• European equities are firmer, with outperformance in the AEX; US equity futures meander around the unchanged mark, though the RTY continues to underperform
• Dollar is flat and pivots 104.00, JPY is softer after BoJ speak; Chinese CPI softer than expected
• Bonds are modestly weaker with specifics light into a US 30yr auction
• Crude is firmer in what has been a choppy session for the complex; XAU edging higher, albeit with gains capped
• Looking ahead, US IJC, US Wholesale Inventory, Japanese M2 Money Supply, ECB Economic Bulletin, Banxico Policy Announcement, Comments from BoE’s Dhingra, Mann, ECB’s Elderson, Lane, Fed’s Barkin, RBA’s Bullock, Supply from the US, Earnings from Take-Two, Philip Morris & ConocoPhillips.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.4%), began the session on a firmer footing and have extended modesty thereafter. The AEX is the European outperformer, led by post-earnings strength in Unilever (+2.9%), ArcelorMittal (+2.6%) and Adyen (+16%).
• European sectors are mixed; Food Beverage & Tobacco is lifted by strength in British American Tobacco (+7.5%) post-earning. Healthcare is hampered by losses in AstraZeneca (-2.3%).
• US equity futures (ES U/C, NQ U/C, RTY -0.3%) are mixed; the ES and NQ are within contained levels and meandering around the unchanged mark, whilst the RTY is softer, as the index continues the prior day’s underperformance. Disney (+6%) reported a mixed set of results though did boost its cash dividend by 50%.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from British American Tobacco, AstraZeneca, Unilever, Siemens, Maersk & more.
• Click here for more details.

FX

• Contained trade for the USD thus far within tight 103.95-104.16 parameters which near enough matches yesterday's range; 100DMA provides resistance at 104.18.
• The EUR is steady vs. the USD with recent hawkish comments from Schnabel providing support after Tuesday's 1.0722 YTD trough. Upside resistance comes via 100DMA at 1.0785 ahead of the round 1.08 mark.
• JPY the slight underperformer across the majors following dovish BoJ commentary overnight. USD/JPY topped out around the YTD peak of 148.89. CPI revisions tomorrow or CPI next week could provide the next inflection point.
• Antipodeans are both out of favour vs. the USD with AUD marginally more so. (Relatively) hawkish RBA unable to reverse downtrend for AUD/USD absent an economic recovery in China; currently holding above its YTD trough at 0.6486.
• PBoC set USD/CNY mid-point at 7.1063 vs exp. 7.1911 (prev. 7.1049).
• CBRT Inflation Report: year-end 2024 forecast 36% (prev. 36%), 2025 14% (prev. 14%), 2026 9%
• Click here for more details.

FIXED INCOME

• USTs are trading heavy into the 30yr auction which has historically had a softer reception than the shorter-dated peers sold already this week, with clear and relatively pronounced steepening in play; holds above session trough at 111-00+.
• Bunds are pressured given the above with specifics a touch light as newsflow has been dominated by earnings. Ahead, numerous ECB speakers but Chief Economist Lane will take centre stage where we are attentive for any fresh remarks around waiting for Q1 wage data; trade has been in a narrow 133.88-134.19 range.
• Gilt action has been in-fitting with European/US peers. Specifics light with no reaction to the latest RICS survey which remains pressured but to a lesser extent than forecast; 10yr yield has probed 4.00% to the upside, but is once again yet to convincingly breach with January's 4.07% peak still elusive.
• Click here for more details.

COMMODITIES

• Crude is modestly firmer in what has largely been a choppy session but within narrow parameters thus far. News flow has remained quiet in early European hours with participants on the lookout for geopolitical headline; Brent Apr sits above USD 79.50/bbl.
• Mixed trade across precious metals with spot gold largely horizontal and spot silver trimming some of yesterday's losses; XAU back under its 50 DMA (USD 2,034.04/oz).
• Contained trade across base metals with little reaction seen to the mostly soft Chinese inflation report overnight and ahead of the Chinese market closures for the Chinese New Year and Spring Festival.
• Chevron's 290k BPD El Segundo California refinery reports unplanned flaring
• Iraq sets March Basrah medium crude official selling price to Asia at USD -0.80/bbl to Oman/Dubai average; Europe: USD -5.54/bbl vs dated Brent; North & South America: USD -1/bbl.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• ECB Economic Bulletin Issue 1, 2024: Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
• Riksbank's Jansson says inflationary pressures have continued to ease, makes it possible to cut earlier than thought in November.

