US stocks were mixed with outperformance in tech and communications following the Google antitrust ruling - Newsquawk Asia-Pac Market Open

• US stocks closed mixed with the Nasdaq and S&P 500 led higher by outperformance in the Communication and Tech sectors, which was largely a function of the upside in Alphabet and Apple following the US court ruling that Google can keep its Chrome browser and is also not required to cease payments to AAPL and others for preloading Google products. Meanwhile, breadth was soft with the majority of sectors down and with small caps and the equal-weight S&P underperforming, while upside was seen in T-notes and the dollar was pressured following dovish data and Fed Speak.
• USD was softer after US job openings posted a bigger decline than expected in July and was accompanied by a slight fall in the vacancy rate, while the number of unemployed workers exceeded available jobs for the first time since 2021. As such, rate cut bets on the Fed marginally ticked higher over the day ahead of ADP and NFP later this week, while there were also several Fed comments in which Waller reiterated his call for a September rate cut, but advocated for a data-dependent approach surrounding cuts beyond the next meeting. Furthermore, Musalem expects tariffs to work through the economy over two to three quarters, before fading, while Bostic still sees one rate cut this year as appropriate and didn't rule out a September cut given the upcoming jobs report and inflation data.
• Looking ahead, highlights include Australian Trade Data, Supply from Japan.

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LOOKING AHEAD

• Highlights include Australian Trade Data, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks closed mixed with the Nasdaq and S&P 500 led higher by outperformance in the Communication and tech sectors, which was largely a function of the upside in Alphabet and Apple following the US court ruling that Google can keep its Chrome browser and is also not required to cease payments to AAPL and others for preloading Google products. Meanwhile, breadth was soft with the majority of sectors down and with small caps and the equal-weight S&P underperforming, while upside was seen in T-notes and the dollar was pressured following dovish data and Fed Speak.
• SPX +0.51% at 6,448, NDX +0.79% at 23,415, DJI -0.05% at 45,271, RUT -0.10% at 2,350.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said it is possible that someday tariffs will replace income tax.
• US told countries not to back fuel emissions deal at the UN shipping agency, or face possible tariffs, according to Reuters citing sources.
• Mexico and the US have established high-level implementation groups to monitor commitments and take actions in their own countries, according to a joint statement. This includes measures to counter cartels, strengthen border security, eliminate clandestine border tunnels, address illicit financial flows, enhance collaboration to prevent fuel theft, and efforts to stem the flow of drugs and weapons.
• Canadian PM Carney said he last spoke to US President Trump on Monday with the conversation described as lengthy and good, while Carney said he will be involved in talks with China in an effort to resolve the Canola dispute.
• China announced anti-dumping duties on optical fibre from the US, while China's duties on optical fibre from Corning are at 37.9%, according to Bloomberg.
• Japanese Trade Negotiator Akazawa is to travel to the US from this Thursday to Saturday, according to the government.
• German Chancellor Merz welcomed EU-Mercosur trade talks going into the final phase, which strengthens German and European economies. Merz said he will shortly invite companies and stakeholders to the national steel summit and noted that businesses have been suffering from high tariffs, while he will also be entering into talks with car makers and auto suppliers to discuss the current sector challenges.

NOTABLE HEADLINES

• Fed's Beige Book stated most of the twelve Fed districts reported little or no change in economic activity since the prior Beige Book period, and four districts reported modest growth, while contacts frequently cited economic uncertainty and tariffs as negative factors.
• Fed Governor Waller said the Fed has little control over the long-end of the curve and 10-year yields are more anchored, while he added the Fed should cut rates at the next meeting, but does not need to go in a lock-sequence of rate cuts. Waller said they could see multiple cuts in the next 3-6 months and noted whether it is every meeting, or every other meeting, they will need to see what the data says, and they can always adjust the rate-cut pace, depending on how data comes in.
• Fed's Musalem (2025 voter) said the current restrictive monetary policy stance is in the right place, given the data. Musalem stated he remains squarely focused on following Congress's mandate and said the Fed framework update is more forward-looking. Musalem also said data integrity is key for the economy and he is very concerned as the situation at the Fed is serious, while he has marked up labour market risks and marked down inflation risks.
• Fed's Kashkari (2026 voter) said inflation is still too high and the Fed is not done with work to bring inflation back to 2%, while he added the labour market is showing signs of cooling and the Fed is getting into a tricky situation with mandates. Furthermore, he said data suggests the economy is slowing and moving to a soft landing. Fed's Kashkari also commented that they have every reason to believe there will be a gentle cooling in the economy, and interest rates have some room to come down gently, while he is not forecasting a recession.
• Fed's Bostic (2027 voter) said price stability remains the primary concern, though a single 25bps cut is still likely appropriate this year, while he added that risks to inflation and the job market are closer to balance but inflation remains above target. Bostic also stated it is not obvious that the labour market is materially weakening, and he is not ruling out a September rate cut depending on the coming jobs report and other data.
• Fed Chair candidate Zervos said the US should cut rates and noted that there has been significant disinflation since 2022, while Zervos added the Fed should not tie its hands, according to a CNBC interview.
• Fed Governor nominee Miran said the main job of the central bank is to prevent depression and inflation, while he added that the composition of the Fed's balance sheet is an open question and independence of monetary policy is a critical element.
• Republican Senator Tillis said he would not consider a nominee to replace ousted Fed Governor Cook until the legality of US President Trump's move to fire her has been determined in court, according to Politico.

