• European indices remain subdued (Euro Stoxx 50 -0.3%) differing somewhat from the APAC handover; energy was the initial outperformer given updates from Total and the broader crude complex, albeit this has experienced a recent pull-back
• Details of the US COVID stimulus plan revealed an extension of unemployment insurance to August 29th, as well as provide USD 1,400 checks at the same income level as prior rounds
• However, payments will start shrinking when income reaches USD 75k for individuals and USD 150k for married couples
• DXY remains under pressure and has matched last-week's low to the benefit of peers particularly the JPY & CHF given yesterday's underperformance with yield dynamics factoring again
• WHO is expected to support the use of the AstraZeneca (AZN LN)/Oxford University vaccine in all adults soon and endorse a delay to the 2nd dose for as long as 12 weeks
• Looking ahead, highlights include US NFIB Business Optimism, EIA STEO, ECB's Lane, Fed's Bullard, supply from the US, earnings from Cisco & Twitter

CORONAVIRUS UPDATE

US COVID-19 cases +91,762 (prev. +107,489), deaths +1,455 (prev. +2,820) and vaccines administered 42.4mln (prev. 41.2mln), while there were comments from US President Biden who said we are topping the goal of 100mln vaccines in the first 100 days. (Newswires)

WHO is expected to support the use of the AstraZeneca (AZN LN)/Oxford University vaccine in all adults soon and endorse a delay to the 2nd dose for as long as 12 weeks. (Telegraph/Newswires)

WHO says that SARS-COV-2 came from animal transmission, the animal reservoir from which the disease came is unknown. (Newswires)

German Health Ministry will spend an additional EUR 6.22bln in 2021 to buy more COVID vaccines; that comes in addition to the EUR 2.66bln already earmarked in 2021 budget. (Newswires)

ASIA

Asian equity markets were mostly positive after the stimulus-driven momentum on Wall St. which lifted all major US indices to fresh unprecedented levels and the S&P 500 to above 3900 for the first time ever, but with gains capped as focus in the region shifted to the deluge of earnings releases. ASX 200 (-0.9%) underperformed with the index dragged by defensives and cautiousness in the largest-weighted financials sector after the RBNZ announced to reinstate LVR restrictions from March 1st to curb risks to financial stability from high-risk mortgage lending. There were also varied corporate updates including Macquarie Group which was boosted despite forecasting its FY21 results to be slightly lower Y/Y as it also noted its market-facing businesses’ combined Q3 net profit contribution was significantly higher Y/Y and with Suncorp lifted by an increase in H1 cash earnings, although Challenger slumped after it reported weaker H1 net. Nikkei 225 (+0.4%) was kept afloat amid supportive measures whereby the government announced to spend JPY 1.4tln in emergency reserves for pandemic-related measures and as earnings also provided a tailwind including SoftBank which posted blockbuster results and was helped by record profit in its Vision Fund. However, most of the advances in Tokyo were eventually faded on currency flows and with wage growth at its largest contraction since December 2009. Hang Seng (+0.5%) and Shanghai Comp. (+2.0%) were initially tentative heading closer to the Lunar New Year holiday closures and after the PBoC reiterated its prudent approach, although support was seen in the blue-chip oil names after further gains in the underlying commodity, while Geely Auto outperformed after its sales rose 40% Y/Y to 156.3k units in January. Finally, 10yr JGBs were steady as prices found a platform around the 151.50 level and with the BoJ also present in the market today for more than JPY 1.2tln of JGBs heavily concentrated in 1yr-10yr maturities.

PBoC injected CNY 50bln via 7-day reverse repos at rate of 2.20% for a net daily drain of CNY 30bln. (Newswires) PBoC set USD/CNY mid-point at 6.4533 vs exp. 6.4501 (prev. 6.4678)

Chinese Foreign Ministry, on US operations in the South China Sea, said China will continue to take necessary measures to ensure security, sovereignty and the development of interests. (Newswires)

Chinese M2 Money Supply YY (Jan) 9.4% vs. Exp. 10.0% (Prev. 10.1%)

• Outstanding Loan Growth (Jan) 12.7% vs. Exp. 12.7% (Prev. 12.8%)
• New Yuan Loans (Jan) 3580B vs. Exp. 3500.0B (Prev. 1260.0B)

US

President Biden will meet with business leaders today regarding aid proposals. (Newswires)

US House Ways and Means Committee released initial text of the COVID-19 relief plan which comprises half of the USD 1.9tln COVID-19 relief package and would extend unemployment insurance to August 29th, while the plan offers USD 1,400 checks at the same income level as prior rounds although payments are to start shrinking when income reaches USD 75k for individuals and USD 150k for married couples. (Newswires)

UK/EU

UK BRC Retail Sales Like-For-Like YY (Jan) 7.1% (Prev. 4.8%). However, BRC said total retail sales were down 1.3% Y/Y in January vs. 1.8% increase in December. (Newswires)