DATA RECAP

• UK RICS House Price Balance (Jan) -18 vs. Exp. -25 (Prev. -30, Rev. -29)

NOTABLE US HEADLINES

• US Treasury Secretary Yellen at the Financial Stability Oversight Council from 14:00GMT/09:00EST.

EARNINGS

• Walt Disney Co (DIS) - Q1 2024 (USD): Adj. EPS 1.22 (exp. 0.99), Revenue 23.55bln (exp. 23.64bln). Disney boosts cash dividend by 50% and targets USD 3bln buyback in FY24. Disney+ subscribers 149.6mln (exp. 151.2mln). Entertainment revenue USD 9.98bln (exp. 10.52bln). Sports revenue USD 4.84bln (exp. 4.62bln). Experiences revenue USD 9.13bln (exp. 9.04bln). Sees FY Adj. EPS about USD 4.60 (exp. 4.27). CEO Iger said parks and resorts continue to do extremely well. Co. is to invest USD 1.5bln in Fortnite maker Epic Games. (Newswires) Shares +6.7% in pre-market trade
• PayPal Holdings Inc (PYPL) - Q4 2023 (USD): EPS 1.48 (exp. 1.36), Revenue 8.02bln (exp. 7.87bln). Total payment volume USD 409.83bln (exp. 403.6bln). Transaction revenue USD 7.28bln (exp. 7.1bln). Active customer accounts 426mln (exp. 427.98mln). Payment transactions 6.80bln (exp. 6.60bln). Sees FY24 Adj. EPS USD 5.10 (exp. 5.49). Sees FY24 share repurchase of at least USD 5bln. (Newswires) Shares -8.9% in pre-market trade
• AstraZeneca (AZN LN) – FY (USD): Revenue 45.8bln (exp. 45.7bln), Core EPS 7.26 (exp. 7.27), Dividend 2.90/shr (exp. 3.00/shr). Q4: Core EPS 1.45 (exp. 1.51), Revenue 12.02bln (exp. 11.94bln). (Newswires) Shares -2.7% in European trade
• British American Tobacco (BATS LN) - FY23 (GBP): Revenue 27.28bln (exp. 27.6bln, prev. 28.1bln Y/Y), EPS 375.6p (exp. 376.1p); takes a non-cash impairment charge of GBP 27.3bln, mainly related acquisition of US combustibles brands. (Newswires) Shares +7.5% in European trade
• Siemens (SIE GY) - Q4 (EUR): Net Income 2.5bln (exp. 1.7bln). Industrial Business Profit 2.72bln (exp. 2.67bln). Revenue 18.4bln (exp. 18.8bln); Free cash flow rose sharply to EUR 1.0bln (prev. 86mln) driven by Industrial Business. Reaffirms FY24 outlook. (Siemens). Index Weightings: DAX 40: 8.8% (Second largest); Euro Stoxx 50: 3.4%; Stoxx 600: 1.1%. Shares +0.6% in European trade
• Kering (KER FP) – FY (EUR): Revenue 19.56bln (exp. 19.59bln), Net 2.98bln (exp. 3.16bln), EBITDA 6.6bln (exp. 6.4bln), EPS 24.38 (exp. 25.60), Gucci Revenue 9.87bln (exp. 10.48bln), Yves St Laurent Revenue 3.18bln (prev. 3.3bln), Dividend 14/shr (exp. 12.89/shr). CFO: end-year trends were, overall, like the rest of the year but saw an improvement in Europe & US. Will continue to invest in brands in the long term, margins could be impacted more this year. FY24 Guidance: Recurring Operating Income to decline Y/Y, particularly within H1. (Newswires) Shares +3.7% in European trade
• ArcelorMittal (MT NA) - Q4 (USD): Revenue 14.6bln (exp. 15.7bln). EBITDA 1.27bln (exp. 1.23bln). Net Income -2.97bln (exp. -1.82bln). Co. says Chinese economic growth "is expected to weaken". Co. remains positive on the medium/long-term steel demand outlook. OUTLOOK "As anticipated, apparent demand conditions are now showing signs of improvement as the destocking phase reaches maturity." "Despite continued headwinds to real demand, World ex-China apparent steel consumption ("ASC") in 2024 is expected to grow by +3.0% to +4.0% as compared to 2023." Shares +2.6% in European trade
• Maersk (MAERSKB DC) - Q4 (USD): Revenue 11.7bln (exp. 11.46bln), EBITDA 0.839bln (exp. 1.13bln), EBIT -537mln (exp. -407mln), EPS -27 (exp. -42), Dividend 5.15/shr. Suspends buyback. High uncertainty remains around the duration & degree of Red Sea disruption, duration from one-quarter to FY reflected via the FY guidance ranges.. Shares -17% in European trade.