DATA RECAP

• US Factory Orders MM (Jul) -1.3% vs. Exp. -1.4% (Prev. -4.8%)
• US JOLTS Job Openings (Jul) 7.181M vs. Exp. 7.378M (Prev. 7.437M, Rev. 7.357M)

FX

• USD was softer after US job openings posted a bigger decline than expected in July and was accompanied by a slight fall in the vacancy rate, while the number of unemployed workers exceeded available jobs for the first time since 2021. As such, rate cut bets on the Fed marginally ticked higher over the day ahead of ADP and NFP later this week, while there were also several Fed comments in which Waller reiterated his call for a September rate cut, but advocated for a data-dependent approach surrounding cuts beyond the next meeting. Furthermore, Musalem expects tariffs to work through the economy over two to three quarters, before fading, while Bostic still sees one rate cut this year as appropriate and didn't rule out a September cut given the upcoming jobs report and inflation data.
• EUR mildly benefitted from the dollar weakness but remained beneath the 1.1700 handle following soft Services PMI data from the bloc.
• GBP nursed some of the losses from the prior day's underperformance and reclaimed the 1.3400 status, while the currency was unfazed by a slew of BoE comments, including from Taylor who wants to see 4-5 rate cuts a year
• JPY was marginally firmer with USD/JPY testing the 148.00 level to the downside amid a narrowing of US-Japan yield differentials.

FIXED INCOME

• T-notes caught a bid following dovish JOLTS data and Fed speak.

COMMODITIES

• Oil prices were lower and driven by OPEC+ headlines, but did pare some of the moves seen after US President Trump threatened Russia sanctions.
• US Private Energy Inventories (bbls): Crude +0.6mln (exp. -2mln), Distillates +3.7mln (exp. -0.6mln), Gasoline -4.6mln (exp. -1.1mln), Cushing +2.1mln.
• OPEC+ is reportedly mulling another oil production hike at Sunday’s meeting but the final decision has not been made yet, according to a Reuters source
• OPEC crude output in August rose by 400k BPD to 28.55mln BPD, according to a Bloomberg survey.
• Russian oil exports from Western ports are to fall 6% in September vs. August to around 1.9mln BPD, according to Reuters sources.
• US President Trump implied 2nd and 3rd phases of Russian oil sanctions.
• Nigeria's Dangote refinery (650k BPD) gasoline-producing unit has gone offline due to catalyst leaks and technical issues and repairs are estimated to take two weeks, according to Reuters citing sources.

GEOPOLITICAL

MIDDLE EAST

• US President Trump said to tell Hamas to immediately give back all 20 hostages (not just 2, 5 or 7) and things will change rapidly.
• Hamas reiterated it is ready for a comprehensive Gaza deal through which all Israeli hostages are released.
• Two Israeli officials claimed US Secretary of State Rubio has signalled in private meetings that he doesn't oppose West Bank annexations and the Trump administration won't stand in the way, according to Axios.
• UN nuclear watchdog sent two quarterly reports on Iran to member states and stated that since June 13th, the day Israel launched attacks on Iran’s nuclear facilities, the IAEA has been unable to conduct in-field activities required to verify Iran’s enriched uranium stock.

