US stocks were indecisive amid light catalysts, mixed earnings and geopolitical uncertainty - Newsquawk Asia-Pac Market Open

• US stocks were ultimately mixed with the SPX and NDX little changed but the Dow was bid and RTY was hit as equity markets continued to meander in search of the next catalyst, while mixed earnings and geopolitical uncertainty added to the tentative mood.
• USD eked mild gains and the DXY traded on both sides of 105.50 as catalysts remained light with no tier-1 data releases, while there were neutral comments from Fed's Collins who noted policy is well positioned and that there are risks to cutting too soon.
• Looking ahead, highlights include Japanese Labour Cash Earnings & Leading Index, Australian Building Approvals, Chinese Trade Data, BoJ Summary of Opinions from the April Meeting.

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LOOKING AHEAD

• Highlights include Japanese Labour Cash Earnings & Leading Index, Australian Building Approvals, Chinese Trade Data, BoJ Summary of Opinions from the April Meeting.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks were ultimately mixed with the SPX and NDX little changed but the Dow was bid and RTY was hit as equity markets continued to meander in search of the next catalyst, while mixed earnings and geopolitical uncertainty added to the tentative mood.
• SPX +0.00% at 5,187, NDX -0.04% at 18,085, DJIA +0.44% at 39,056, RUT -0.46% at 2,055.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Collins (non-voter) said she expects demand will need to slow to get inflation to 2% and Fed policy is well positioned for the current outlook, while she added it is "moderately restrictive" and there are risks to cutting rates too soon. Collins said current monetary policy should slow the economy and it is too soon to tell just how restrictive policy is.
• Fed's Cook (voter) said in a review of financial stability that households remain resilient but she is watching climbing delinquency rates, while she added that firms have ample earnings to cover debt payments and financial firms are well positioned to absorb shocks.
• NY Fed's Perli said the balance sheet wind-down process has been smooth and slowing the pace of the wind-down reduces the risk of market stress. Perli said the Fed has tools to deal with unexpected money market stress and all signs point to still abundant market liquidity levels but also noted there is a lot of uncertainty around the final decision for the Fed balance sheet.

DATA RECAP

• US Wholesale Sales MM (Mar) -1.3% (Prev. 2.3%, Rev. 2.0%)
• US Wholesale Inventory MM (Mar) -0.4% vs. Exp. -0.4% (Prev. -0.4%)
• Atlanta Fed GDPnow (Q2): 4.2% (prev. 3.3%)

FX

• USD eked mild gains and the DXY traded on both sides of 105.50 as catalysts remained light with no tier-1 data releases, while there were neutral comments from Fed's Collins who noted policy is well positioned and that there are risks to cutting too soon.
• EUR price action was choppy around the 1.0750 level with recent comments by ECB officials providing little incrementally.
• GBP traded indecisively and swung back and forth of the 1.2500 level ahead of Thursday's BoE meeting.
• JPY was the underperformer which saw USD/JPY gain a firm footing at the 155.00 handle.
• Riksbank cut its policy rate by 25bps to 3.75% (as expected by a majority of respondents), while the policy rate is expected to be cut two more times during H2.

FIXED INCOME

• Treasuries saw modest selling in light trade and with contracts contained within post-NFP ranges.

COMMODITIES

• Oil prices crude complex saw gains amid tailwinds from crude stocks drawing more than anticipated.
• US EIA Weekly Crude Stocks w/e -1.362M vs. Exp. -1.066M (Prev. 7.265M).

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu will tell CIA Director Burns that he opposes Hamas's proposal and is ready to expand the Rafah operation, according to Al Arabiya.
• Israel sees no signs of a breakthrough in the truce talks in Gaza, but the Israeli delegation is still in Cairo, according to an Israeli official cited by Reuters.
• Israeli senior official said major gaps remain in the negotiations on the Gaza hostage deal, but the Israeli team will remain in Cairo to try to bridge these gaps and will make a significant effort to get a deal, according to Axios' Ravid.
• IDF said it continues operations east of Rafah and Hamas military infrastructure was destroyed in the Rafah crossing area, while IDF said it is conducting a precision operation in limited areas east of Rafah in the southern Gaza Strip.
• Israeli army said it "killed the commander of the Hamas naval force in a bombing of Gaza City yesterday", according to Asharq News.
• Israeli Defence Minister Gallant said the mission in the north isn't complete and that "this might be a hot summer".
• Senior Israeli officials warned their US counterparts that the Biden administration's decision to pause a weapons shipment to Israel could jeopardize hostage negotiations, according to two sources briefed on the issue told Axios' Ravid.
• White House said talks on a possible Gaza hostage deal are ongoing and the gap that remains between the two sides could be closed.

OTHER

• US Navy said USS Halsey (guided missile destroyer) conducted a routine Taiwan Strait transit on 8th May, while it was separately reported that China’s military followed the US destroyer in Taiwan Strait transit and China said its military is staying on high alert to defend sovereignty.

ASIA-PAC

NOTABLE HEADLINES

• PBoC said it can either buy or sell treasury bonds in the secondary market depending on market conditions, as such trades can be used to manage liquidity, according to Reuters.
• China's Commerce Ministry said China resolutely opposes the US abusing export control measures and repeatedly taking unreasonable sanctions/suppression measures on Chinese enterprises, while it added that the US government cancelling some chip export licenses regarding Huawei is a violation of WTO rules.
• China’s Commerce Ministry said it will continue to impose anti-dumping duties on imports of stainless steel billets and stainless steel hot-rolled plates and coils from the EU, Japan, South Korea and Indonesia.
• China’s Industry Ministry said draft rules would guide lithium battery firms to reduce manufacturing projects that "purely" expand production capacity.
• US Commerce Secretary Raimondo expects the rule on export investment restrictions to be completed by end-2024 and said that Huawei is a threat.
• US Commerce Department is said to be mulling the use of computing power threshold from the AI executive order as a trigger for restrictions, while it is mulling a move to restrict sales of propriety AI software to China and other nations. Furthermore, the US eyes curbs on China's access to AI software behind apps such as ChatGPT, according to Reuters sources.
• US Senate Majority Leader Schumer said he will be providing an AI "roadmap" in the coming weeks which will be translated into legislation.
• US Senator Brown is seeking a US ban on all Chinese internet-connected vehicles, according to Bloomberg.
• BoJ Governor Ueda said he will not comment specifically on recent FX moves but noted it is important for FX moves to reflect fundamentals and the impact of FX moves varies depending on the size and sector of companies. Ueda said rapid, abrupt and one-sided Yen falls are negative for Japan's economy and are undesirable. Furthermore, he said FX moves are among the important factors that affect the economy and prices, while he added if the risk of JPY affecting trend inflation is significantly high, they may need to respond with monetary policy.

EU/UK

NOTABLE HEADLINES

• ECB's Holzmann does not see a reason to lower rates too much too quickly and reiterated that the ECB is influenced by the Fed to a certain extent, according to Handelsblatt.
• ECB's Wunsch said he sees a path for initiating rate cuts this year and there is room for cutting 50bps but when this occurs will depend on the data, while he added that the **costs of remaining tight for too long seem to outweigh the costs of premature easing.

DATA RECAP

• German Industrial Output MM (Mar) -0.4% vs. Exp. -0.6% (Prev. 2.1%, Rev. 1.7%)