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RANsquawk EU Open Rundown 03.05.17

  • Asian equities traded with little in the way of firm direction amid looming risk events and a slew of market closures overnight
  • GBP has lost some ground heading into the EU open amid reports that UK PM May is said to have been barred from discussions on Brexit terms
  • Looking ahead, highlights include the FOMC rate decision, ADP Employment Change and DoEs

ASIA

Asia equities traded mixed ahead of the looming key risk events including the FOMC meeting and amid several market closures with Japanese, South Korean and Hong Kong markets shut for public holiday. ASX 200 (-1.0%) declined below the 5,900 level with telecoms weighed on by Vocus, while miners also slipped as copper prices remained pressured. The Shanghai Comp. (-0.3%) failed to benefit from a firm CNY 200bln PBoC liquidity injection and the Taiex gained with the Apple supply chain mostly higher following the tech giant’s earning release, where Q2 EPS beat expectations but revenue and iPhone sales disappointed.

PBoC injected CNY 170bln in 7-day reverse repos, CNY20bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos.

PBoC set CNY mid-point at 6.8892 (Prev. 6.8946). (Newswires)

EUROPE/UK

UK BRC Shop Price Index (Apr) Y/Y -0.50% vs. Exp. -0.50% (Prev. -0.80%). (Newswires)

UK PM May is said to have been barred from discussions on Brexit terms with EU leaders and will only be able to sit down for talks with the European Commission’s chief negotiator Michel Barnier. (Times) Elsewhere, The FT have reported that EU negotiators have revised their initial calculations and now require the UK to pay up to EUR 100bln to exit the EU, according to analysis by the FT. (FT)

FX

USD/JPY lacked demand and languished around 112.00 as participants in Japan began their 5-day weekend with Tokyo trade shut for the rest of the week amid 3 consecutive public holidays. The greenback was subdued after retreating below 99.00, while NZD saw upside following the mostly better than expected jobs data in which unemployment matched its lowest reading since Q4 2008. Conversely, AUD/USD underperformed and attempted a break below 0.7500 amid cross-related flows with AUD/NZD also eyeing 1.0800 to the downside. Elsewhere, GBP has seen some softness as European traders enter their desks amid reports that UK PM May is said to have been barred from discussions on Brexit terms.

New Zealand Employment Change (Q1) Q/Q 1.2% vs. Exp. 0.8% (Prev. 0.8%)

New Zealand Unemployment Rate (Q1) M/M 4.9% vs. Exp. 5.1% (Prev. 5.2%)

COMMODITIES

WTI crude futures recovered from yesterday’s selling pressure where prices settled at its lowest levels since November 29th on oversupply concerns, with support provided after-hours following a drawdown in API crude inventories. Elsewhere, copper prices were weaker amid a cautious risk tone, while gold (unch.) languished near 3-week lows with demand subdued ahead of today’s FOMC rate decision.

US API Crude Oil Inventory Report (Apr 28) W/W -4158K (Prev. 897K)

Russia reduced oil output by 300.8K B/D as of May 1st vs. October level, this is in line with the OPEC deal. There were also later reports that Russia is said to favour extending the OPEC deal by another 6 months, according to a government official. (Newswires)

The Saudi Prince stated that OPEC and Non-OPEC deal was unprecedented and that the optimistic scenario for oil prices is USD 55.00 and lowest is USD 45.00. (Newswires)

US

Afternoon weakness was seen in the greenback, as money moved to safe haven assets as treasuries bounced back from the losses seen on Monday, with many analysts attributed the buying tspanoughout the session to weak auto sales across the US. A bounce from the modest short covering is clear, supported by buyers of the belly aiding the continued grind higher, as a result, the 10y T-note settled at 125.25+, up 7+ ticks.

Categories:
MOC: * SPX 850mln to sell (vs at 650mln to sell at 1549 EDT) * Dow 50mln to sell (vs 100mln to buy at 1549 EDT)