• European bourses are firmer across the board, Euro Stoxx 50 +0.6%, with a busy morning for earnings dictating the state of play ahead of European heavyweight LVMH.
• Stateside, futures are firmer across the board, ES Mar'23 +0.2% and comfortably above the 4k mark while the NQ outperforms post-TSLA
• DXY has bounced from a minor new YTD low, with peers mixed and relatively rangebound.
• Core fixed benchmarks have continued to ease from best levels, with the IMF's Japan policy proposal adding to the pressure.
• WTI and Brent March futures remain underpinned by the China-demand narrative, with focus on geopols and French strike action
• Looking ahead, highlights include US Durable Goods, GDP Advance/PCE Prices Advance (Q4), IJC, New Home Sales, Japanese CPI, SARB Policy Announcement, Earnings from LVMH, Comcast, Intel, Visa & Southwest, Supply from the US, Holiday in China (Lunar New Year)

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.6%, with a busy morning for earnings dictating the state of play before Stoxx 600 heavyweight LVMH's (MC FP) earnings, due after-market on Thursday.
• Stateside, futures are firmer across the board, ES Mar'23 +0.2% and comfortably above the 4k mark and as such the 10- and 200-DMAs which reside on either side of the figure.
• NDX +0.6% is the incremental outperformer after a well received update from Tesla (TSLA) +7% pre-market while IBM (IBM) slips -1.6% after its Q4 report.
• Click here and here for the European Equity notes including updates from Nokia, SAP, STMicroelectronics, Diageo and more.
• Click here for more detail.

FX

• DXY slips to a minor new 101.500 y-t-d low, but holds in and pares some losses pre-US data raft.
• Aussie and Kiwi remain underpinned on inflation grounds, but AUD/USD heavy on 0.7100 handle and NZD/USD clipped around 0.6500.
• Yen recoils between 129.00-130.00 range vs Buck as Japan's top currency diplomat warns that sharp moves will not be tolerated, CNH bid as HK markets return from holiday with COVID reopening optimism.
• Euro and Pound wobble above 1.0900 and 1.2400 vs Dollar and ahead of technical resistance.
• Morgan Stanley's month-end USD rebalancing model: expects the USD to underperform in January, with weakness expected vs all G10 currencies ex-NOK.
• CBRT announced support for the conversion of firms' foreign exchange obtained from abroad into Turkish liras to support 'liraization' in commercial activities, with firms to be provided with FX conversion support corresponding to 2% of the amount converted.
• Click here for more detail.

FIXED INCOME

• Core benchmarks have continued to ease from best levels with the IMF's BoJ/Japan policy proposal adding to the pressure.
• Bunds holding just above 138.00 within 138.62-137.91 parameters while Gilts are just below 105.00 towards the mid-point of a 105.66-104.72 range.
• USTs are similarly contained around the 115.00 handle as participants await US data and a subsequent 7yr auction.
• Click here for more detail.

COMMODITIES

• WTI and Brent March futures remain underpinned by the China-demand narrative, though are relatively rangebound overall and spent much of the morning trading with no firm direction with focus on geopols and French strike action.
• US and European gas futures are experiencing a modest divergence, with ING suggesting the US Nat Gas pressure is due to milder weather.
• TotalEnergies (TTE FP) says pension reforms strike action is interrupting shipments at French production sites, except for the Feyzin refinery (119k BPD). Continue to ensure petrol stations are supplied, no shortage.
• 24-hours strike declared at the 140k BPD Fos-Sur-Mer oil refinery in France, according to BFM TV citing an Esso Union official.
• German energy regulator says there is not enough gas saving in the third calendar week; household, business and industry consumption down 9%in total in that week (vs 20% target).
• Spot gold has been dipping from best levels amid seemingly yield-driven USD upside while LME copper is relatively resilient but has slipped from best levels.
• Click here for more detail.

