US stocks gained and yields declined following softer-than-expected PPI data - Newsquawk Asia-Pac Market Open

• US stocks were underpinned with broad-based gains seen in the major indices following the cooler-than-expected US PPI data which pressured yields and the dollar, while the tech-heavy Nasdaq 100 (+2.5%) outperformed amid notable strength in Nvidia (+6.5%) and Tesla (+5.3%). As such, Technology and Consumer Discretionary sectors spearheaded the advances although energy lagged and closed in the red after oil prices pulled back as reports suggested Iran's response may be limited.
• USD was pressured and the DXY retreated beneath the 103.00 level in the aftermath of the softer-than-expected PPI data which provides some encouraging signs ahead of the looming CPI release, while there were comments later in the session from Fed's Bostic that the balance of risks in the economy is getting back to level and he is willing to wait for the first rate cut but it is coming.
• Looking ahead, highlights include South Korean Unemployment Rate, RBNZ Rate Decision & Press Conference, Supply from Australia & Japan.

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LOOKING AHEAD

• Highlights include South Korean Unemployment Rate, RBNZ Rate Decision & Press Conference, Supply from Australia & Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were underpinned with broad-based gains seen in the major indices following the cooler-than-expected US PPI data which pressured yields and the dollar, while the tech-heavy Nasdaq 100 (+2.5%) outperformed amid notable strength in Nvidia (+6.5%) and Tesla (+5.3%). As such, Technology and Consumer Discretionary sectors spearheaded the advances although energy lagged and closed in the red after oil prices pulled back as reports suggested Iran's response may be limited.
• SPX +1.7% at 5,434, NDX +2.5% at 19,006, DJIA +1.0% at 39,766, RUT +1.6% at 2,095
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (voter) said the balance of risks in the economy is getting back to level and he is willing to wait for the first rate cut but it is coming. Bostic said recent inflation data gives him more confidence they can get back to 2% and he wants to see 'a little more' data, while he stated that if the economy evolves as he expects, there would be a rate cut by the end of the year.

DATA RECAP

• US PPI Final Demand MM (Jul) 0.1% vs. Exp. 0.2% (Prev. 0.2%)
• US PPI Final Demand YY (Jul) 2.2% vs. Exp. 2.3% (Prev. 2.6%, Rev. 2.7%)
• US PPI ex-Food/Energy MM (Jul) 0.0% vs. Exp. 0.2% (Prev. 0.4%, Rev. 0.3%)
• US PPI exFood/Energy YY (Jul) 2.4% vs. Exp. 2.7% (Prev. 3.0%)

FX

• USD was pressured and the DXY retreated beneath the 103.00 level in the aftermath of the softer-than-expected PPI data which provides some encouraging signs ahead of the looming CPI release, while there were comments later in the session from Fed's Bostic that the balance of risks in the economy is getting back to level and he is willing to wait for the first rate cut but it is coming.
• EUR benefitted from the dollar weakness and climbed to just shy of the 1.1000 handle
• GBP gained alongside outperformance in cyclical currencies, while better-than-expected jobs data had little impact.
• JPY gradually recovered its initial losses and USD/JPY eventually retreated to a sub-147.00 after US yields softened post-PPI data.

FIXED INCOME

• T-notes were higher with treasuries underpinned across the curve after softer-than-expected PPI data.

COMMODITIES

• Oil prices trimmed some of Monday's gains as participants potentially factored in reports that suggested Iran's response may be limited, while it was reported that Iranian officials said only a Gaza ceasefire could delay Iran's response towards Israel.
• US Private Inventory data (bbls): Crude -5.2mln (exp. -2.2mln), Distillate +0.6mln (exp. -0.6mln), Gasoline -3.7mln (exp. -1.4mln), Cushing -2.3mln.
• IEA OMR maintained 2024 world oil demand growth forecast unchanged at 970k BPD but cut the 2025 forecast by 30k BPD, while it stated weak growth in China now significantly drags on global gains and that Chinese oil demand contracted for the third straight month.
• Libya's Waha field (100k+ BPD) to Es Sider port pipeline was affected by a fire that broke out on the pipeline on Monday but there was no impact on exports, while Libya’s NOC later announced the fire was distinguished with no damages nor casualties.
• Workers union at BHP's Escondida copper mine in Chile announced to begin strike action, while BHP said it activated a contingency plan due to a strike at Escondida copper mine in Chile.

