BUND TECHS: (Z5) Corrective Cycle

After falling close to a percent on Friday, oil prices have trended lower again during today’s APAC trading as risk appetite softened and expected excess supply going forward weighed. WTI is down 0.4% to $63.73/bbl after a trough of $63.66. Brent is 0.4% lower at $67.18/bbl after falling to $67.12. The USD index is little changed.

• OPEC+ will meet on September 7 to decide its October production target. There are still 1.65mbd of previous voluntary output cuts that could be unwound. The market is already very nervous about the increase in OPEC supply announced to date and will watch the outcome of the meeting closely.
• Progress towards a Ukraine peace deal appears to have stalled and with it any chance of an easing of sanctions on Russia. Last week the US imposed a 25% punitive tariff on India for continuing to buy Russian crude. It is attending the summit in China and PM Modi is scheduled to meet with President Putin on Monday.
• The focus of the week is likely Friday’s US August payrolls release with Bloomberg consensus expecting a 75k rise in jobs but the unemployment rate rising 0.1pp to 4.3%.
• The US is closed for a holiday today. Later ECB President Lagarde speaks and ECB’s Schnabel and Cipollone appear. European August manufacturing PMIs and euro area July unemployment are released.

The political unrest has seen a sell off in Indonesia continue, following Friday's steep declines.  BYD’s Hong Kong-listed shares drop 8% in early trading on Monday after its second-quarter profit missed estimates as Morgan Stanley estimates its per vehicle profit, excluding contributions from BYD Electronic, likely fell to CNY4,800, the lowest quarterly level since 1Q22.  Alibaba shares rise 15% in Hong Kong on Monday, the most in six months, after the Chinese e-commerce giant reported a surge in revenue from China’s AI boom, helping offset a surprise drop in profit.

• The HSI in Hong Kong has started the week off with a strong rally of +1.7% to trend above a major technical level.  The CSI 300 is modestly lower by -0.12%, Shanghai Comp is up +0.12% and Shenzhen up +0.21%.
• The TAIEX in Taiwan kicks of another trading week with a decent fall of -1.2%.
• The KOSPI is down heavily by -1.3% at 3,143 to trade through the 20-day EMA.  Below the 50-day EMA is at 3,113.  
• Indonesia's is weighing heavy on SE Asia stocks with the JCI down -0.95% and the FTSE Malay KLCI down -0.75% .
• The Straits Times in Singapore is flat Monday whilst the PSEi in the Philippines is up +0.22%.
• The NIFTY 50 has started the week off positively with gains of +0.48%

• The Eurozone final PMI surveys for August are due for manufacturing on Monday and services on Wednesday.
• The flash PMIs were surprisingly robust as the composite increased to 51.1 for another 0.2pt improvement, up from the 50.4 averaged in 1H25 and its highest since May 2024.
• Drivers were mixed however, with manufacturing leading the monthly improvement to 50.5 whilst services cooled to 50.7 as the two closed what has been sizeable divergence.
• This week's final readings should confirm that countries other than Germany and France have still been outperforming but by less than previous months.
• Since the flash PMI release, the European Commission's economic confidence index was softer than expected in August as it shifted back close to levels averaged in 1H25 and is comfortably below its long-term average.