RUSSIA-UKRAINE

• US President Trump said he will find out over the next week or so how good relationship is with Russia and will help Poland protect itself. Trump also said US soldiers will remain in Poland and will put more there if they want, while he later commented that he will be talking to Ukrainian President Zelensky shortly in the next days.
• Ukraine's Foreign Minister said regarding Russian President Putin's offer for a leaders’ meeting in Moscow, that he makes 'unacceptable proposals' and that seven countries have offered to host a leaders' meeting as of now.
• Russian President Putin said if common sense prevails, an acceptable way to end the Ukraine conflict can be found with light at the end of the tunnel, otherwise, it will have to be solved militarily.
• Russian President Putin said there is no date set or preparations made for US President Trump's visit to Russia.
• US Special Envoy Witkoff is in Paris ahead of Ukraine coalition meeting, according to Reuters citing two diplomatic sources.
• French President Macron said Ukrainian President Zelensky and several other heads of state are to speak with US President Trump on Thursday at 14:00 Paris Time with the call to take place after the meeting of the Coalition of the Willing countries in the morning. Macron also said the Coalition of the Willing is ready to provide security guarantees to Ukraine if there is a ceasefire.
• UK government said it made eleven new designations under the Russia sanctions regime and includes those "engaging in and providing support for the Government of Russia's programme for the forced deportation and re-education of Ukrainian children".

ASIA-PAC

NOTABLE HEADLINES

• India's GST council approved changes in the consumption tax rate with new rates to be effective from September 22nd. India’s Finance Minister announced plans for a simplified GST structure with only two slabs, in which the GST rate cut decisions were taken unanimously with the tax rates on common man and middle class items reduced from 18% and 12%, to 5%. Furthermore, the tax rate on air conditioners, TVs, dishwashing machines was reduced to 18% and the tax rate on small cars reduced to 18, while mid-sized and large cars with engine capacity exceeding 1500cc are to attract a 40% rate and a special rate of 40% is to apply for cigarettes, chewing tobacco, aerated water containing added sugar, and for carbonated and non-alcoholic beverages.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said the MPC views domestic factors as primary drivers for the UK outlook over international factors and tariffs play a smaller role in UK inflation than previously believed. Bailey also said the decision on QT is an open decision and there is no pot of gold for public finances if the BoE takes a different approach to QT, while he does not think QT is a cause of the increase in bond yields and said the open decision will take into account interaction with markets.
• BoE's Greene said she voted to keep policy on hold as the risk of persistent inflation was higher, and the risk of weaker demand was lower, while she is not convinced that UK rates are meaningfully restrictive.
• BoE's Lombardelli said she voted to hold rates at the last meeting due to her concerns about the current and expected above-target rates of underlying inflation and her judgments of the balance of supply and demand. Furthermore, she said they should retain space to cut further in the future if needed, and noted if cuts are too far or fast, they “may then have to change policy direction”.
• BoE's Taylor said his main concerns have been to get inflation sustainably back to the 2% target and maintain monetary policy restrictiveness as long as necessary but no longer. Taylor said the greater danger is that they get behind the curve and stay too tight in the short-term. Furthermore, he noted the neutral rate is quite low and thinks they have further to go, while he wants to see 4-5 rate cuts a year.
• UK Chancellor Reeves said they need to bring inflation and borrowing costs down, while she added the economy is not broken.
• UK Chancellor Reeves dismissed forecasts of a GBP 50bln "black hole" in the public finances, despite higher borrowing costs and expected tax rises piling pressure on the chancellor ahead of the autumn Budget, according to the BBC. The report also noted that Reeves has two rules on government borrowing that she has repeatedly said are "non-negotiable", which are to get debt falling as a share of national income by the end of this parliament in 2029-30, and that day-to-day government costs will be paid for by tax income, rather than borrowing by 2029-30.
• ECB's Lagarde is confident that institutions such as the ESRB can adapt to change while keeping crises in check.
• ECB was reported to meet banks to discuss how their loan books are insured, while it is trying to understand how banks are insuring their loan books against risks, including credit default, according to Bloomberg.

DATA RECAP

• UK S&P Global Services PMI (August) 54.2 vs. Exp. 53.6 (Prev. 53.6)
• UK S&P Global PMI: Composite Output (August) 53.5 vs. Exp. 53.0 (Prev. 53.0)
• German HCOB Services PMI (August) 49.3 vs. Exp. 50.1 (Prev. 50.1)
• German HCOB Composite Final PMI (August) 50.5 vs. Exp. 50.9 (Prev. 50.9)
• EU HCOB Services Final PMI (August) 50.5 vs. Exp. 50.7 (Prev. 50.7)
• EU HCOB - Composite Final PMI (August) 51.0 vs. Exp. 51.1 (Prev. 51.1)
• EU Producer Prices MM (Jul) 0.4% vs. Exp. 0.2% (Prev. 0.8%)
• EU Producer Prices YY (Jul) 0.2% vs. Exp. 0.1% (Prev. 0.6%)