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu reportedly added new conditions to Israel's demands in ceasefire negotiations, according to NYT.
• Hamas will participate in the round of negotiations expected on Thursday, according to Sky News Arabia citing CNN sources. It was also reported that Hamas leader Sinwar said that if Israel is serious about negotiations and wants Hamas to participate, it must first stop its military operations in Gaza, according to Sky News Arabia citing WSJ.
• Hamas's armed wing said it targeted Tel Aviv with two rockets, while Israeli media reported that explosions were heard in Tel Aviv.
• Iran held military drills in northern Iran and is to also hold navy drills in the Caspian Sea near the Azerbaijan border, according to Mehr.
• Iranian officials said only a Gaza ceasefire could delay Iran's response towards Israel, according to Reuters citing sources. It was separately reported that an Iranian official said they and Hezbollah will launch a direct attack on Israel if the Gaza talks fail or if they feel that Israel is stalling in the negotiations, according to Sky News Arabia.
• Iran is reportedly considering sending representatives to Gaza negotiations for the first time, while Tehran will not participate directly in the Gaza negotiations but its representative will be behind the scenes, according to Reuters sources.
• US President Biden responded "that's my expectation" when asked if he expected Iran to skip a retaliatory strike if a Gaza ceasefire deal was reached.
• US Secretary of State Blinken has postponed his trip to the Middle East and won't travel to the region on Tuesday due to the uncertainty about the situation, according to Axios citing sources. Furthermore, US officials also told Axios they do not expect an Iranian attack today.
• White House official said national security officials McGurk and Hochstein will travel to the Middle East to work on a ceasefire deal and to de-escalate tensions.
• Pentagon said it continues to focus on securing a ceasefire in Gaza as part of the hostage deal, while it was noted that it has increased military capabilities to defend Israel but is working to reduce tension.
• Pentagon said the US State Department approved a possible foreign military sale to Israel of F-15IA and F-15I+ aircraft for USD 18.82bln, while it approved the potential sale of the advanced medium-range air-to-air missiles to Israel for an estimated USD 102.5mln.

OTHER

• Ukrainian President Zelenskiy said Ukraine controls 74 settlements in Russia's Kursk region and Kyiv's forces advanced 1-3kms inside Russia in the last 24 hours, while it was noted that forces took over 40 square kilometres of new Russian territory.
• US State Department said the US is not engaged in any aspect, planning or preparation of Ukraine's incursion into Russia.

ASIA-PAC

DATA RECAP

• Chinese New Yuan Loans (CNY)(Jul) 260bln vs Exp. 450bln (Prev. 2130B)
• Chinese Aggregate Financing (CNY)(Jul) 770bln vs Exp. 1.1tln (Prev. 3300B)
• Chinese Money Supply M2 YY (Jul) 6.3% vs Exp. 6.1% (Prev. 6.2%)

EU/UK

NOTABLE HEADLINES

• German ZEW said the economic outlook for Germany is breaking down and in the current survey, they observed the strongest decline of the economic expectations over the past two years, while economic expectations for the EZ, the US and China also deteriorated markedly. Furthermore, it said it is likely that economic expectations are still affected by high uncertainty.

DATA RECAP

• UK Employment Change (Jun) 97k vs. Exp. 3k (Prev. 19k)
• UK ILO Unemployment Rate (Jun) 4.2% vs. Exp. 4.5% (Prev. 4.4%)
• UK Claimant Count Unem Change (Jul) 135.0k (Prev. 32.3k, Rev. 36.2k)
• UK Avg Earnings (Ex-Bonus)(Jun) 5.4% vs. Exp. 5.4% (Prev. 5.7%, Rev. 5.8%)
• UK Avg Wk Earnings 3M YY(Jun) 4.5% vs. Exp. 4.6% (Prev. 5.7%)
• German ZEW Economic Sentiment (Aug) 19.2 vs. Exp. 32.0 (Prev. 41.8)
• German ZEW Current Conditions (Aug) -77.3 vs. Exp. -75.0 (Prev. -68.9)
• EU ZEW Survey Expectations (Aug) 17.9 (Prev. 43.7)