• European bourses are firmer benefitting from after-market US updates amid a number of European earnings; sectors are predominantly in the green with Tech outperforming post-Google
• US futures are bolstered across the board as the NQ outperforms given Google's +10.5% gains in the pre-market and its heavyweight status in the index; note, Meta and Amazon earnings are due Wednesday and Thursday respectively
• Greenback continues to soften on repositioning and hit on EUR upside as headline inflation unexpectedly lifted from the prior
• Gilts and US Treasuries feel the heat emanating from the Eurozone, but hold up better than Bunds ahead of ADP and details of next week's Quarterly Refunding Announcement
• Crude benchmarks are steady near the unchanged mark, but within reach of recent peaks, in a continuation of the contained APAC trade pre-OPEC+
• Looking ahead, US ADP, Australian Composite/Services PMI, OPEC+ Meeting, Speeches from BoC’s Macklem & Gravelle, US Quarterly Refunding, Earnings from Meta, AbbVie, T-Mobile

As of 11:10GMT/06:10EST

LOOKING AHEAD

• US ADP, Australian Composite/Services PMI, OPEC+ Meeting, Speeches from BoC’s Macklem & Gravelle, US Quarterly Refunding, Earnings from Meta, AbbVie, T-Mobile

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EUROPEAN TRADE

EQUITIES

• European bourses are firmer benefitting from after-market US updates amid a number of European earnings releases including Novartis (-2.5%) weighing on the SMI/Healthcare names
• Sectors are predominantly in the green with Tech outperforming post-Google while Energy names pull-back slightly from yesterday's gains.
• US futures are bolstered across the board as the NQ outperforms given Google's +10.5% gains in the pre-market and its heavyweight status in the index; note, Meta and Amazon earnings are due Wednesday and Thursday respectively.
• Alphabet Inc (GOOGL) - Q4 earnings beat, approved 20-for-1 stock split via special dividend. EPS 30.69 (exp. 27.32), revenue 75.33bln (exp. 72.13bln). Google Services revenue USD 69.40bln (exp. 66.64bln), advertising revenue USD 61.24bln (exp. 58.2bln, vs 46.2bln Y/Y), Google Cloud revenue USD 5.54bln (exp. 5.42bln), Google Cloud operating loss USD 890mln (exp. loss 820.9mln) (Newsquawk). CFO said slower YouTube ad sales reflected lapping strong brand sales a year ago, FX expected to be a headwind this year, expects a meaningful increase in capex this year. (Newsquawk)

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FX

• Greenback continues to soften on repositioning and a paring of 50bp Fed liftoff bets.
• Euro pops as Eurozone inflation exceeds expectations by a significant margin in advance of the ECB.
• Kiwi capped by mostly sub-consensus NZ labour and wage metrics, bar a record low jobless rate.
• Sterling underpinned ahead of anticipated BoE rate hike and as UK shop prices rise at the fastest pace in a decade.

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Notable Expiries, NY Cut:

• EUR/USD: 1.1100 (304M), 1.1190-00 (800M), 1.1215-20 (380M), 1.1240-50 (1.4BN), 1.1300 (359M), 1.1350-55 (418M), 1.1500 (403M)
• USD/JPY: 113.60-61 (770M), 114.30-35 (475M), 114.50 (720M), 114.95-00 (1.3BN), 115.50 (761M), 116.00 (1.537BLN)
• Click here for the full list.

FIXED INCOME

• Bunds and peers beat a sharp retreat as EZ HICP tops 5% - BTPs cushioned to an extent as books build for Italy's 10 year inflation-linked syndication.
• Gilts and US Treasuries feel the heat emanating from the Eurozone, but hold up better ahead of ADP and details of next week's Quarterly Refunding Announcement.
• Italy has received demand in excess of EUR 18bln for the new syndicated 10yr BTP I/L, spread +34bps over the outstanding May 2030 bond, via Reuters citing leads.

