• APAC stocks were mostly subdued amid a deluge of earnings releases and key data releases at month-end.
• Alphabet (GOOG) slumped 5.8% after advertising revenue missed, while Microsoft (MSFT) fell by 0.3% after Q3 More Personal Computing was guided below forecasts. 
• Hang Seng and Shanghai Comp underperformed following the latest Chinese PMI data in which Manufacturing PMI remained in contraction territory for a 4th consecutive month.
• DXY eked slight gains pre-FOMC, USD/JPY was choppy following some hawkish-leaning remarks from the BoJ's SoO. 
• UK Chancellor Hunt has reportedly warned his cabinet that tax cuts in the Spring budget could be smaller than expected, according to The Times.
• Looking ahead, highlights include, French CPI & German CPI, German Retail Sales &Unemployment, US ADP, Employment Wages, Canadian GDP, Fed & BCB Policy Announcement, Fed Chair Powell's Press Conference, Supply from Germany, US Treasury Refunding Announcement. Earnings from Novo Nordisk, H&M, GSK, Novartis, Santander, Boeing, Boston Scientific, Thermo Fisher Scientific, Mastercard & Phillips 66.

LOOKING AHEAD

• Highlights include French CPI & German CPI, German Retail Sales & Unemployment, US ADP, Employment Wages, Canadian GDP, Fed & BCB Policy Announcement, Fed Chair Powell's Press Conference, Supply from Germany, US Treasury Refunding Announcement
• Earnings from Novo Nordisk, H&M, GSK, Novartis, Santander, Boeing, Boston Scientific, Thermo Fisher Scientific, Mastercard & Phillips 66.
• Click here for the Newsquawk Week Ahead.
• Click here for the Newsquawk FOMC Preview.

US TRADE

EQUITIES

• US stocks were choppy and the SPX finished little changed on the eve of the FOMC although there were losses in the Nasdaq 100 and Russell 2000, while US data was on the firmer side with a surprise rise in JOLTS job openings and an increase in Consumer Confidence albeit not as strong as expected.
• SPX -0.06% at 4,925, NDX -0.68% at 17,477, DJIA +0.35% at 38,467, RUT -0.76% at 1,996.
• Click here for a detailed summary.

NOTABLE HEADLINES/EARNINGS

• Alphabet Inc (GOOGL) Q4 2023 (USD): EPS 1.64 (exp. 1.59), Revenue 86.31bln (exp. 85.33bln), Google advertising revenue USD 65.52bln (exp. 65.8bln). YouTube ads revenue USD 9.20bln (exp. 9.16bln). Google Services revenue USD 76.31bln (exp. 75.97bln). Google Cloud revenue USD 9.19bln (exp. 8.95bln). Shares fell 5.8% aftermarket after advertising revenue missed expectations.
• Microsoft Corp (MSFT) Q2 2024 (USD): EPS 2.93 (exp. 2.78), Revenue 62.02bln (exp. 61.1bln). Cloud revenue 33.7bln (exp. 32.31bln) Sees Q3 Revenue between USD 60bln-61bln (exp. 60.86bln) and Intelligent Cloud rev. 26.0bln-26.3bln (exp. 25.9bln), More Personal Computing rev. 14.7bln-15.1bln (exp. 15.4bln). Shares fell 0.3% aftermarket.
• A Delaware judge voided the USD 56bln pay package of Tesla (TSLA) CEO Musk, according to CNBC. Shares fell 2.6% aftermarket.

APAC TRADE

EQUITIES

• APAC stocks were mostly subdued amid a deluge of earnings releases and key data releases at month-end.
• ASX 200 shrugged off early weakness and printed record highs as yields fell after softer-than-expected inflation.
• Nikkei 225 initially retreated following disappointing Industrial Production and Retail Sales data, while hawkish-leaning comments from the BoJ Summary of Opinions also provided a headwind for stocks. However, the index then gradually recovered all of its losses.
• KOSPI was subdued after results from Samsung Electronics which topped estimates but its profits declined.
• Hang Seng and Shanghai Comp underperformed following the latest Chinese PMI data in which Manufacturing PMI matched estimates and remained in contraction territory for a 4th consecutive month.
• US equity futures were pressured amid losses in Alphabet and Microsoft post-earnings. (ES -0.4%)
• European equity futures indicate a flat open with Euro Stoxx 50 future unchanged after the cash market closed up 0.5% on Tuesday.

FX

• DXY eked slight gains amid the cautious mood but with gains capped as participants await the FOMC.
• EUR/USD marginally declined after hitting some near-term resistance around the 1.0850 level, while participants also await a slew of incoming data releases from Europe including French and German inflation.
• GBP/USD slightly weakened after recently failing to reclaim the 1.2700 status.
• USD/JPY was choppy with early pressure following some hawkish-leaning remarks from the BoJ's SoO.
• Antipodeans were pressured by the cautious risk environment and softer-than-expected Australian CPI.
• PBoC set USD/CNY mid-point at 7.1039 vs exp. 7.1727 (prev. 7.1055).

FIXED INCOME

• 10-year UST futures extended on yesterday's intraday rebound amid a softer yield environment and as the attention turns to the looming FOMC and quarterly refunding announcement.
• Bund futures continued to claw back yesterday's initial data-induced losses and returned above the 135.00 level.
• 10-year JGB futures were pressured following the BoJ Summary of Opinions from the January meeting which included some hawkish-leaning rhetoric.