Barclaycard said UK consumer spending fell 16.3% Y/Y in January which is the largest drop since May, while it added that only 40% of people in UK feel secure in their jobs which is down 10ppts from January 2020. (Newswires)

UK Ambassador to the US Pierce said the UK wants a comprehensive trade agreement instead of a quick trade deal with US and Britain is very willing to resolve digital services tax concerns in the OECD, while she stated Britain is encouraging the Biden administration to negotiate on tax issues and that the prior administration was less willing. (Newswires)

EU Ambassador to the US Lambrinidis said the dispute regarding aircraft subsidies has been going on for far too long and that an agreement on aircraft subsidies would bolster markets, as well as send a strong message to workers. The Ambassador also stated that climate challenges will require a large amount of investment and support, while he added that Brussels is heartened by Treasury Secretary Yellen's comments on willingness to return to OECD discussions and that it is obvious digital companies have to pay larger taxes. (Newswires)

EU lawmakers reportedly want to follow suit to Australia in seeking to force the big tech companies to pay for news. (FT)

Spain's government is to outline new support measures to bolster business solvency by the end of February, according to sources, while the government is in talks with banks on implementing haircuts on state-guaranteed loans to firms and banks would potentially share part of the cost with the government. (Newswires)

German Trade Balance, EUR, SA* (Dec) 16.1B vs. Exp. 15.9B (Prev. 16.4B, Rev. 16.0B). (Newswires)

EQUITIES

European stocks take a breather from the recent rally and see a mild downside bias in early trade (Euro Stoxx 50 -0.3%) following a relatively mixed APAC session, as the stimulus-driven momentum seen on Wall Street gradually fizzled out. US equity futures also see shallow losses with the ES, NQ, YM and RTY lower by some 0.1-0.2% as participants await the next catalyst for further conviction. Sectors in Europe are mostly lower with no clear risk bias but with some defensives seeing less pronounced losses, although Energy outpaces as crude prices remain near pre-COVID levels. Delving deeper into the sectors Food & Beverage and Healthcare reside near the top of the table, just below Oil & Gas, whilst the other side of the spectrum sees Construction, Tech and Banks – with the latter potentially a function of yields pulling back. Spain’s IBEX (-0.9%) resides as the underperformer amid losses in its heavyweight banking sector coupled with some earnings-hit stock – with Solaris (-9%) the laggard in the Spanish benchmark. Elsewhere, France’s CAC (+0.1%) is cushioned by gains in Total (+1.6%) post-earnings, whereby the Co. beat on adj. net expectations and noted that the group maintains its priorities for cash flow allocations and the implementation of the Co's transformation strategy, support dividends and maintain a strong balance sheet. Other earnings-related movers include Micro Focus (+3.19%), TUI (-0.5%), ASM (+0.9%) and Randstad (+2.5%).

Total (FP FP) - Q4 adj. net USD 1.3bln vs exp. USD 1.14bln. EPS USD 0.31 vs prev. USD 0.97 Y/Y. ROE 3.7% vs prev. 10.4%. The group maintains its priorities for cash flow allocations and the implementation of the Co's transformation strategy, support dividends and maintain a strong balance sheet. Co. notes the oil environment remains uncertain and dependant on the recovery of demand which is still impacted by the pandemic. 2021 net investment at USD 12bln vs USD 13bln In 2020. Co. expects 2021 oil and gas production to be stable. Total will propose to shareholders changing its name to "TotalEnergies". (Total)

EU MEP’s working on the Digital Services Act and Digital Market Act have stated that they associated laws could potentially see amendments during their process through Parliament to incorporate components of the Australian-style digital regulation reforms; regarding regulation compelling tech Co’s to pay for news which has drawn backlash from Google (GOOG) and Facebook (FB) thus far. (FT)

FX

USD - The Dollar has fallen further from best levels, and almost across the board on a mixture of fundamental and technical factors, including more retracement and reconvergence in yield spreads that had been favouring US Treasuries, even loftier record peaks on Wall Street and further progress towards fiscal relief. Meanwhile, crude and fellow commodities are also applying greater downside pressure on the Greenback and G10 counterparts have either scaled or are testing key chart and sentimental levels. Hence, the DXY is now struggling to stay above 90.500 between 90.963-502 parameters compared to Monday’s 91.288 high.

JPY/EUR/CHF - It’s a close call, but in terms of magnitude and sheer speed of movement, the Yen’s resurgence from 105.77 at one stage last Friday to circa 104.54 (and counting) so far today is perhaps most eye-catching, especially when set against the Nikkei’s ongoing rally and close just above 29.5k. However, from a chart perspective alone, the 2nd successive close below the 200 DMA (now 105.54) was bearish for Usd/Jpy and the loss of 105.00+ status would have tripped stops set by short term longs and intraday jobbers looking for a rebound. Similarly, the Euro has managed to sustain momentum through 1.2050 and 1.2100 to surpass the 21 DMA just beyond the round number to expose 1.2150 and the 50 DMA around 1.2156, while the Franc has rebounded from sub-0.9000 to 0.8950+.