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COMMODITIES

• Crude benchmarks are steady near the unchanged mark, but within reach of recent peaks, in a continuation of the contained APAC trade pre-OPEC+.
• Newsflow has been minimal but focused on Geopols amid marginally more positive commentary out of the Kremlin.
• Spot gold/silver remain within yesterday's parameters and as such the cluster of DMAs for the yellow metal around USD 1800/oz are still in-play.
• US Private Inventory Data (bbls): Crude -1.6mln (exp. +1.5mln), Cushing -1.0mln, Gasoline +5.8mln (exp. +1.6mln), Distillates -2.5mln (exp. -1.5mln)
• Texas Governor Abbott said that no one can guarantee there won't be power outages amid winter storms, according to Axios.

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NOTABLE EUROPEAN HEADLINES

• OFGEM is to announce the energy price cap level at 11:00GMT on Thursday February 3rd.
• UK PM Johnson is set to unveil billions of GBP in state-backed loans to lower the impact of rising energy prices on households. (Telegraph)
• The Times' Shadow MPC says the BoE should hike rates by at least 25bps on February 3rd; 5/9 voted for a 25bps hike, 2/9 voted for a 50bps hike and 2/9 voted for a 75bps hike. (Times)
• EU will outline a more aggressive approach to setting global standards for cutting-edge and green technologies in an effort to counter China's influence, according to FT.

DATA RECAP

• EU HICP Flash YY (Jan) 5.1% vs. Exp. 4.4% (Prev. 5.0%); X Food & Energy Flash YY (Jan) 2.5% vs. Exp. 2.0% (Prev. 2.7%)
• EU HICP-X Food, Energy, Alcohol & Tobacco Flash YY (Jan) 2.3% vs. Exp. 1.9% (Prev. 2.6%)
• UK BRC Shop Price Index (YY) 1.5% (Prev. 0.8%)

US-SPECIFIC HEADLINES

• US House Majority Leader Hoyer tested positive for COVID-19, according to Fox's Pergram.
• Alphabet Inc (GOOGL) Q4 2021 (USD): EPS 30.69 (exp. 27.32), Revenue 75.33bln (exp. 72.13bln), approved 20-for-1 stock split in the form of a one-time special stock dividend.

Click here for the US Early Morning note.

APAC TRADE

• Asian stocks were positive as the region took impetus from Wall St's best 3-day performance since 2020.
• ASX 200 (+1.2%) was led higher by outperformance in the commodity related sectors and after RBA Governor Lowe stuck to his dovish message that the board is prepared to be patient and the end of QE does not imply an imminent hike.
• Nikkei 225 (+1.7%) climbed above 27,500 amid a predominantly weaker currency and as Japan continues to hold off on considering a state of emergency.

NOTABLE APAC HEADLINES

• US House will hold a procedural vote on the China competition bill today, according to a source cited by Reuters.
• RBA Governor Lowe said they are in sight of achieving inflation and unemployment goals, while he reiterated it is too early to conclude the inflation is sustainably within the target range and the end of bond purchases does not mean a Cash Rate hike is imminent. He also said it remains to be seen if rates will increase this year and there are clearly scenarios where they would be hiking this year, but added it is still plausible that the first rate hike is a year or longer away, according to Reuters.

DATA RECAP

• New Zealand HLFS Job Growth QQ (Q4) 0.1% vs. Exp. 0.3% (Prev. 2.0%)
• New Zealand HLFS Unemployment Rate (Q4) 3.2% vs. Exp. 3.4% (Prev. 3.4%, Rev. 3.3%)
• New Zealand Labour Cost Index - QQ (Q4) 0.7% vs. Exp. 0.9% (Prev. 0.7%)

GEOPOLITICS

• US Defense Secretary Austin will travel to Europe later this month to meet with NATO allies regarding Ukraine, according to Reuters citing a VOA reporter.
• Turkish Defence Ministry announced air strikes against Kurdish militant targets in Iraq and Northern Syria, according to Reuters.
• Russian Kremlin says there are no immediate plans for a further round of security talks between the Russia and US; President Putin cited "very cautious optimism" on security discussions, via Reuters.