US stocks eked slight gains in a shortened session ahead of Independence Day - Newsquawk Asia-Pac Market Open

  • US stocks eked slight gains with price action kept rangebound and the upside capped in a shortened trading session ahead of the Independence Day holiday, while participants also digested weak US ISM Manufacturing PMI data.
  • USD traded flat amid thinned liquidity as US participants head into Independence Day celebrations, while EUR was indecisive although recouped its initial losses with EUR/USD back above the 1.0900 level.
  • Saudi Arabia will extend the voluntary cut of 1mln BPD for an additional month to include August which could be extended beyond that month, while Russian Deputy PM Novak said they will cut oil production by an extra 500k bpd in August.
  • Highlights include New Zealand NZIER Business Confidence, South Korean CPI, RBA Rate Decision, Supply from Japan, US Holiday Closure for Independence Day.

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LOOKING AHEAD

  • Highlights include New Zealand NZIER Business Confidence, South Korean CPI, RBA Rate Decision, Supply from Japan, US Holiday Closure for Independence Day.

US TRADE

  • US stocks eked slight gains with price action kept rangebound and the upside capped in a shortened trading session ahead of the Independence Day holiday, while participants also digested weak US ISM Manufacturing PMI data.
  • SPX +0.12% at 4,455, NDX +0.19% at 15,208, DJIA +0.03% at 34,418, RUT +0.43% at 1,896.
  • Click here for a detailed summary.

DATA RECAP

  • US S&P Global Manufacturing PMI Final (Jun) 46.3 (Prev. 46.3)
  • US ISM Manufacturing PMI (Jun) 46.0 vs. Exp. 47.0 (Prev. 46.9)
  • US ISM Manuf. New Orders Index (Jun) 45.6 (Prev. 42.6)
  • US ISM Manuf. Employment Index (Jun) 48.1 vs. Exp. 50.5 (Prev. 51.4)
  • US ISM Manuf. Prices Paid (Jun) 41.8 vs. Exp. 44.0 (Prev. 44.2)

FIXED INCOME

  • US Treasuries settled lower in what was a choppy session which saw the front-end lead the curve back towards its most inverted levels since 1989, while treasuries also failed to sustain the knee-jerk reaction to the weak ISM data.

FX

  • USD traded flat amid thinned liquidity as US participants head into Independence Day celebrations.
  • EUR was indecisive although recouped its initial losses with EUR/USD back above the 1.0900 level.
  • GBP remained choppy and continued to fluctuate around the 1.2700 level against the dollar.
  • JPY swung between gains and losses with early selling in USD/JPY exacerbated by the ISM data, but was then reversed after support held at the 144.00 level.
  • CBRT Minutes stated they are to determine the policy rate according to the inflation target and rises on the inflation outlook remain alive, while its decision was the first step of the monetary tightening process.

COMMODITIES

  • Crude prices were ultimately lower after fading a spike in the European morning which was spurred by reports Saudi would extend its voluntary cut of 1mln BPD for an additional month to include August and with Russian Deputy PM Novak also announcing that Russia would reduce oil supply in August by an extra 500k BPD. Nonetheless, the initial gains were fully reversed with price action not helped by the thinned conditions and disappointing US ISM Manufacturing data.
  • Saudi Arabia will extend the voluntary cut of 1mln BPD for an additional month to include August which could be extended beyond that month, according to Reuters.
  • Russian Deputy PM Novak said they will cut oil production by an extra 500k bpd in August, on top of the same amount it had pledged to reduce from March until year-end, according to Reuters.
  • Algeria is to cut an additional 20k BPD of oil output (on top of the 48k BPD cut decided in April) to support efforts by Saudi and Russia to balance and stabilise oil markets, effective during August, according to the Energy Ministry.
  • Libya's Oil Minister welcomed the Saudi decision to extend its voluntary oil output cut of 1mln BPD.
  • Kazakhstan's section of the Caspian Pipeline Consortium (CPC) experienced a power outage, according to Interfax citing local authorities.
  • Indian refiners reportedly began paying in Yuan for some Russian crude oil imports with Indian Oil Corp (IOC IS) the first state refiner to use Yuan for such payments although it was not possible to immediately determine how much Russian oil had been purchased with Yuan, according to Reuters citing sources.

GEOPOLITICAL

  • Russian Defence Minister Shoigu said the June 23rd-25th provocations had no impact on their actions in the special military zone, according to Ifx.
  • Polish Defence Minister Blaszczak wants the German Patriot system to remain in Poland at least until year-end.
  • China's Defence Minister met with the Russian Navy Commander-in-Chief on Monday in Beijing and hopes both sides will strengthen communication at all levels, while he hopes both sides will organise regular joint exercises and patrols, according to Reuters.
  • Iran's MOF spokesperson said regarding talks to remove sanctions, that they recently observed some signs of realism and a shift away from non-constructive attitudes, but added this is not enough and they are in talks to achieve an outcome.

ASIA-PAC

NOTABLE APAC HEADLINES

  • China's Commerce Ministry banned the exports of gallium and germanium-related products from August 1st, which are metals used for chips.
  • China’s NDRC chief said will study policies to help private firms.
  • China’s NDRC said hog prices have fallen to the warning zone and the state reserve will launch a second round of pork purchases this year, while it will closely monitor changes in hog prices and continue to strengthen control of hog production capacity and prices.
  • China’s state asset regulator urged power generation and coal firms to ensure electricity supply this summer.

EU/UK

NOTABLE HEADLINES

  • Incoming BoE MPC member Greene said it would be a mistake for central bankers to assume inflation and rates will automatically go back to pre-COVID levels, according to an FT OpEd.
  • BoE's Benjamin (non-voter) said there is a risk that banks underestimate their aggregate direct and indirect exposures to counterparties and connected collateral, while the BoE intends to closely monitor private asset financing by banks.
  • ECB's Nagel (hawk) said they still have a way to go with policy tightening and that monetary policy signals are clearly pointing in the direction of further tightening, while he added the Euro system's balance sheet should be significantly reduced in coming years. Nagel also commented that inflation isn't retreating as they would like it to and he is confident a hard landing can be avoided.

DATA RECAP

  • UK S&P Global/CIPS Manufacturing PMI (Jun F) 46.5 vs. Exp. 46.2 (Prev. 46.2)
  • German HCOB Manufacturing PMI (Jun) 40.6 vs. Exp. 41.0 (Prev. 41.0)
  • EU HCOB Manufacturing Final PMI (Jun) 43.4 vs. Exp. 43.6 (Prev. 43.6)

Authored by Tyler Durden via ZeroHedge July 3rd 2023