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US stocks were rangebound amid mixed data and geopolitical concerns - Newsquawk Asia-Pac Market Open

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Tuesday, Jan 24, 2023 - 10:04 PM
  • US stocks traded sideways for most of the session amid varied data and geopolitical tensions, while pressure was seen at the opening bell amid a flurry of halts on the NYSE due to a technical glitch which triggered 84 Limit Up Limit Down halts. However, there was a bout of support for futures after the close following Microsoft's earnings which beat on the bottom line and its Cloud revenue also topped forecasts.
  • USD eventually returned flat after swinging on both sides of the 102.00 level and with early support from the better-than-expected PMI data stateside. EUR eked mild gains with two-way price action on PMI day and after EU PMIs topped forecasts with Services and Composite PMIs back in expansionary territory, while there was further hawkish commentary from ECB officials including Simkus who said the ECB should continue with half-point rate hikes and that reaching the ECB rate peak before summer may be unlikely.
  • Looking ahead, highlights include Australian CPI and Leading Index, New Zealand CPI & Credit Card Spending, Japanese Leading Index, Singapore CPI, Holiday Closures in China, Hong Kong, Taiwan and Vietnam.

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LOOKING AHEAD

  • Highlights include Australian CPI and Leading Index, New Zealand CPI & Credit Card Spending, Japanese Leading Index, Singapore CPI, Holiday Closures in China, Hong Kong, Taiwan and Vietnam.

US TRADE

EQUITIES

  • US stocks traded sideways for most of the session amid varied data and geopolitical tensions, while pressure was seen at the opening bell amid a flurry of halts on the NYSE due to a technical glitch which triggered 84 Limit Up Limit Down halts. However, there was a bout of support for futures after the close following Microsoft's earnings which beat on the bottom line and its Cloud revenue also topped forecasts.
  • SPX -0.07% at 4,016, NDX -0.22% at 11,846, DJI +0.31% at 33,733, RUT -0.27% at 1,885.
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • US Treasury Secretary Yellen said Japan and the EU would need to negotiate new trade agreements with the US to meet the mineral-sourcing requirements for an overhauled EV tax subsidy, according to WSJ.
  • Microsoft Corp (MSFT) Q2 2023 (USD): Adj. EPS 2.32 (exp. 2.30), Revenue 52.70bln (exp. 52.99bln), Co. reported Intelligent Cloud revenue USD 21.51bln (exp. 21.43bln), while it stated that Azure and other cloud revenue growth of 31% was driven by strong demand for consumption-based services.

DATA RECAP

  • US S&P Global Manufacturing PMI Flash (Jan) 46.8 vs. Exp. 46.0 (Prev. 46.2)
  • US S&P Global Services PMI Flash (Jan) 46.6 vs. Exp. 45.0 (Prev. 44.7)
  • US S&P Global Composite Flash PMI (Jan) 46.6 (Prev. 45.0)
  • US Rich Fed Composite Index (Jan) -11 (Prev. 1.0)
  • US Rich Fed Services Index (Jan) -6 (Prev. -12.0)
  • US Rich Fed Manufacturing Shipments (Jan) -3 (Prev. 5.0)

FIXED INCOME

  • Treasuries bull-flattened in a choppy session as data-led selling reversed amid geopolitical tensions.

FX

  • USD eventually returned flat after swinging on both sides of the 102.00 level and with early support from the better-than-expected PMI data stateside.
  • EUR eked mild gains with two-way price action on PMI day and after EU PMIs topped forecasts with Services and Composite PMIs back in expansionary territory, while there was further hawkish commentary from ECB officials including Simkus who said the ECB should continue with half-point rate hikes and that reaching the ECB rate peak before summer may be unlikely.
  • GBP underperformed against its cyclical counterparts after UK PMI figures mostly disappointed.
  • JPY strengthened against the dollar which was facilitated by a decline in US Treasury yields.

