 1.0900, while the rhetoric from ECB officials continued to suggest 50bp hikes for the next two meetings.
• GBP benefitted from the dollar's demise which helped GBP/USD reclaim the 1.2400 handle.
• JPY held on to its gains in which USD/JPY retreated below the 130.00 level.
• BoC raised rates by 25bps to 4.50%, as expected, and expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. BoC Governor Macklem said the central bank has raised rates rapidly and now it is time to pause and assess whether monetary policy is sufficiently restrictive, while he added this is a conditional pause, dependent on the economy developing broadly in line with forecasts.

COMMODITIES

• Oil prices were modestly firmer in tight and choppy trade amid mixed inventory data and with little in the way of major newsflow to provide an impetus for the benchmarks,
• US EIA Crude Stocks 0.53M vs. Exp. 0.97M (Prev. 8.41M), SPR U/C; Total Stocks +4.0M.
• Nigeria raised February Bonny crude OSP (vs dated Brent) to +0.38/bbl and raised Qua Iboe to +0.95/bbl.
• Libya's NOC is to sign offshore gas exploration and production deals with Italy's Eni (ENI IM) on Saturday, according to NOC chief Bengdara in local press.
• Chile's copper production is likely to peak at 7.135mln tons in 2030, which is lower and later than previously expected, while Chile’s copper production was likely around 5.3mln tons in 2022 which will rise to about 5.6mln tons this year and about 5.9mln tons in 2024, according to a Cochilco report cited by Reuters.

GEOPOLITICAL

• Russia’s Kremlin said the situation is genuinely alarming and requires them to be vigilant and take appropriate measures when questioned about the Doomsday clock moving closer to midnight.
• Russian Embassy in Berlin said Germany's decision to approve the delivery of Leopard tanks to Ukraine is extremely dangerous and takes the conflict to a new level.
• Ukraine's Defence Minister spoke with US Defence Secretary Austin and said that more good news will be announced soon.
• US senior administration official said the US is to provide 31 Abrams tanks and eight M88 vehicles to Ukraine, while the delivery of the US tanks will take months and training begins now.
• White House's Kirby said the US has seen no indication that Russian President Putin has plans on striking NATO territory and said the US has to be prepared to support Ukraine for as long as it takes.
• Lockheed Martin (LMT) COO told the FT there is a lot of conversation about a third-party transfer of F-16s to Ukraine to defend its airspace.
• EU ambassadors formally gave the green light to roll over all the EU’s economic sanctions on Russia for an additional six months, according to Radio Free Europe's Jozwiak.

ASIA-PAC

• White House said China has not been fully transparent regarding COVID numbers.
• A bipartisan group of lawmakers is renewing a push to intensify oversight of foreign purchases of US farmland, citing concerns over recent acquisitions by Chinese buyers, according to WSJ.
• Several Chinese suppliers to Apple (AAPL) will soon seek government approval to form joint ventures in India, according to Economic Times citing sources.
• Japan lowered its overall economic view in January for the first time in 11 months and stated the economy is recovering moderately but some weakness has been seen recently. Furthermore, it lowered the view on exports for the first time since November 2021 and lowered the view on imports for the first time since October 2022.

EU/UK

• UK government is to provide taxpayer funding for British semiconductor Co.s, according to Bloomberg's Wickham citing sources.
• Irish PM Varadkar said it is not yet possible to say if a resolution on the Northern Ireland protocol is possible by St Patrick's Day or Good Friday.
• ECB's Makhlouf said they need to continue raising rates at next week's meeting by taking a similar step to the December decision and raising again in March. Makhlouf added that future policy decisions need to continue to be data-dependent and that inflation remains far too high, while he stated that interest rates will have to rise significantly at a steady pace to reach levels sufficiently restrictive. Furthermore, he said they are going to have to wait and see what data tells them in March and rates may stay restrictive for a while, while he also commented that it would not be surprising to see the ECB continue on the path of rate rises beyond Q1.
• ECB's Nagel said rates need to increase further and there is still a risk that inflation could be higher than expected but added that the economy is proving to be more robust than thought a few months prior, according to Der Spiegel.
• ECB's Vasle said 50bp hikes at the next two meetings are appropriate.
• German Economy Minster said a recession is expected to be shorter and milder if it occurs.
• France's CGT union said strikes are to take place on Thursday and Friday in the French power sector against pension reforms and it does not rule out targeted power cuts.

DATA RECAP

• UK PPI Input Prices MM NSA* (Dec) -1.1% vs. Exp. -0.6% (Prev. 0.6%)
• UK PPI Output Prices MM NSA* (Dec) -0.8% vs. Exp. 0.3% (Prev. 0.3%, Rev. 1.0%)
• German Ifo Current Conditions (Jan) 94.1 vs. Exp. 95.0 (Prev. 94.4)
• German Ifo Expectations (Jan) 86.4 vs. Exp. 85.0 (Prev. 83.2)
• German Ifo Business Climate (Jan) 90.2 vs. Exp. 90.2 (Prev. 88.6)