US stocks finished mixed while crude rises on Red Sea risk premium - Newsquawk Asia-Pac Market Open

US stocks were firmer Monday with the NDX leading the SPX higher gradually through the session.
The Dollar was flat and traded within very tight parameters (102.370-630) as Fed Speak provided little sway for the index.
Treasuries bear-steepened in light trade after troubles in the Red Sea saw energy prices spike, resurfacing supply shock concerns.
Oil prices bounced on Monday as tanker troubles in the Red Sea baked in a geopolitical risk premium.
Looking ahead, highlights include New Zealand Trade Balance, ANZ Business Confidence (Dec), RBA Meeting Minutes, BoJ Announcement and Press Conference.

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19th December 2023

SNAPSHOT

Highlights include New Zealand Trade Balance, ANZ Business Confidence (Dec), RBA Meeting Minutes, BoJ Announcement and Press Conference.
Click here for the Newsquawk Week Ahead.

US stocks were firmer Monday with the NDX leading the SPX higher gradually through the session.
SPX +0.45% at 4,740, NDX +0.64% at 16,729, DJIA +0.00% at 37,306, RUT -0.14% at 1,982.
Click here for a detailed summary.

NOTABLE HEADLINES

Fed's Mester (2024 voter, retiring in June, hawkish) said markets are a "little bit ahead" of the Fed on rate cuts, says the next phase is not when to reduce rates, even though that's where markets are at, it is about how long policy should remain restrictive, according to FT.
Fed's Goolsbee (2023 voter, dove) said in a CNBC interview they have made significant improvement on inflation which has been reflected in the SEP projections. Was confused a bit about market reaction; there seems to be some confusion in markets about how the FOMC works. No contradiction between what Williams and Powell said over the past week.

Fed's Daly (2024 voter) said it is appropriate for the Fed to begin looking ahead to lowering interest rates in 2024 because of how inflation has improved this year, via WSJ. While much of the initial decline in inflation this summer stemmed from supply-chain healing, more recent declines appear to have been driven by a cooling in demand-driven components. Click here for the full headlines.
The Dollar was flat and traded within very tight parameters (102.370-630) as Fed Speak provided little sway for the index.
The EUR and CHF outperformed on Monday, albeit only seeing marginal gains, with EUR/USD back above 1.09 with little to no reaction seen in the wake of the poor German Ifo data given Flash PMIs last week.
JPY was the G10 laggard and printed a high of 143.15 vs. an earlier low of 142.08 as market participants await the pivotal BoJ.
GBP and CAD also saw slight losses against the Greenback, albeit in a lack of currency-specific newsflow and the Loonie failing to profit off rising crude prices amid heightened Red Sea tensions.

Treasuries bear-steepened in light trade after troubles in the Red Sea saw energy prices spike, resurfacing supply shock concerns.

Oil prices bounced on Monday as tanker troubles in the Red Sea baked in a geopolitical risk premium.
Codelco said on Monday it reached contract agreements with three unions, putting off the risk of a strike, according to Reuters. Codelco said the three new agreements "respond to the current business context and seek to increase the company's competitiveness," though it did not disclose their financial details.
QatarEnergy CEO says new LNG long-term supply deals are imminent, in ongoing live talks in Europe. The LNG market remains "quite tight and volatile", according to Reuters.

US Officials confirm that on December 18th the M/V Swan Atlantic was attacked in the southern Red Sea; in response, the USS Carney is moving to the ship.
BP (BP/ LN) is to pause all tanker transits via the Red Sea, via Bloomberg.
An unidentified object hit a Norwegian ship in the Red Sea, according to the ship owner cited by Reuters.
Evergreen line said containerships scheduled to pass through the Red Sea will be rerouted around Cape of Good Hope to continue their voyages to destination ports. Hapag-Lloyd took and Equinor similar action thereafter.
Yemen Houthi official said the group will be able to confront any possible coalition that could be formed by the US in the Red Sea, according to Al Jazeera. Yemen Houthi officials reiterated that shipping lanes travelling in the Red and Arabian Seas are safe except for ships belonging to Israel.

NOTABLE HEADLINES

Chinese State Planner said it will expand consumption of renewable energy, according to Reuters.

NOTABLE HEADLINES

ECB's Vasle said market pricing for the start of rate cuts, and the totality for 2024, is excessive, according to Reuters. Adds inflation will rebound in H1, ECB should reassess policy outlook only after observing the trend, according to Reuters.
ECB's Kazimir said the positive drop in inflation observed in the past few months is not enough to declare victory and move to the next stage; increasingly confident that inflation will reach the target in 2025 and can accomplish it in a soft-landing scenario, according to Reuters.
ECB's Stournaras said need to see inflation sustainably below 3% by mid-year before lowering rates, according to Reuters. Adds there is a disconnect between the market and the ECB despite President Lagarde's pushback against a March cut.
BoE's Broadbent said, "given the volatility in the official estimates of wage growth, and the disparity (such as it is) among the various indicators we have, it will probably require a more protracted and clearer decline in these series before the MPC can safely conclude that things are on a firmly downward trend". Via the BoE.

DATA RECAP

Business Climate New 86.4 vs. Exp. 87.8 (Prev. 87.3, Rev. 87.2); Expectations New 84.3 vs. Exp. 85.9 (Prev. 85.2, Rev. 85.1)
Current Conditions New 88.5 vs. Exp. 89.7 (Prev. 89.4)

Argentina Central Bank is to switch benchmark interest rate from 28-day Leliq to 1-day reverse repo; will no longer hold Leliq auctions, according to Reuters,

Source: Newsquawk