• European bourses are generally weaker, with the exception of the AEX which benefits from ASML; US equity futures are mixed, with the RTY outperforming
• Tesla (-7.9%) is significantly lower in the pre-market after its results missed, noting that 2024 vehicle growth will be lower than the prior year.
• Dollar is marginally weaker, EUR flat and JPY marginally weaker
• Bonds hold a bearish tone following yesterday's hot data and disappointing US 5yr outing
• Crude is bid without a pertinent catalyst and base metals are incrementally firmer albeit within ranges
• Looking ahead, US Building Permits, Durable Goods, GDP Advance, PCE Prices Advance, KC Fed Manufacturing, Tokyo CPI, ECB, & SARB Policy Announcements, Comments from ECB President Lagarde's Press Conference. Supply from the US, Earnings from LVMH, Intel, Visa & Blackstone.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (-0.2%) are taking a breather from yesterday’s gains induced by the PBoC RRR cut & the Tech sector. Indices are marginally weaker, with the exception of the AEX (+0.4%), which continues to benefit from gains in ASML after earnings earlier in the week.
• European sectors hold a negative tilt; though, Energy is at the top of the pile amid higher crude prices. Chemicals and Media are both propped up by strong earnings results within the sector; Givaudan (+4.4%) and Publicis (+1.9%) assisting respectively.
• US equity futures are mixed; ES and NQ are trading on either side of the unchanged mark, whilst the RTY outperforms as it attempts to pare back the underperformance seen in the prior session. Tesla (-7.9%) is significantly lower in the pre-market after its results missed noting that 2024 vehicle growth will be lower than the prior year.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from STMicroelectronics, Nokia, IG Group, Sandvik & more.
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FX

• Uneventful trade for the USD with the DXY back on a 103 handle awaiting key US data releases; peak for today is at 103.40, just shy of its 200DMA at 103.47.
• EUR is steady vs. the USD with the pair unable to reclaim 1.09 status ahead of the ECB. Well contained within yesterday's 1.0848-1.0932 parameters, with a raft of EUR/USD Opex also in focus.
• JPY is the marginal laggard across the majors vs. the USD but sticking to a 147 handle for now. Yesterday's 146.65-148.39 range very much in place, and awaiting impetus from Tokyo CPI.
• NOK inching slight gains vs. the EUR after the Norges Bank stood pat on rates whilst offering some hawkish guidance; next downside target comes via the 16th Jan low at 11.3230.
• PBoC sets USD/CNY mid-point at 7.1044 vs exp. 7.1620 (prev. 7.1053).
• Click here for more details.
• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• USTs contained with specifics limited thus far and perhaps given the marked hawkish cross-asset reaction seen after the disappointing 5yr outing on Wednesday.
• Bunds hold a bearish tone; softer German Ifo provided fleeting respite, but Bunds have since reverted back towards their 133.58 trough.
• Gilts continue to exude hawkish action with a fresh 97.57 WTD trough bringing into play 97.43 (8th Dec) & 97.39 (11th Dec) lows.
• Click here for more details.

COMMODITIES

• A firmer session for the crude complex in a continuation of the upside seen yesterday whereby futures settled with gains of USD 0.72/bbl for WTI and USD 0.49/bbl for Brent; currently, Brent (+1.4%) and back above USD 81.00/bbl.
• Precious metals are firmer to varying degrees with horizontal price action for spot gold while spot silver continues grinding higher despite a lack of obvious catalysts; XAU in a narrow USD 2,012.20-2,018.19/oz range. Base metals are also mostly firmer though with the breadth of the market fairly narrow.
• Ukraine hits a Russian oil refinery in Tuapse with drones in operation by SBU agency, via Reuters citing Ukrainian sources; to continue attacking facilities providing fuel for the Russian military.
• China's 2023 gold consumption rose 8.78% Y/Y to 1089.7 tonnes and China's gold output rose 0.84% Y/Y to 375.2 tonnes, according to the Gold Association.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• Red Sea attacks reportedly push BHP (BHP AT) to divert shipping from Asia to Europe, via WSJ citing sources; adding around nine days to transit time, according to experts cited.
• Norges Bank maintains its Key Policy Rate at 4.50% as expected; "the policy rate will likely be kept at that level for some time ahead". Click here for full analysis on the announcement.

