From Marc Chandler at Bannockburn Global Forex:
Overview: Russia's decision to return some troops to their bases following the completion of some military exercises has stoked a relief rally in equities, while weighing on the dollar, gold, and oil. The announcement was made too late for most Asia Pacific bourses, but those open late, like India, are benefitting. A boost in China's policy loans help lift the local shares. Europe's Stoxx 600 is recouping around half of yesterday's 1.8% loss, while the US S&P and NASDAQ futures are 1.0%-2.0% higher. The US 10-year yield is probing the highs near 2.03%, while European yields are a little firmer with the peripheral premium narrowing, except for Greece.
The greenback is heavier against most currencies, while the other "safe-havens" (Japanese yen and Swiss franc) are slightly softer. Among emerging market currencies, central European currencies are leading the relief rally. The JP Morgan Emerging Market Currency Index is up about 0.2% for the second day. Gold is reversing lower after reaching an eight-month high near $1880, around $100 higher than late January. Initial support is seen in the $1840-$1850 area. After poking above $95 a barrel briefly yesterday, March WTI is giving back all of yesterday's gains. Nearby support is seen near $92. US natural gas is up almost 4.5% after a 6.5% gain yesterday. It fell nearly 14% last week. Europe's benchmark is unwinding yesterday's 5.5% gain plus more today. China's warning against speculation and hoarding took a toll on iron ore prices. They are off around 7.2%, for the third consecutive decline. Copper prices are edging higher for the second session.
Asia Pacific
Japan's economy returned to growth in Q4 22, but it was not quite as strong as expected, and deflationary forces seemed to strengthen. The world's third-largest economy expanded by 5.4% at an annualized rate in the last three months of 2022, missing forecast for 6% (median in Bloomberg's survey). The contraction in Q3 was revised to 2.7% from 3.6% with the help of an upward revision to consumption, which was also a little stronger than projected in Q4. Business spending slightly softer. Net exports contributed 0.2% (not the 0.3% expected). The new social restrictions introduced last month is expected to be a drag on Q1 22 growth. The GDP deflator, which fell 1.1% in Q2 and 1.2% in Q3, fell 1.3% in Q4, the most in a decade. The January CPI figures are due late this week. Excluding fresh food and energy, prices are expected to have fallen around 1%, the most since 2011.The PBOC injected CNY100 bln ($15.7 bln) into the banking system via policy loans for the second consecutive month. This is understood to signal that Beijing is stepping up its support for the economy. The medium-term lending facility (1-year) rate was kept steady at 2.85%. It had been cut by 10 bp last month. Tomorrow, China is expected to report that both CPI and PPI moderated in January. Less price pressures are thought to underscore the scope for PBOC action, which is expected to spur additional monetary easing.....
....MUCH MORE