COMMODITIES

  • Oil prices declined and WTI crude futures tested USD 80/bbl level to the downside with some desks attributing the weakness to global economic slowdown fears, while the latest PMI data was varied in which US, UK and EU Manufacturing PMIs topped forecasts but all remained in contraction territory.
  • US Energy Inventory Data (bbls): Crude +3.4mln (exp. +1.0mln), Cushing +3.9mln, Gasoline +0.6mln (exp. +1.8mln), Distillate -1.9mln (exp. -1.1mln)
  • OPEC+ JMMC panel is unlikely to recommend any changes to oil outlook policy on February 1st, according to sources cited by Bloomberg and Reuters.

GEOPOLITICAL

  • US continues to see some concerning activity from Chinese Co.s related to Ukraine, with US officials seeing non-lethal military assistance and economic support from Chinese Co.s that stops short of wholesale sanctions evasion, according to Reuters sources.
  • White House said it will continue to communicate to China the implications of providing material support to Russia in the war against Ukraine.
  • US is leaning towards providing Abrams tanks to Ukraine which could be announced this week and would be part of a broader diplomatic understanding with Germany, according to officials cited by the WSJ.
  • Germany is to send Leopard tanks to Ukraine and is to allow other countries such as Poland to re-export Leopard tanks, according to Spiegel citing sources.
  • Poland requested approval to export up to 14 Leopard tanks to Ukraine, according to German defence sources cited by Reuters.

ASIA-PAC

  • The first three days of the Chinese Spring Festival holidays saw bookings for domestic hotel and scenic spots increase by 56% and 79% Y/Y, respectively, according to data by online travel agency Tongcheng Travel cited by the Global Times. Furthermore, domestic air ticket bookings rose by 30% and passenger trips via railway, road, waterway and plane rose 67.7% Y/Y to 23.5mln on Monday.
  • Global Times’s Hu Xijin tweeted "China’s Ministry of National Defense is certainly preparing as well. If McCarthy visits Taiwan this spring, then a new Taiwan Straits crisis will be inevitable".
  • Chinese and Russian space agency leaders intend to meet in February, according to TASS.
  • US Senator Hawley said he will introduce a bill to ban TikTok in the US, according to Reuters.

EU/UK

  • ECB's Nagel said the ECB is not done on far too high inflation, according to L'Express.
  • ECB's Panetta said the ECB should not pre-commit to any specific policy move beyond February and can bring inflation down with well-calibrated non-mechanical rate hikes. Panetta also said he is anxiously optimistic about inflation following the recent good reading and that the ECB will reassess the policy outlook in March alongside new projections.
  • ECB's Simkus said the ECB should continue with half-point rate hikes and that reaching the ECB rate peak before summer may be unlikely. Simkus added that core inflation is still strong and showed the fight is not over, while he noted that wage growth is set to beat the historical average.
  • EU leaders are to give the green light at the February 9th-10th summit for looser state aid policy to help the green industry against outside competition, according to draft conclusions.

DATA RECAP

  • UK Flash Manufacturing PMI (Jan) 46.7 vs. Exp. 45.5 (Prev. 45.3)
  • UK Flash Services PMI (Jan) 48.0 vs. Exp. 49.7 (Prev. 49.9)
  • UK Flash Composite PMI (Jan) 47.8 vs. Exp. 49.1 (Prev. 49.0)
  • EU S&P Global Manufacturing Flash PMI (Jan) 48.8 vs. Exp. 48.5 (Prev. 47.8)
  • EU S&P Global Services Flash PMI (Jan) 50.7 vs. Exp. 50.2 (Prev. 49.8)
  • EU S&P Global Composite Flash PMI (Jan) 50.2 vs. Exp. 49.8 (Prev. 49.3)
  • German S&P Global Manufacturing Flash PMI (Jan) 47.0 vs. Exp. 47.9 (Prev. 47.1)
  • German S&P Global Services Flash PMI (Jan) 50.4 vs. Exp. 49.6 (Prev. 49.2)
  • German S&P Global Composite Flash PMI (Jan) 49.7 vs. Exp. 49.6 (Prev. 49.0)
  • German GfK Consumer Sentiment (Feb) -33.9 vs. Exp. -33.0 (Prev. -37.8, Rev. -37.6)
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