DATA RECAP

• German Ifo Expectations New (Jan) 83.5 vs. Exp. 84.8 (Prev. 84.3); Curr Conditions New (Jan) 87.0 vs. Exp. 88.6 (Prev. 88.5); Business Climate New (Jan) 85.2 vs. Exp. 86.7 (Prev. 86.4); IFO says German business morale falls in January. Q1 GDP could shrink by 0.1% or 0.2%. Red Sea attacks have not yet impacted deliveries of raw materials and intermediate products. Lack of new orders, can also now be seen in service providers.
• French Business Climate Mfg (Jan) 99.0 vs. Exp. 100.0 (Prev. 100.0, Rev. 99)
• South African PPI MM (Dec) -0.6% vs. Exp. -0.3% (Prev. -0.6%); PPI YY (Dec) 4.0% vs. Exp. 4.3% (Prev. 4.6%)

NOTABLE US HEADLINES

• Fed announced the Bank Term Funding Program will cease making new loans as scheduled on March 11th and it adjusted the interest rate on the emergency loan program to prevent arbitrage. Fed said it adjusted the interest on new BTFP loans to be no lower than the interest rate on reserve balances on the day the loan was made and that the new rate on BTFP loans effectively increases the rate by nearly 50bps with the change effective immediately.
• On the US Smith-Wyden tax deal, Senate Republicans and one key Democrat told Punchbowl they want to hold a committee markup on the bill. That would slow down the nearly USD 80bln package.
• BofA Total Card Spending (week to Jan 20th) -3.0% Y/Y vs +0.2% average in Dec.
• Disney's (DIS) India unit valuation falls to USD 4.5bln (vs prev. USD 10bln) in merger talks, according to Bloomberg.

EARNINGS

• Tesla Inc (TSLA) - Q4 2023 (USD): Adj. EPS 0.71 (exp. 0.74), Revenue 25.17bln (exp. 25.59bln); 2024 vehicle volume growth may be notably lower than 2023. KEY METRICS: Free cash flow 2.06bln (exp. .1.45bln). Gross margin 17.6% (exp. 18.1%). CapEx 2.31bln (exp. 2.32bln). COMMENTARY: Cybertruck production and deliveries ramp throughout the year. One-time non-cash tax benefit of USD 5.9bln recorded. CEO Musk says very far along with next-generation product development Co. is to first produce next-generation vehicles in Texas followed by Mexico, while Co. expects capital spending to exceed USD 10bln in 2024. Says: Will start production of next-generation vehicle towards end-2025. Will ramp up battery cell orders from suppliers. The production ramp-up of next-generation vehicles will be challenging. Wants 25% control of the company to be an effective steward of very powerful technology. A dual class of stock would be ideal. Co. has a chance of shipping some Optimus units next year. Chinese car companies will demolish rivals without trade barriers. (Tesla) Shares -7.8% premarket.
• International Business Machines Corp (IBM) - Q4 2023 (USD): oper. EPS 3.87 (exp. 3.78), Revenue 17.4bln (exp. 17.3bln). Sees FY free cash flow of about USD 12bln (exp. 10.9bln). Sees FY constant currency revenue growth consistent with the company’s mid-single digit model. (Newswires). Shares +7.4% premarket.
• Nokia (NOKIA FH) - Q4 (EUR): Revenue 5.71bln (exp. 6.10bln), EPS 0.10 (exp. 0.13), Adj. EBIT 846mln (exp. 767.5mln), initiates a 2-year EUR 600mln share repurchase program; raises dividend to EUR 0.13/shr (prev. 0.12/shr). COMMENTARY: "In Q4 the environment remained challenging however there are now signs of stabilization with improving order trends.". "Nokia expects Q1 net sales in its networks businesses (consisting of Network Infrastructure, Mobile Networks and Cloud and Network Services) to show an approximately normal seasonal decline sequentially." GUIDANCE: Sees FY comparable operating profit between EUR 2.3-2.9bln (exp. 2.449bln). "Company decided to lower its comparable operating margin target to be achieved by 2026 from the prior at least 14% to at least 13%." "Nokia still sees a path to achieving the at least 14% comparable operating margin target but considering the current market conditions in Mobile Networks, this was deemed a prudent change". (Nokia/Newswires) +7.2% in European trade
• STMicroelectronics (STM FP) - Q4 (USD): Revenue 4.28bln (exp. 4.31bln), Net 1.08bln (exp. 0.9bln), EPS 1.14 (exp. 0.95), Operating Income 1.02bln (exp. 1.04bln). OTHER METRICS: Intend to invest circa. 2.5bln in net CapEx during 2024. Q1 GUIDANCE: Revenue 3.6bln (exp. 4.06bln). Gross Margin 42.3%. COMMENTARY: “In Q4, our customer order bookings decreased compared to Q3. We continued to see stable end-demand in Automotive, no significant increase in Personal Electronics, and further deterioration in Industrial.” "In Q4, ST delivered revenues and gross margin slightly below the mid-point of the guidance, with higher revenues in Personal Electronics offset by a softer growth rate in Automotive.” (STMicroelectronics/Newswires) -3.0% in European trade

