Weekend News Round Up - Newsquawk Asia-Pac Market Open

• US stocks were mixed and the major indices finished off their worst levels seen early in the session alongside the broad risk-averse conditions although there was notable underperformance in the small-cap Russell 2000 which extended on its sell-off from Thursday, while the majority of sectors were pressured and closed in the red with only Tech and Communications firmer.
• Fed’s Kashkari (non-voter) said they need to see more evidence to convince them inflation is heading to 2% and they are in a good position to take their time and get more data before deciding on rates. Kashkari also stated it is reasonable that a rate cut could occur in December and the median projection is for one cut which is likely to be towards the end of the year, according to CBS’s Face the Nation.
• Looking ahead, highlights include New Zealand Performance of Services Index, Japanese Core Machinery Orders, Chinese House Prices, Industrial Production & Retail Sales, PBoC 1-Year MLF Rate, Holiday Closures in Singapore, India, Indonesia, Philippines, Malaysia & Middle East.

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LOOKING AHEAD

• Highlights include New Zealand Performance of Services Index, Japanese Core Machinery Orders, Chinese House Prices, Industrial Production & Retail Sales, PBoC 1-Year MLF Rate, Holiday Closures in Singapore, India, Indonesia, Philippines, Malaysia & Middle East.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were mixed and the major indices finished off their worst levels seen early in the session alongside the broad risk-averse conditions although there was notable underperformance in the small-cap Russell 2000 which extended on its sell-off from Thursday, while the majority of sectors were pressured and closed in the red with only Tech and Communications firmer.
• SPX -0.04% at 5,432, NDX +0.42% at 19,660, DJIA -0.15% at 38,589, RUT -1.61% at 2,006.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Mester (voter, retiring in June) said on Friday that the median SEP projection is close to hers and there is still work to do to gain confidence in inflation. Mester repeated she still wants to see a few more months of similar inflation data and she does not think they will get back to the inflation target until 2026, while she added that all meetings are always in play, according to a Bloomberg interview.
• Fed's Goolsbee (non-voter) said on Friday that recent CPI data was very good and they would be feeling very good if they got a lot of months like May's CPI data, while he added they have to see more progress and his feeling was relief.
• Fed’s Kashkari (non-voter) said they need to see more evidence to convince them inflation is heading to 2% and they are in a good position to take their time and get more data before deciding on rates. Kashkari also stated it is reasonable that a rate cut could occur in December and the median projection is for one cut which is likely to be towards the end of the year, according to CBS’s Face the Nation.

COMMODITIES

• Ukraine planned record power imports on Saturday after significant energy infrastructure damage. In relevant news, US Vice President Harris announced over USD 1.5bln to bolster Ukraine’s energy sector, according to Reuters.

GEOPOLITICAL

MIDDLE EAST

• Israel's military said it will hold a tactical pause of military activity for humanitarian purposes between 06:00BST-17:00BST daily along the road from the Kerem Shalom Crossing to Salah Al-Din Road and then northwards, according to Reuters. However, it was separately reported that Israeli PM Netanyahu denounced as ‘unacceptable’ the plans by Israel’s military for a limited pause in operation near a crossing into Gaza intended to help aid distribution, according to FT.
• Israel Defence Forces said intensified cross-border fire from Hezbollah on Israel could lead to dangerous escalation and is bringing them to the brink of what could be a wider escalation that could have devastating consequences for Lebanon and the entire region, according to a video statement cited by Reuters.
• Hamas leader Haniyeh said the group’s response to the latest Gaza ceasefire proposal is consistent with the principles of US President Biden’s plan, according to Reuters. It was also reported that the Palestinian Islamic Jihad armed wing said the only way to return Israeli hostages is through withdrawing from Gaza and reaching a hostages-for-prisoners deal.
• White House said Qatar and Egypt plan talks with Hamas on a Gaza ceasefire.
• UK, France, and Germany’s governments condemned Iran’s latest steps as reported by the IAEA to further expand its nuclear program which they said is especially concerning, while they remain committed to a diplomatic solution preventing Iran from developing nuclear weapons, according to Reuters.
• Iranian Foreign Ministry spokesperson Kanaani said the G7 should distance itself from destructive policies in the past. It was also separately reported that Iran’s Foreign Ministry condemned the ‘invalid’ E3 statement on its nuclear program, according to IRNA.
• US naval forces rescued a crew from a Greek-owned ship that was struck by Houthis in the Red Sea, while Yemen’s Houthis said they carried out three military operations against an American destroyer and two ships in the Red and Arabian Seas, according to Reuters.

OTHER

• Russia’s Kremlin said President Putin is not ruling out talks with Ukraine but wants guarantees and a legitimate record of their outcome is needed, according to Russian agencies including TASS. In relevant news, Russian forces took control of the village in Ukraine’s Zaporizhzhia region, according to Ifax citing the Defence Ministry.
• Ukrainian peace summit communiqué stated that Russia’s ongoing war against Ukraine continues to cause large-scale human suffering and destruction, as well as creates risks and crises with global repercussions, while it stated that any threat or use of nuclear weapons in the context of the ongoing war against Ukraine is inadmissible.
• Ukrainian Foreign Minister said the peace summit communiqué text is complete and Kyiv’s positions have been addressed, while there were no alternative peace plans discussed at the summit in Switzerland and Kyiv won’t let Russia speak in the language of ultimatums. Furthermore, the Austrian Chancellor said there is a desire for a follow-up Ukraine conference although it is too early to say what the format will be and have to see whether Russians can be there.
• US National Security Adviser Sullivan said Russia’s latest peace proposal for Ukraine would lead to further domination of Ukraine and is a completely absurd vision.
• Swedish armed forces spokesperson said a Russian airplane violated Swedish airspace on Friday and was met by Swedish fighter jets, according to TT news agency.

ASIA-PAC

NOTABLE HEADLINES

• China Securities Regulatory Commission announced in a statement that it'll further evaluate and refine rules for margin trading and securities lending, while it will increase regulation of "illicit" short-selling as it aims to ensure market stability.
• South Korean presidential official said conditions for a rate cut are emerging in South Korea, according to Reuters.
• New Zealand median house prices fell 3.1% M/M and fell 1.2% Y/Y in May, according to REINZ.

EU/UK

NOTABLE HEADLINES

• UK PM Sunak’s Conservative Party is headed for a historic wipeout in the July 4th general election, according to three new polls by Survation, Opinium and Savanta published in Sunday newspapers cited by Bloomberg.
• ECB President Lagarde released a speech on Friday which stated that policymakers today are grappling with new kinds of risk and although the best-case scenario would be for policymakers to work together to prevent these risks from materialising, we need to be prepared for a “second-best” world marked by higher levels of uncertainty and volatility. Furthermore, she added that it will create tensions for central banks that we will have to resolve.
• ECB is in no rush to discuss a French bond rescue and policymakers have not discussed emergency bond purchases for France, according to sources. Furthermore, sources said ECB policymakers have no immediate plan to debate using the Transmission Protection Instrument for France and some policymakers would wait until a new French government is formed before any discussion about TPI, according to Reuters.
• French President Macron said he is not worried about the impact on markets after the decision to dissolve the government.
• Germany is to reportedly endorse a second term of office for European Commission President von der Leyen at a meeting of EU leaders on Monday, according to Reuters citing government sources.
• Italian PM Meloni said G7 leaders agreed on the need for a fairer international taxation system and global minimum tax.