MNI US OPEN - Apple Softer Pre-Market, Taking Shine Out of Equities

NEWS

CHINA/US (BBG): China Seeks to Broaden iPhone Ban to State Firms, Agencies
China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple Inc. in its biggest foreign market and global production base. Several agencies have begun instructing staff not to bring their iPhones to work, people familiar with the matter said, affirming a previous report from the Wall Street Journal. In addition, Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organizations, the people said, asking not to be identified discussing a sensitive matter.

UK (MNI): Conservative MP Pincher Resigns, Triggering Another By-Election
Conservative MP for Tamworth Christopher Pincher has resigned this morning following his suspension from the House of Commons over groping allegations. As such, a by-election will be triggered, and there is the prospect that this could take place on the same day as, or soon after, the by-election in the Conservative-held seat of Mid Bedfordshire taking place on 19 Oct following the resignation of Nadine Dorries. For PM Rishi Sunak and his Conservative party the timing by-elections will be unwelcome news. The seats would usually be viewed as relatively safe for the centre-right Conservatives, holding Mid Bedfordshire with a majority of over 24k, and Tamworth with over 19k votes.

CHINA (MNI): Support Needed To Boost Future China GDP-Advisor
The Chinese economy will need further accommodative policy to maintain a potential growth rate between 5.5-6% over the next 10 years, while recent house-buying relaxations will help the country recover, with GDP tipped to reach around 5.3% this year, a policy advisor told MNI in an interview. Zhang Ming, senior fellow and deputy director at the Institute of Finance and Banking at Chinese Academy of Social Science, said Chinese authorities will have to provide further monetary or fiscal support, which will likely target consumption, investment and bail out property developers.

JAPAN (MNI): BOJ Solid Consumption Index Eases Spending Concern
The Bank of Japan's Consumption Activity Index posted the first m/m rise in two months in July, gaining 0.6% m/m, easing concern over private consumption and supporting the BOJ’s view that private consumption will likely continue increasing moderately, data released by the BOJ showed on Thursday. Solid spending on nondurable good drove the increase which followed June's 0.6% fall, although spending on services edged lower.

JAPAN (MNI): Easy Policy Still Needed - BOJ's Nakagawa
Bank of Japan board member Junko Nakagawa said on Thursday the Bank's must continue with easy policy as the Japanese economy has not reached the 2% inflation target, although a shift in wage- and price-setting behavior is observed. ‘’If the synergies between actual price rises and the expected inflation rate rise strengthened, Japan’s inflation rate could rise upwardly,” Nakagawa told business leaders in Kochi City.

JAPAN (MNI): PM Kishida Could Reshuffle Cabinet Next Week, Taso & Motegi To Keep Their Posts
Kyodo News reports that Prime Minister Fumio Kishida is making arrangements to reshuffle his Cabinet and ruling Liberal Democratic Party (LDP) executives next week. * Multiple officials told Kyodo that LDP Vice President Taro Aso and Secretary General Toshimitsu Motegi are expected to keep their current positions. This suggests that Kishida will opt for stability as the LDP is trying to win back public support.

AUSTRALIA (MNI): RBA's Lowe Calls For Monetary And Fiscal Alignment
The outgoing Reserve Bank of Australia Governor Philip Lowe has called for greater coordination between monetary and fiscal policy, noting better outcomes were possible if the two were well-aligned. Speaking at an industry lunch Thursday in Sydney, Lowe noted monetary policy was a powerful, yet limited, instrument. “In principle, fiscal policy could provide a stronger helping hand, although this would require some rethinking of the existing policy architecture,” he noted.

DATA

MNI: EUROZONE Q2 GDP +0.1% Q/Q, +0.5% Y/Y

MNI: GERMANY JUL IND PROD -0.8% M/M

MNI:CHINA YTD TRADE SURPLUS +$553.4 BLN; JAN-JUL +$489.57 BLN
CHINA JAN-AUG EXPORTS -5.6% Y/Y; JAN-JUL -5.0% Y/Y
CHINA JAN-AUG IMPORTS -7.6% Y/Y; JAN-JUL -6.7% Y/Y
CHINA JAN-AUG EXPORTS +0.8% Y/Y IN YUAN TERM: CUSTOMS
CHINA JAN-AUG IMPORTS -1.3% Y/Y IN YUAN TERM: CUSTOMS

EGBs: Off Lows, BTPs Tighten & GGBs Widen

A bounce in the Euro STOXX competes with the average to decent passage of French & Spanish supply in recent EGB trade, but those inputs generally nullify each other, leaving Bund futures around session bests, after recovering from a brief early look through yesterday’s low.

• A bid in Gilts, weaker than expected M/M domestic industrial production and a negative start for equities had provided support for Bunds earlier in the day.
• German cash benchmarks sit 2-3bp firmer with the 5- to 10-Year zone outperforming the wings.
• OAT futures have recovered from hedging/concession around the aforementioned auction process and trade just shy of session bests.
• Greek paper is a little wider in the long end, perhaps on some profit taking in compression trades ahead of tomorrow’s expected ratings update from DBRS Morningstar (although any upgrade to IG status for Greece won’t impact benchmark bond index GGB inclusion).
• Meanwhile, BTPs have unwound yesterday’s widening move, aided by the recovery in equities and some modest tightening in benchmark CDS indices. Also note that the Italian Treasury has announced that it will launch a new 5-Year retail-only BTP Valore with books open between 2-6 October (a reminder that the initial Valore offering saw strong demand).

