US stocks eked slight gains in choppy trade ahead of US CPI - Newsquawk Asia-Pac Market Open

• US stocks eventually eked slight gains after two-way price action ahead of looming risk events and with early headwinds amid notable selling in Nvidia (NVDA) shares which hit sentiment and dragged stocks into negative territory for most of the session. However, stocks then staged a late comeback which was also facilitated by less-hawkish commentary from Fed's Bostic who said they cannot eliminate the possibility that rate cuts move even further out but also suggested that cuts could be pulled forward if the disinflation pace resumes.
• USD was ultimately flat after a choppy session in which the DXY traded on both sides of 104.00 as all eyes turned to the US CPI report on Wednesday to help determine whether the hot January and February inflation reports were more than just a bump in the road and with FOMC Minutes to be released hours after the CPI data.
• Looking ahead, highlights include Japanese PPI & Bank Lending, RBNZ Rate Decision, Supply from Australia, Holiday Closures in Singapore, Malaysia, Philippines, Indonesia & Middle East for Eid al-Fitr.

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LOOKING AHEAD

• Highlights include Japanese PPI & Bank Lending, RBNZ Rate Decision, Supply from Australia, Holiday Closures in Singapore, Malaysia, Philippines, Indonesia & Middle East for Eid al-Fitr.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks eventually eked slight gains after two-way price action ahead of looming risk events and with early headwinds amid notable selling in Nvidia (NVDA) shares which hit sentiment and dragged stocks into negative territory for most of the session. However, stocks then staged a late comeback which was also facilitated by less-hawkish commentary from Fed's Bostic who said they cannot eliminate the possibility that rate cuts move even further out but also suggested that cuts could be pulled forward if the disinflation pace resumes.
• SPX +0.14% at 5,209, NDX +0.39% at 18,169, DJIA -0.02% at 38,883, RUT +0.34% at 2,080.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (voter) reiterated he expects a slow pace of disinflation in 2024 and stated that CPI coming in at consensus would be a welcome development, as well as noted that it is always possible Fed's growth forecast could rise. Bostic said they cannot eliminate the possibility that rate cuts move even further out but also suggested that cuts could be pulled forward if the disinflation pace resumes, while he added that if there seems like there is a looming cliff coming, he would then think about when it is appropriate to reduce rates.
• White House Economic Adviser Brainard said she expects steady progress on inflation in the coming months.

FX

• USD was ultimately flat after a choppy session in which the DXY traded on both sides of 104.00 as all eyes turned to the US CPI report on Wednesday to help determine whether the hot January and February inflation reports were more than just a bump in the road and with FOMC Minutes to be released hours after the CPI data. There were also recent comments from Fed's Bostic who was less hawkish than previously as he noted that they cannot eliminate the possibility that rate cuts move even further out but also stated that cuts could be pulled forward if the disinflation pace resumes.
• EUR traded little changed against the dollar and remained contained within the 1.0800 handle as participants await key risk events such as the aforementioned US CPI and the ECB policy announcement on Thursday.
• GBP edged higher and GBP/USD briefly reclaimed the 1.2700 status which it later gave back amid light catalysts.
• JPY returned to flat territory vs the greenback after early upside in USD/JPY stalled beneath the psychological 152.00 level.
• SNB's Vice Chairman Schlegel said FX interventions support the goal of achieving price stability and without forex sales, the SNB would have had to raise interest rates higher. Schlegel said FX purchases in the past have also helped head off deflation and that FX interventions complement interest rate policy, while he added the central bank only uses FX intervention when necessary.
• Argentinian Central Bank is to lower its benchmark interest rate soon and the magnitude of the reduction is yet to be decided, according to Reuters sources.

CRYPTO

• Hong Kong Securities and Futures Commission received the first applications for spot Bitcoin ETFs, according to Caixin.

FIXED INCOME

• Treasuries rallied across the curve ahead of Wednesday's CPI data and with catalysts light, while treasuries weathered a poor 3yr auction and both the 20yr UK Gilt and 5yr German Bobl auctions saw strong demand.