NOTABLE HEADLINES

• US and EU are reportedly discussing a potential deal regarding critical raw materials and minerals, to enable the EU to benefit from the US' Inflation Reduction Act/green investment plan, via Bloomberg citing sources.
• UK 2022 car production fell 9.8% Y/Y to 775k units, while car and light van production for 2023 is expected to increase 15% Y/Y to 984k units, according to SMMT.
• UK ONS says consumer behaviour indicators were broadly similar to the prior week.
• Irish Finance Minister McGrath says Brexit talks have reached a new level.
• Italian Economy Minister says before April they intend to extend relief measures to assist families and firms with energy costs, could alter regulations on capital gains tax.

NOTABLE US HEADLINES

• US and Dutch officials will meet on Friday to discuss export controls on chip manufacturing tools, according to sources cited by Reuters.
• Tesla Inc (TSLA) - Tesla profits and revenues topped expectations, although auto gross margins fell to a five quarter low. Q4 adj. EPS 1.19 (exp. 1.13), Q4 revenue USD 24.32bln (exp. 24.03bln), Q4 FCF -49% at USD 1.42bln (exp. 3.13bln), Q4 adj. EBITDA USD 5.4bln (exp. 5.39bln), Q4 operating Margin 16%, Q4 automotive gross margin 25.9% (exp. 28.5%). +7% in the pre-market, see the US Early Morning note for full details
• International Business Machines Corp (IBM) - Q4 operating EPS 3.60 (exp. 3.60), Q4 revenue USD 16.7bln (exp. 16.4bln). Q4 software revenue +8% at USD 7.288bln. FY22 cash flow USD 9.3bln (missing USD 10bln target), owing to higher-than-expected working capital needs. Announced workforce reduction of 3.9k jobs. -1.5% in the pre-market, see the US Early Morning Note for full details
• Click here for the US Early Morning note.

GEOPOLITICS

• Russian Kremlin says it sees the sending of Western tanks to Ukraine as direct and growing involvement in the conflict.
• Russian Security Council's Secretary Patrushev says the US and NATO are participating in the Ukrainian conflict and want to prolong it.

CRYPTO

• Bitcoin is under pressure and is incrementally below the USD 23k handle and as such at the lower-end of USD 22.83-23.82k parameters.

APAC TRADE

• APAC stocks traded somewhat mixed amid key holiday closures and after the flat handover from Wall St where the major indices recouped most of their initial losses after the BoC’s dovish hike.
• Nikkei 225 was subdued amid a firmer currency and upside in yields, while the government also lowered its overall economic assessment for the first time in 11 months.
• KOSPI gained despite the weaker-than-expected GDP data although the finance minister flagged the likelihood of a return to growth for the current quarter.
• Hang Seng outperformed as participants in Hong Kong returned from the Lunar New Year holiday and were greeted by strength in tech, property and autos, although trade across the rest of the region remained relatively quiet owing to the closures in Australia, China, Taiwan, India and Vietnam.

NOTABLE ASIA-PAC HEADLINES

• BoJ Summary of Opinions from the January meeting stated it is appropriate to maintain current monetary easing including YCC and that the BoJ must keep yields from rising across the curve while being mindful of the bond market function. Furthermore, they must spend more time to gauge the impact of the December decision and must conduct a review of policy at some point although it is appropriate to maintain easy policy for now, while they still see some distance in achieving the price goal and noted it will take some time to achieve sustained wage growth.
• IMF (policy proposal on Japan) says the BoJ should allow bond yields to move in a more flexible manner; If significant upside inflation risks materialise, BoJ needs to be ready to withdraw stimulus strong, e.g. by increasing interest rates; possible options for the BoJ include widening the yield bank, increasing the yield target, targeting shorter yields and shifting to a quantity target; BoJ policy is appropriate as inflation is likely to ease but risks are becoming more pronounced; FX intervention should be limited to special circumstances such as disorderly market conditions.
• Japan is to downgraded its COVID classification on May 8th, via NHK.
• CATL (300750 CH) Europe president says six battery cell production lines are to be installed by the end of the year.

DATA RECAP

• Japanese PPI Services YY (Dec) 1.5% vs Exp. 1.6% (Prev. 1.7%)
• South Korean GDP Growth QQ Advance (Q4) -0.4% vs. Exp. -0.3% (Prev. 0.3%); YY Advance (Q4) 1.4% vs. Exp. 1.5% (Prev. 3.1%)