AUD/NZD/GBP - The next best majors, as the Aussie takes a firmer grip of the 0.7700 handle in wake of a rather mixed NAB business survey showing an improvement in sentiment, but deterioration in conditions, while the Kiwi is hovering just under 0.7250 following a rise in NZ inflation expectations and the RBNZ preannouncing that LVR restrictions will be reimposed with effect from March 1. Elsewhere, the Pound has finally pierced 1.3750 and a near double top formed either side of month end to post a fresh y-t-d pinnacle a fraction shy of 1.3790 and a technical hurdle protecting 1.3800.

CAD/NOK/SEK - Oil’s extended rally to top Usd 58.50/brl and Usd 61/brl in WTI and Brent respectively continues to underpin the Loonie and Norwegian Krona, but a downturn in broad risk sentiment has prevented the former from scaling 1.2700 vs the Buck and latter from holding above 10.2500 vs the Euro. Nevertheless, the Nok is doing better than the Swedish Crown that remains capped beneath 10.1000 against the single currency on the eve of the Riksbank.

EM/PM/CRYPTO - Broad gains vs the Usd, bar the Try that is still facing heavy offers into 7.0000, with Gold inching closer to Usd 1850/oz and the 200 DMA, Bitcoin tops Usd 48.2k for another new ATH.

RBNZ announced to reinstate LVR restrictions from March 1st at pre-pandemic levels to curb risks to financial stability from high-risk mortgage lending but added that LVR restrictions do not apply to new residential construction. RBNZ also stated it is concerned about the risk of a sharp correction in the housing market on financial stability and it will further tighten investors' restrictions effective on May 1st. (Newswires)

• New Zealand 2-year Inflation Expectations (Q1) 1.9% (Prev. 1.6%)
• Australian NAB Business Confidence (Jan) 10 (Prev. 4)
• Australian NAB Business Conditions (Jan) 7 (Prev. 14)

FIXED

Although inverse asset correlations remain loose and sporadic, Bunds have at least acknowledged the fact that the Dax has backtracked further from its record peak just below 14.2k to sub-14k. In fact, core debt has clawed back more losses in general with little or no sign of supply issues emanating from Germany’s linker and syndicated offerings from the UK and Spain. However, the 10 year benchmarks have drifted back down from recovery highs of 176.36 on Eurex (+24 ticks vs -16 ticks), 132.51 on Liffe (+20 ticks vs -9 ticks) and 136-25 for the T-note (+3/32 vs 2+/32 below par) awaiting the return of US participants, Redbook, JOLTS, the start of this week’s Quarterly Refunding (Usd 58 bn 3 year auction) plus ECB and Fed commentary via Lane and Bullard.

COMMODITIES

WTI and Brent futures trade off best levels but remain elevated on the reflationary prospect emanating from the US stimulus bill, which comes against a supportive backdrop of vaccine hopes and OPEC+ supply tweaks – with Saudi’s extra output cuts exacerbating the tightening in the oil market. The oil complex has also been tracking the broader market sentiment amid the slowing in pace of COVID infections alongside calls from monetary and fiscal figures not to taper stimulus too soon. Desks also note that refinery margins are pointing towards a recovery in fuel demand – with jet fuel demand also supported by measures mulled by officials to ensure cross-country travel can occur safely. That being said, downside risks include the prolongation of lockdown measures due to staggered vaccine rollouts or the emergence of a more potent variant – this sentiment was also reflected in the outlook by oil giant Total. Furthermore from a supply standpoints, the high oil prices could prove tempting for producers to unwind or at least call for the tapering of COVID-related output cuts. Meanwhile, US active oil rigs have seen a consistent rise since the latter part of November – with the number seen rising on the back of attractive prices. WTI resides just north of USD 58/bbl (vs. high 58.59/bbl) whilst Brent itself back on a USD 60-handle after briefly topping USD 61/bbl to a high of around USD 61.23/bbl. Elsewhere, precious metals benefit from the softer Dollar with spot gold inching closer back towards 1850/oz with its 200DMA seen around USD 1855/oz followed by its 50DMA at USD 1859/oz. Spot silver meanwhile extends its gains above USD 27.50 (vs. low 27.23/oz). Finally, base metals are firmer amid the softer Buck and reflationary backdrop, with LME copper meandering around the USD 8,100/t mark.

Qatar Energy Minister warned importers could face a spike in gas prices if they do not sign long-term contracts citing a slowdown in US shale industry and with financial challenges forcing some oil companies to put global projects on hold. (FT)

Exxon (XOM) is reportedly to announce the closure of their Altona (90k BPD) refinery on Wednesday. (AFR)

Chevron (CVX) Richmond California refinery (240k BPD) has reported a plant upset. (Newswires)