GILTS: Early Richening Moves Extend On BoE DMP, 2 Further BoE Hikes No Longer Fully Priced

Initial BoE DMP reaction saw gilts extend their early rally and BoE-dated OIS soften further, although the moves have faded from extremes.

• The market reaction is best explained by noting the mixed releases within the DMP survey, as expected wage growth and expected price growth both fall - but realised wage growth picked up a little further. Overall this will probably be an encouraging report for the MPC, but in our view won't be enough to stop a September hike, and definitely keeps a November move on the table, too.
• Gilt futures have regained the 94 handle and operate through yesterday’s high, with initial resistance located at Tuesday’s high (94.55).
• Cash benchmarks sit 6-9bps richer as the curve bull steepens.
• SONIA futures flat to +13 through the blues, with the reds leading the bid.
• BoE-dated OIS prints 1-8bp softer on the session, with ~21bp of tightening showing for this month’s MPC, while terminal policy rate pricing moves below 5.75% i.e. 2x 25bp hikes from current policy rate levels are no longer fully priced.

FOREX: USD Index Remains Within Broad Uptrend

• Antipodean currencies outperform headed into the Thursday crossover, with AUD and NZD higher against most others. Despite the bounce off lows for AUD/USD, however, the bearish trend condition remains intact, with yesterday's 0.6357 low still within range and marking the bear trigger to open levels last seen in November.
• The USD Index remains in the medium-term uptrend drawn off the mid-July lows, with the index holding just below yesterday's multi-month high of 105.024. The JPY outperforms modestly, with markets clearly still heeding the verbal intervention from both Matsuno and Kanda earlier in the week.
• GBP is the poorest performer, resulting in fresh pullback lows for GBP/USD as the pair looks to the 200-dma at 1.2426 for support. BoE's Bailey appearing in front of lawmakers yesterday struck a somewhat dovish tone, stressing that the Bank of England are nearing the peak of their multi-year tightening cycle.
• US and Canadian data take focus going forward, with US weekly jobless claims data as well as Canadian Ivey PMI for August on the docket. The speaker slate is similarly busy, with ECB's Holzmann, Fed's Harker, Goolsbee, Williams, Bostic and Bowman making up the busy slate.

EQUITIES: NASDAQ 100 Mini Struggles, Apple Pressured Pre-Market

S&P 500 & NASDAQ 100 e-minis under some pressure early on with the negative lead out of China weighing.

• In terms of stock specific matters, pre-market headwinds have been noted for Apple (last indicated the best part of 3% weaker) on the back of a BBG source report suggesting that “China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple Inc. in its biggest foreign market and global production base.”
• The major e-mini futures are flat to 0.6% lower, with the DJIA contract outperforming and the NASDAQ 100 leading the losses.
• Technically, the e-mini S&P 500 contract traded lower yesterday. Key resistance has been defined at 4,547.75, Sep 1 high. A break is required to reinstate the recent bullish theme. Note that recent gains in the contract stalled at the area of resistance around the former bull channel base - drawn from the Mar 13 low. The line intersects at 4,542.44. This is a bearish development and a continuation lower would expose key support at 4,350.00, the Aug 18 low.

EQUITIES: EuroStoxx50 Continues to Fade From Recent Highs

The E-mini S&P contract traded lower yesterday. Key resistance has been defined at 4547.75, Sep 1 high. A break is required to reinstate the recent bullish theme. Note that recent gains in the contract stalled at the area of resistance around the former bull channel base. Eurostoxx 50 futures continue to pull back from the recent high. Attention is on support at 4225.00, the Aug 24 low. Clearance of this level would signal scope for a test of the key support at 4187.00.

• Japan's NIKKEI 225 closed lower by 249.94 pts or -0.75% at 32991.08 and the TOPIX ended 9.15 pts lower or -0.38% at 2383.38.
• Elsewhere, in China the SHANGHAI closed lower by 35.725 pts or -1.13% at 3122.352 and the HANG SENG ended 247.91 pts lower or -1.34% at 18202.07.
• Across Europe, Germany's DAX trades higher by 17.28 pts or +0.11% at 15759.78, FTSE 100 higher by 14.22 pts or +0.19% at 7440.84, CAC 40 up 33.32 pts or +0.46% at 7227.21 and Euro Stoxx 50 up 4.81 pts or +0.11% at 4242.83.
• Dow Jones mini up 9 pts or +0.03% at 34488, S&P 500 mini down 8.75 pts or -0.2% at 4462.5, NASDAQ mini down 86.75 pts or -0.56% at 15312.75.

Gold Narrows Gap With Key Support

• WTI Crude down $0.47 or -0.54% at $87.1
• Natural Gas up $0 or +0.16% at $2.515
• Gold spot up $2.93 or +0.15% at $1919.1
• Copper down $2.2 or -0.58% at $376.3
• Silver down $0.04 or -0.18% at $23.1165
• Platinum down $4.46 or -0.49% at $909.58