GEOPOLITICS

• UN report stated North Korea further developed its nuclear weapons last year and UN sanctions monitors are investigating 58 suspected North Korean cyberattacks since 2017 that earned USD 3bln to help fund WMD development, according to Reuters.
• North Korea terminated inter-Korean economic cooperation law whereby the North Korean Supreme People's Assembly voted to scrap all agreements signed with South Korea on promoting economic cooperation.

CRYPTO

• Bitcoin (+1.4%) climbs back above USD 44k whilst Ethereum is marginally softer.

APAC TRADE

• APAC stocks were ultimately mixed after the fresh record levels on Wall St where the S&P 500 touched just shy of the 5k level, while participants digested recent earnings releases and Chinese inflation data ahead of the Lunar New Year holidays.
• ASX 200 benefitted from strength in tech and property, while the utilities sector outperformed amid a surge in AGL Energy after it reported a four-fold increase in its core net and returned to a statutory profit for H1.
• Nikkei 225 outperformed and approached closer to the 37,000 level as earnings drove price action and with SoftBank among the biggest gainers after shares in unit Arm Holdings surged by around 20% post-earnings.
• Hang Seng and Shanghai Comp were mixed with the former dragged lower by weakness in tech after Alibaba shares slumped on disappointing earnings, while the mainland gained despite the soft inflation data with sentiment upbeat heading into the Lunar New Year holidays and after the PBoC injected liquidity. China also recently replaced CSRC Chairman Yi Huiman with Wu Qing who is nicknamed the “Broker Butcher” for his crackdown on traders.
• Nifty eventually weakened in the aftermath of the RBI rate decision where the central bank maintained its rates as expected and although there was a change in the vote split with MPC external member Varma the lone dissenter favouring a 25bps cut, the language from Governor Das remained hawkish in which he stated that monetary policy must be disinflationary and the MPC is to remain resolute in bringing inflation down to 4%.

NOTABLE HEADLINES

• China Auto Industry Body official says battery vehicle sales were -37% in Jan M/M; far below market expectations, which is a main source of pressure on auto market growth.
• US President Biden is poised to limit Americans’ personal data going to China with the administration planning to issue an order as soon as next week, according to Bloomberg.
• BoJ Deputy Governor Uchida said the BoJ won't aggressively hike rates even after ending negative rates and noted that Japan's real interest rate is in deeply negative territory and monetary conditions are very accommodative which is not expected to change in a big way. Furthermore, Uchida said uncertainty over the outlook remains high, but the likelihood of sustainably achieving our price target is gradually heightening and it is hard to imagine a path of continuous rate hikes.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained its stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the rate decision and policy stance, with MPC external member Varma the lone dissenter who voted for a 25bps cut and for a change in stance to neutral. RBI Governor Das stated that growth in India is accelerating and inflation is on a downward trajectory in India, while he added that transmission of policy rate hikes is still underway and monetary policy must be disinflationary. Furthermore, Governor Das said inflation needs to align at 4% on a durable basis and the MPC is to remain resolute in bringing inflation down to 4%, as well as noted that monetary policy has to remain vigilant and that the last mile of disinflation is always the most challenging.
• Chinese President Xi says China should enhance positive economic recovery and China is going to comprehensively deepen reforms, via Xinhua.
• PBoC releases Q4 monetary policy report: vows to keep monetary policy prudent. Prudent policy will be flexible, precise and effective; will fend off risks in key areas

DATA RECAP

• Chinese CPI MM (Jan) 0.3% vs. Exp. 0.4% (Prev. 0.1%); CPI YY (Jan) -0.8% vs. Exp. -0.5% (Prev. -0.3%); PPI YY (Jan) -2.5% vs. Exp. -2.6% (Prev. -2.7%)