• US stocks finished higher on Friday after they shrugged off an initial choppy start; Apple surged 7%
• Asian stocks were mostly positive but with conditions thinned due to closures on Chinese New Year's Eve
• US equities futures were marginally higher overnight but with gains contained heading into month-end
• Fed’s Bostic (2024 voter) suggested that a rate increase of 50bps is possible if inflation remains stubbornly high
• Italian President Mattarella was formally re-elected and had agreed to serve a second term
• US President Biden stated that the US will be moving troops to Eastern Europe and NATO countries in the near-term
• Looking ahead, highlights include German CPI, EZ GDP (Flash, Prelim.), Speeches from Fed’s Daly & George, Earnings from Ryanair and Siemens

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US TRADE

• US stocks finished higher on Friday after they shrugged off an initial choppy start and with upside led by large caps as AAPL surged 7% following a strong quarterly report and encouraging commentary about the outlook for the supply chain.
• Nasdaq (+3.1%) outperformed following Apple's earnings which included an all-time record high revenue.

APAC TRADE

EQUITIES

• Asian stocks were mostly positive but with conditions thinned due to closures on Chinese New Year's Eve.
• ASX 200 (-0.2%) was subdued with mining names pressured by lower metal prices and weaker output updates.
• Nikkei 225 (+1.1%) reclaimed the 27,000 level with the index underpinned by a weaker currency.
• Hang Seng (+1.2%) finished the shortened trading day higher with the index unfazed by mixed Chinese PMI data, while there was also an absence of Stock Connect flows with participants in the mainland away for the Lunar New Year.
• US equities futures were marginally higher overnight but with gains contained heading into month-end; E-mini S&P +0.5%
• European futures are indicative of a positive open with the Eurostoxx 50 future up by 1.2% after the cash market closed lower by 1.0% on Friday.

FX

• DXY was steady above 97.00 ahead of this week’s risk events including central bank meetings and NFP data, while Barclays’ rebalancing model at month-end points to strong USD buying against all majors.
• EUR/USD eked marginal gains with the status quo maintained in Italy where President Mattarella was formally re-elected, while Portugal's ruling Socialists won a surprise majority in snap parliamentary elections.
• GBP/USD reclaimed the 1.3400 handle but with upside limited as Westminster awaits the impending Sue Gray report.
• USD/JPY kept afloat near 115.50 with JPY subdued after disappointing Industrial Production and Retail Sales.
• Antipodeans rebounded ahead of tomorrow's RBA meeting and potential end to QE, while Kiwibank forecasts RBNZ to hike the OCR to 2.5% by November.
• Turkish President Erdogan said they will lower interest rates and that inflation will fall too, while he also commented that problems which stem from a volatile FX rate and inflation are temporary, according to Reuters.

FIXED INCOME

• 10-year USTs traded rangebound at month-end after a mild pull back from resistance at 128.00.
• 10-year JGBs were slightly pressured as the Japanese 10yr yield rose to 0.18% and its highest since early 2016.
• Bunds retreated further below 170.00.

COMMODITIES

• WTI and Brent futures gained, while natgas jumped over 5% amid the ongoing threat of Russia invading Ukraine
• Spot gold remained subdued after last week's retreat beneath USD 1800/oz.
• Copper lacked demand amid the absence of its largest buyer China.
• Baker Hughes US Rig Count (w/e Jan 28th): Oil +4 at 495, Nat Gas +2 at 115, Total +6 at 610.
• German Nord Stream 2 approval is not expected during H1 this year, according to FAZ.
• IEA said Chinese gas demand growth forecast is to slow to 8% this year from 12% growth in 2021, while European gas demand forecast is to fall by 4.5% this year on higher coal consumption in the power sector, according to Reuters.

CRYPTO

• Crypto markets were pressured in which Bitcoin briefly slipped back beneath the 37,000 level.
• BoE's executive director for financial stability said cryptocurrency does not yet pose a risk to UK's financial stability, according to The Times.

