US stocks were led lower by tech weakness ahead of Nvidia's earnings - Newsquawk Asia-Pac Market Open

• US stocks were lower on return from the holiday weekend with the declines led by tech as Nvidia was pressured ahead of its earnings and AI bellwether Super Micro Computer (SMCI) also extended Friday's sharp sell-off before trimming the losses heading into the close, while the latest US data releases were softer and participants now await the FOMC Minutes on Wednesday.
• USD was pressured amid softer yields in which the DXY briefly slipped below 104.00 before nursing some of the losses to return near its 100 DMA level of 104.03, while focus turns to the incoming FOMC Minutes.
• Looking ahead, highlights include Australian Melbourne Institute Leading Index & Wage Price Index, Japanese Trade Data, Supply from Australia.

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LOOKING AHEAD

• Highlights include Australian Melbourne Institute Leading Index & Wage Price Index, Japanese Trade Data, Supply from Australia.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks were lower on return from the holiday weekend with the declines led by tech as Nvidia was pressured ahead of its earnings and AI bellwether Super Micro Computer (SMCI) also extended Friday's sharp sell-off before trimming the losses heading into the close, while the latest US data releases were softer and participants now await the FOMC Minutes on Wednesday.
• SPX -0.60% at 4,975, NDX -0.79% at 17,546, DJIA -0.17% at 38,563, RUT -1.41% at 2,004.
• Click here for a detailed summary.

NOTABLE HEADLINES

• White House Economic Adviser Brainard said there is still work to do on inflation and some prices are still too high.

DATA RECAP

• US Leading Index Change MM (Jan) -0.4% vs. Exp. -0.3% (Prev. -0.1%)
• Philadelphia Fed Non-Manufacturing Regional Business Activity Index (Feb) -8.8 (prev. -3.7)

FX

• USD was pressured amid softer yields in which the DXY briefly slipped below 104.00 before nursing some of the losses to return near its 100 DMA level of 104.03, while focus turns to the incoming FOMC Minutes.
• EUR benefitted from the dollar weakness and reclaimed the 1.0800 handle.
• GBP strengthened but was well off intraday highs, while participants digested comments from BoE officials including Bailey who noted inflation does not need to fall to the 2% target before policymakers could back a rate cut but also downplayed the market's rate path.
• JPY gave back most of its earlier gains with USD/JPY back above the 150.00 level.
• Canadian CPI Inflation MM (Jan) 0.0% vs. Exp. 0.4% (Prev. -0.3%)
• Canadian CPI Inflation YY (Jan) 2.9% vs. Exp. 3.3% (Prev. 3.4%)

FIXED INCOME

• Treasuries bull-steepened after soft Canadian CPI data eased global inflationary concerns ahead of Wednesday's 20yr auction and FOMC minutes.

COMMODITIES

• Oil prices were lower despite the soft dollar as the broader risk-off conditions weighed.
• Russian Foreign Minister Lavrov said Russia and Venezuela are to broaden oil production cooperation.
• Russian Energy Minister Shulginov said Novatek recommenced the shipment of petroleum products from Ust-Luga.
• World refined copper markets were in a 20k metric tonnes surplus in December 2023 (vs. 123k deficit in November), according to ICSG.

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu said Israel will not yield to any internal or external pressure to end the war in Gaza and wants to release more hostages, but “not at any cost”, according to Al Arabiya.
• Hamas said US President Biden and his administration bear direct responsibility for obstructing a decision to stop the aggression, according to Al Jazeera.
• White House said the US hopes negotiations to get hostages out will bear fruit soon and they still don't believe it is the right time for a permanent ceasefire.
• Yemen's Houthis said they have used drones to target a number of US warships in the Red Sea as well as sites in Eilat in southern Israel, while they targeted Israeli ship 'MSC Silver' in the Gulf of Aden with a number of missiles.
• US confirmed a reaper spy drone was shot down by Houthis over the Red Sea.
• French warships in the Red Sea intercepted and destroyed two drones in attacks which originated from Yemen.

OTHER

• Ukraine’s Defence Minister Umerov said he and US Defence Secretary Austin, alongside new Ukrainian forces commander Syrskyi discussed front line and ammunition supplies.
• Lawmakers in Germany’s ruling coalition are set to vote this week on a motion that requests for Ukraine "the delivery of additionally necessary long-range weapon systems" that could strike Russia, including Taurus cruise missiles, according to FT.
• White House said the US is to announce major sanctions on Friday against Russia for Navalny’s death. White House's Sullivan said new sanctions on Russia will cover a range of elements including defence industrial base and sources of revenue for the economy.
• US told allies Russia may put a nuclear weapon in space in 2024, according to Bloomberg sources. Russian Defence Minister Shoigu earlier stated they have "no such plans" in regards to reports that Russia is planning to deploy nuclear weapons in space, while Russian President Putin said that Russia is against the deployment of nuclear weapons in space and is for negotiations with the US on strategic stability but if the US wants to achieve unilateral advantages, that will not happen. Furthermore, Putin said Russia is open to contacts via defence and foreign ministries, according to RIA.

ASIA-PAC

NOTABLE HEADLINES

• Shenzhen Stock Exchange said it will strengthen monitoring and analysis of quantitative trading, especially high-frequency trading.
• India Monthly Economic Report said it is expected that food inflation will moderate further and that downside risks to trade include a spike in commodity prices such as from continued attacks in the Red Sea.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said the BoE is looking beyond the temporary period when it expects CPI to return to the target this year and thinks the economy is already showing distinct signs of an upturn. Bailey added they do not need inflation back at the target before cutting rates and that the market expects rate cuts this year, while the BoE does not endorse the market curve, but it is not unreasonable for the market to do this. Furthermore, Bailey said he is comfortable with a market interest rate profile that has rate cuts in it and cannot say when or how much rates will be cut.
• BoE Deputy Governor Broadbent said the question has moved on from one about the degree of policy restrictiveness to one about its duration and said it remains highly uncertain. Broadbent said more persistent components of inflation may have peaked and doesn’t rule out a policy easing at some point this year, while the timing of any adjustment can only depend on the actual evolution of the economic data and in particular, three sets of indicators which are tightness of the labour market, wage growth and services inflation.
• BoE's Dhingra said UK consumption is still very weak and different to the bounce back seen in other countries. while she noted downside risks to the economy are substantial and tight policy will add to that.
• BoE's Greene said there is a risk of cutting too quickly and then reversing, while she is reasonably sure wage growth is heading in the right direction but is still well above the level consistent with the CPI target.
• ECB Euro Area Indicator of Negotiated Wage Rates 4.46% (Prev. 4.69%)