COMMODITIES

• Crude futures were choppy after the prior day's fluctuations and with bullish private sector inventory data offset by the mostly negative risk environment and mixed geopolitical headlines.
• US Energy Inventory Data (bbls): Crude -2.5mln (exp. -0.2mln), Gasoline +0.6mln (exp. +1.5mln), Distillate -2.1mln (exp. -0.4mln), Cushing -2.0mln.
• US seeks to buy about 3mln bbls of US-produced sour crude for the SPR for a June delivery.
• Spot gold was contained amid a firmer dollar heading into the FOMC policy announcement.
• Copper futures were lacklustre amid the cautious mood and after Chinese Manufacturing PMI remained in contraction territory for a fourth consecutive month.

CRYPTO

• Bitcoin lacked conviction with price action choppy on both sides of the USD 43,000 level.

NOTABLE ASIA-PAC HEADLINES

• BoJ Summary of Opinions from the January meeting stated a member said that the BoJ must patiently maintain monetary easing under YCC, while the positive wage-inflation spiral must strengthen further and wage growth must exceed 2% to reach the price target. A member said the prerequisite for policy change including ending negative rates, appears to be falling into place given improvements in the economy and prices, while a member said they are now likely at a phase where they need to confirm through specific data the likelihood of achieving 2% inflation. Furthermore, a member said there is a strong chance they can judge that policy normalisation is possible once they can confirm the impact of the quake on the economy in the coming 1-2 months, while a member stated they must deepen the exit debate as the likelihood of achieving the price target has heightened and it was also stated that BoJ could be forced to sharply tighten monetary policy if its decision to end the negative rate comes too late.
• Chinese President Xi promised US President Biden that China wouldn’t interfere in the 2024 US presidential election, when they met last November, which China's Foreign Minister reiterated to the US National Security Adviser over the weekend, according to CNN.
• IMF senior official said Chinese authorities need to give a consistent and clear set of messages to address property sector woes and need to separate viable from non-viable while protecting homebuyers, while the official added that going forward, they would prefer if there were more policy rate cuts than bank reserve cuts in China.

DATA RECAP

• Chinese NBS Manufacturing PMI (Jan) 49.2 vs. Exp. 49.2 (Prev. 49.0)
• Chinese NBS Non-Manufacturing PMI (Jan) 50.7 vs. Exp. 50.6 (Prev. 50.4)
• Chinese Composite PMI (Jan) 50.9 (Prev. 50.3)
• Japanese Industrial Production (Dec P) 1.8% vs. Exp. 2.4% (Prev. -0.9%)
• Japanese Retail Sales YY (Dec) 2.1% vs. Exp. 4.7% (Prev. 5.3%, Rev. 5.4%)
• Australian CPI QQ (Q4) 0.6% vs. Exp. 0.8% (Prev. 1.2%)
• Australian CPI YY (Q4) 4.1% vs. Exp. 4.3% (Prev. 5.4%)
• Australian Weighted CPI YY (Dec) 3.4% vs. Exp. 3.7% (Prev. 4.3%)
• New Zealand ANZ Business Confidence (Jan) 36.6 (Prev. 33.2)
• New Zealand ANZ Activity Outlook (Jan) 25.6 (Prev. 29.3)

GEOPOLITICS

• Iraqi armed group Kataib Hezbollah suspended military and security operations against US forces and said it took the decision to prevent any embarrassment to the Iraqi government. It was earlier reported that an Iran-proxy group fired a drone at a base in Iraq although no injuries were reported.
• Iran's envoy to the UN said any attack on Iran, its interests or its nationals outside of its borders will be met with a definitive response, according to IRNA.
• White House's Kirby said they see potential for an extended pause in Gaza that would let hostages out.
• Iraq and Jordanian foreign ministers stressed the need to distance the two countries and the region from military threats by any side, according to state media.
• US military said it shot down an anti-ship cruise missile fired by Yemen Houthis into the Red Sea, according to Reuters.
• Saudis reportedly resumed defence talks with the US after a pause was forced by the Hamas war, while discussions took place in Saudi Arabia between Crown Prince Mohammed Bin Salman and US senators earlier this month, according to Bloomberg citing sources.

UK/EU

NOTABLE HEADLINES

• The Times shadow MPC voted 8-1 in favour of keeping the base rate unchanged at 5.25% with the lone dissenter voting for a 25bps hike, while it said the BoE should avoid signalling to investors where it intends to shift monetary policy over the coming months.
• UK Chancellor Hunt has reportedly warned his cabinet that tax cuts in the Spring budget could be smaller than expected amid “major structural weaknesses” in the UK economy, according to The Times. Hunt reportedly said there is likely to be less headroom for tax cuts than in the Autumn statement.
• ECB President Lagarde said they will get to 2% inflation in a timely manner and that everyone on the Governing Council agrees the next move is a cut, while she also noted that wage data is critically important and she cannot give a timeline for a cut, according to Bloomberg.
• ECB's Nagel said Germany's economic outlook is not great but noted inflation is absolutely moving in the right direction and the ECB will decide meeting by meeting. Nagel also said he is now convinced that the ECB has tamed the "greedy beast" of inflation.
• Berlin Airport said there will be no departures for passengers on Thursday due to a strike.

DATA RECAP

• UK Lloyds Business Barometer (Jan) 44 (Prev. 35)