COMMODITIES

• Oil prices declined and settled at session lows in the absence of any material escalation in Middle East tensions.
• US Energy Inventory Data (bbls): Crude +3mln (exp. +2.4mln), Gasoline -0.6mln (exp. -1.3mln), Distillate +0.1mln (exp. -1.2mln), Cushing +0.1mln.
• EIA STEO stated 2024 world oil demand growth was cut by 480k BPD to a 0.95mln BPD Y/Y increase and the 2025 forecast was cut by 30k BPD to a 1.35mln BPD Y/Y increase.

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu said Israel will complete the elimination of Hamas' brigades including in Rafah and nothing will prevent this.
• Israeli Defence Minister Galant reportedly told US Secretary of Defense Austin that Israel has not yet set a date for the Rafah operation and that Israel would have to carry out several necessary actions before an operation in Rafah which are mainly an orderly evacuation of the civilian population and an increase in humanitarian aid, according to Axios.
• White House said an in-person Israel-US meeting on Rafah will take place in a couple of weeks.
• US Secretary of State Blinken said the US continues to work closely with Qatar and Egypt on a ceasefire agreement for Gaza, while the US does not have a date for the potential Israeli operation in Rafah and conversations with Israel are ongoing. Furthermore, Blinken said they have an offer for Hamas which is a "very serious" offer and should be accepted.
• Israeli Defence Force said that they will carry out a large-scale humanitarian operation in southern Gaza.
• The town of Kafr Kila in southern Lebanon was subjected to Israeli raids, according to Sky News Arabia.
• A bipartisan group of US House members is introducing legislation to sanction the Gaza-based Popular Resistance Committees, while it was stated that the organisation was involved in the October 7th attack and the taking of hostages.
• Turkey announced restrictions on exports to Israel as of April 9th until a ceasefire in Gaza is announced which will apply to products in 54 categories with restrictions to include construction materials, aluminium, steel, cement and chemical pesticides, according to journalists.
• Israeli Foreign Minister said in response to the Turkish export restrictions on Israel that Israel will prepare its own trade restrictions on products from Turkey.
• IRGC naval force commander said that Iran has the option of disrupting the Strait of Hormuz amid rising tensions with Israel, but chooses not to, according to Al Arabiya.

OTHER

• Russian Kremlin said there is no specific timeframe for a visit by President Putin to China but the visit of Foreign Minister Lavrov can be considered as preparation for high-level contacts which are needed.
• Russian embassy said Switzerland did not send an invitation to Russia to participate in the summit on Ukraine and Moscow will not participate, according to RIA.
• EU Foreign Minister Borrell said that war is certainly looming all around them and that a high-intensity, conventional war in Europe is no longer a fantasy, according to FT.
• US President Biden’s administration is preparing to take the unusual step of issuing an order that would prevent US companies and citizens from using software made by a major Russian cybersecurity firm because of national security concerns, according to CNN sources.
• White House National Security Advisor Sullivan said more joint patrols can be expected after four-way naval drills in the South China Sea during the weekend. Sullivan also said that US President Biden and Japanese PM Kishida will announce measures to enhance defence and security cooperation, while they will also announce measures on space exploration soon.

ASIA-PAC

NOTABLE HEADLINES

• BoJ is said to consider raising its inflation forecast following the surprisingly strong results from annual wage negotiations with FY24 Core CPI seen revised up from the current forecast of 2.4%, while the BoJ is likely to forecast FY26 price growth of around 2.0%, according to Bloomberg sources.
• Japanese PM Kishida said he is hopeful that 2024 will be the year for the Japanese economy to completely break free from deflationary sentiment, while he added there will be more opportunities for Japanese and US companies to cooperate on next-generation chips.

EU/UK

NOTABLE HEADLINES

• ECB Bank Lending Survey said credit standards were broadly unchanged in the first quarter of 2024 and loan demand from firms declined substantially, while corporate credit standards tightened in Q1 but eased for household mortgages.
• Italy cut its 2024 GDP growth forecast to 1.0% from the 1.2% target set in September and it confirmed a deficit-to-GDP ratio target at 4.3% in 2024 and 3.7% in 2025, according to Reuters sources.