US stocks were led higher by small caps after NY Fed Manufacturing softened the blow from Chinese GDP data - Newsquawk Asia-Pac Market Open

US stocks were firmer with gains led by the tech sector after the Nasdaq rebalancing decision lacked the bite that some had feared, while the Russell 2k outperformed the major indices after the improvement in the NY Fed's Empire manufacturing index cushioned the blow from the disappointing Chinese GDP data and supported small caps.
USD was relatively flat with mild softness in the DXY which reverted to below the 100.00 level after trading on both sides of the key figure, while the data calendar was light from the US with only the NY Fed Manufacturing report to digest which beat on the headline, as well as showed that prices eased and employment returned to expansionary territory.
Looking ahead, highlights include South Korean Trade Data, Japanese Tertiary Industry Activity Index, RBA Minutes.

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LOOKING AHEAD

Highlights include South Korean Trade Data, Japanese Tertiary Industry Activity Index, RBA Minutes.

US TRADE

US stocks were firmer with gains led by the tech sector after the Nasdaq rebalancing decision lacked the bite that some had feared, while the Russell 2k outperformed the major indices after the improvement in the NY Fed's Empire manufacturing index cushioned the blow from the disappointing Chinese GDP data and supported small caps.
SPX +0.39% at 4,523, NDX +0.95% at 15,713, DJIA +0.22% at 34,585, RUT +1.04% at 1,951.
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NOTABLE HEADLINES

NY Fed June SCE credit access survey overall rejection rate for credit applicants increased to 21.8% which is the highest since June 2018 with the increase broad-based across age groups and the highest among those with credit scores below 680.

DATA RECAP

US NY Fed Manufacturing (Jul) 1.1 vs. Exp. -4.3 (Prev. 6.6)

FIXED INCOME

US Treasuries were choppy in particularly light trade with the losses after hot Empire State survey data pared with soft China GDP data overhanging.

FX

USD was relatively flat with mild softness in the DXY which reverted to below the 100.00 level after trading on both sides of the key figure, while the data calendar was light from the US with only the NY Fed Manufacturing report to digest which beat on the headline, as well as showed that prices eased and employment returned to expansionary territory.
EUR eked marginal gains against the dollar and maintained the 1.12 handle, while comments from ECB's Nagel provided little incrementally in which he noted that he expects a 25bps hike in July but is data dependent for September.
GBP slightly softened and GBP/USD pulled back after failing to sustain an early reclamation of the 1.3100 status.
JPY traded indecisively with USD/JPY ultimately flat after whipsawing around the 139.00 level.

COMMODITIES

Crude futures were pressured with the disappointing Chinese GDP data accelerating the pullback in oil from recent peaks, while some misleading OPEC headlines during European trade provided a transient spike higher.
US total shale regions oil production for August is seen to decline 18k BPD to 9.399mln BPD vs 5.9k BPD rise in July, according to the EIA.
Russia is to cut oil exports by 2.1mln tonnes in Q3 which is in line with cuts of 500k BPD in August, according to Reuters citing the Energy Ministry.
India's Russian oil imports could decline on payment problems and deciding on discounts, while Iraq is offering more volumes at better discounts and is willing to offer more oil to India, according to Reuters citing an Indian government source.

CRYPTO

Binance reduced company employee benefits and warned more cost-cutting could come amid a decline in profit as a result of the current market environment and regulatory climate, according to WSJ citing a letter.

GEOPOLITICAL

Russian President Putin said Russia will respond regarding the Kerch Bridge attack.
Russian Kremlin confirmed that the Black Sea grain deal ceased to be valid as of today and that they will return to another deal once conditions impacting Russia have been fulfilled.
Russian Foreign Ministry said Russia would be ready to consider a resumption of the Black Sea grain deal only when it sees concrete results, not only promises, while it added that Russia has withdrawn security guarantees for shipments and is closing down the sea humanitarian corridor.
Russia told UN Shipping Agency IMO that the end of the Black Sea grain deal means guarantees for the safety of navigation issued by the Russian side will be revoked, according to a letter seen by Reuters.
Ukrainian President Zelensky said he agreed with UN Secretary-General Guterres to work together on ensuring Black Sea grain shipments and food security, according to Reuters.
China's envoy to the UN hopes that "by accommodating the concerns of all parties" a package solution can be found to resume the Black Sea grain deal.
US Pentagon said it will send additional F-35 and F-16 jets along with a warship to the Middle East to defend US interests and safeguard freedom of navigation.
North Korea said the offer for discussions from the US is just a ploy, according to KCNA.

ASIA-PAC

NOTABLE APAC HEADLINES

US President Biden is weighing new curbs on chips and semiconductor-making devices, while Intel (INTC), Nvidia (NVDA) and Qualcomm (QCOM) CEOs are seeking to ease new restrictions, according to Bloomberg.
US Treasury Secretary Yellen said there is a good chance they will go ahead with outbound investment controls on China, according to Bloomberg TV.
US State Department said Secretary of State Blinken saw the meeting with chip CEOs as an opportunity to share his perspective on the industry and supply chains after his recent trip to China.
US-based semiconductor industry association called on President Biden’s administration to refrain from additional restrictions on US chip sales to China, according to a statement.
China's state planner chairman met with companies in the steel smelting, electronic devices and modern logistics sectors, while it was noted that efforts will be made to optimise the development of the private economy.
China's National Meteorological Centre said typhoon Talim made landfall in China's Guangdong with nearly 230k people evacuated as of 17:00 Monday local time and the typhoon is expected to move to the Beibu Gulf in the South China Sea, while the typhoon may make a second landfall in the coastal area of the Guangxi Zhuang autonomous region on Tuesday morning, according to Xinhua. It was also reported that China's weather administration issued a red warning alert for flash floods in the southern Guangxi region.
Taiwan's VP and ruling party candidate Lai Ching-teh is to visit the US in August as part of a South American trip although the trip will not involve high-profile engagements or locations that could provide a pretext for a reaction from Beijing, according to FT citing sources.
US Secretary of State Blinken said there's no reason for China to use the transit in the US of Taiwan’s presidential frontrunner Lai as a pretext for provocative action.
Citi cut China's FY23 GDP growth forecast to 5.0% from 5.5% and Barclays cut China’s FY23 GDP growth forecast to 4.9% from 5.4%, while JPMorgan cut China's FY23 GDP growth forecast to 5.0% from 5.5% and Morgan Stanley cut China's FY23 GDP growth forecast to 5.0% from 5.7%.

EU/UK