NOTABLE APAC HEADLINES

• PBoC injected CNY 100bln via 14-day reverse repos over the weekend with the rate at 2.25%, according to Reuters.
• US House Majority Leader Hoyer said the House will take up the bill on China competition and support for the semiconductor industry in the week ahead, according to Reuters.

Data Recap

• Chinese Manufacturing PMI (Jan) 50.1 vs Exp. 50.0 (Prev. 50.3)
• Chinese Non-Manufacturing PMI (Jan) 50.1 vs Exp. 50.5 (Prev. 52.7)
• Chinese Composite PMI (Jan) 51.0 (52.2)
• Chinese Caixin Manufacturing PMI (Jan) 49.1 vs Exp. 50.0 (Prev. 50.9), 23-month low.
• Japanese Industrial Production YY (Dec) 2.7% vs Exp. 2.9% (Prev. 5.1%)
• Japanese Retail Sales YY (Dec) 1.4% vs. Exp. 2.7% (Prev. 1.9%)

EUROPE-SPECIFIC HEADLINES

• UK PM Johnson and Chancellor Sunak aim to finalise a package of measures to support millions of low income UK households amid an upcoming increase in energy bills, according to FT.
• UK devolved governments in Scotland and Wales slammed PM Johnson's post-Brexit plan and accused the PM of a power grab with legislation to remove legacy EU laws, according to FT.
• UK Foreign Secretary Truss said PM Johnson is the best person to lead the Tories into the next election and insisted there is no discussion about her running to replace PM Johnson, according to The Telegraph.
• Italian President Mattarella was formally re-elected and has agreed to serve a second term after PM Draghi persuaded him to stay on for the nation’s stability, according to BBC.
• Portugal’s ruling Socialists unexpectedly won an outright majority with 117 seats out of the 230-seat parliament after snap elections on Sunday, while the opposition PSD won 71 seats and the far-right party increased their seats to 12, according to France24.
• SGH Macro sources, in a note dated 28th January, suggest that the ECB is continuing with bond purchases to offset a decline in Eurozone fiscal stimulus.

Data Recap

• UK Lloyds Business Barometer (Jan) 39 (Prev. 40)

GEOPOLITICS

• North Korea fired what appeared to be its longest-range missile since 2017 which flew 800km to an altitude of 2,000km and was its seventh launch this month, according to Reuters.
• US President Biden stated that the US will be moving troops to Eastern Europe and NATO countries in the near-term, according to Reuters.
• US Senator Mendez said the Senate is nearing an agreement on legislation to sanction Russia and there is strong bipartisan resolve for severe consequences if Russia invades Ukraine, according to Reuters.
• A US official said on Friday that Russia's military build-up near Ukraine has expanded to include supplies of blood, which is a key indicator of military readiness, according to Reuters.
• UK PM Johnson said the picture on Ukraine’s border is increasingly concerning, while UK Foreign Secretary Truss said they think it is highly likely Russian President Putin is seeking to invade Ukraine and it is very unlikely that British soldiers will be deployed to Ukraine to fight alongside Ukrainian troops, according to Reuters. Furthermore, Truss is to tell parliament that Russian oligarchs with links to President Putin who have investments in the UK will be hit by tough sanctions if Russia invades Ukraine, according to FT.
• Yemeni Houthis' military spokesman said via Twitter that they are to disclose a new military operation against UAE, while it was also reported that UAE air defences engaged targets above Abu Dhabi in which they intercepted a ballistic missile launched towards the UAE.
• Syrian air defences intercepted an Israeli barrage targeting the vicinity of Damascus, according to Syrian state media citing a military source.

NOTABLE US HEADLINES

• Fed’s Bostic (2024 voter) maintained his call for three 25bps hikes this year beginning in March but noted that a more aggressive approach is possible if warranted by the data which would mean rate increases at every remaining policy meeting this year, while he also suggested that a rate increase of 50bps is possible if inflation remains stubbornly high, according to FT.