GEOPOLITICS

• US President Biden sent a letter to congressional leaders informing them of his intention to formally notify Congress of the sale of F-16s to Turkey as soon as Ankara completes Sweden's NATO ratification process, while he urged Congress to proceed with the F-16 sale without delay, according to Reuters.
• China's military said it organised troops to follow and monitor a US destroyer that transited through the Taiwan Strait, while it added that the US openly "hyped" up the passage, according to Reuters.
• Taiwan's President-elect Lai said he will continue to defend the cross-strait status quo of peace and stability, while he hopes the US can continue to firmly support Taiwan and hopes US Congress can continue to support Taiwan in bolstering self-defence capabilities.
• Chinese Defence Ministry says US warships and planes have "caused trouble and provocations at China's doorstep" and carried out large-scale high-frequency activities in waters and airspace around China. Says on patrols in the Taiwan Strait, says the PLA continues to train/prepare for war and will continue organising relevant military operations regularly.

CRYPTO

• Bitcoin (+0.5%) holds around the USD 40k level, with Ethereum (+0.4%) also gaining to a similar magnitude.

APAC TRADE

• APAC stocks were mostly positive but with gains capped as markets digested a slew of earnings releases and with the recent upside in global yields partially offsetting the Chinese stimulus euphoria.
• ASX 200 notched mild gains as strength in the commodity-related sectors picked up the slack in the rate-sensitive industries.
• Nikkei 225 eventually turned positive but lagged behind regional peers and briefly dipped below the 36,000 level.
• Hang Seng and Shanghai Comp were boosted with outperformance in the latter as mainland participants took their first opportunity to react to the latest support measures by China including the 50bps RRR cut which will release CNY 1tln of funds.

NOTABLE HEADLINES

• Australian PM Albanese said every taxpayer will get a tax cut from July 1st as his government made changes to planned tax cuts including reducing benefits for the wealthy and providing low-income earners with more breaks, while Albanese commented that tax cuts have no implication on RBA's inflation forecast.
• Moody's downgrades the rating of 17 Chinese local government financing vehicles by one notch; revises outlooks to negative

DATA RECAP

• South Korean GDP QQ (Q4 A) 0.6% vs. Exp. 0.5% (Prev. 0.6%); GDP YY (Q4 A) 2.2% vs. Exp. 2.1% (Prev. 1.4%)