• European bourses are mixed and trading around the unchanged mark, with slight underperformance in the CAC 40, hampered by losses in L’Oreal; US equity futures mirror European peers
• Dollar is incrementally firmer; Kiwi outperforms after ANZ lifts its RBNZ rate forecast
• Bonds are around flat awaiting US CPI Revisions, German & UK 10yr yields notched fresh YTD peaks
• Crude is holding near yesterday's high after soaring more than 3% in the prior session; Gold and base metals are contained amid a lacklustre Dollar and China on holiday
• Looking ahead, Canadian Employment, US CPI Seasonal Factor Revisions, BoC SLOOS, Comments from ECB’s Cipollone & Fed's Logan.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed and trading around the unchanged mark, following a mostly higher APAC lead, with slight underperformance in the CAC 40, hampered by losses in L’Oreal (-6.2%) post-earnings.
• European sectors are mixed; Healthcare is propped up by gains in Carl Zeiss Meditec (+9.4%) after it reported strong results. Utilities are on the back foot, after Enel (-0.9%) received a downgrade at RBC.
• US Equity Futures (ES U/C, NQ +0.2%, RTY +0.3) are on a mixed footing, with overall price action mirroring that seen in Europe; Expedia (-13.9%) is lower after it reported a deeper than expected loss in FCF; Take-Two Interactive (-8.6%) suffers after cutting Net Bookings guidance.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from Hermes, L'Oreal, Ubisoft & more.
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FX

• The Dollar is contained within yesterday's 103.95-104.43 range and in close proximity to the 100DMA at 104.17 ahead of US CPI revisions. A dovish release could see a breach of 104.00 and a test of several DMAs with the 200DMA at 103.60; whilst a hawkish release could see a retest of the recent YTD peak at 104.60.
• EUR is yet to break out of yesterday's 1.0741-1.0788 range. Likely to remain at the whim of the USD. Upside sees 100DMA at 1.0787.
• Steadier trade for USD/JPY after printing a fresh YTD high at 149.57 overnight. Technicians highlight the importance of a close above the 76.4% fib of the Nov-Dec'24 move at 149.17. Resistance ahead of 150.00 comes via 27th Nov. high at 149.67.
• The Kiwi is the G10 outperformer after ANZ bank forecasted that the RBNZ is to raise the OCR in Feb and April; currently 0.614
• PBoC set USD/CNY mid-point at 7.1036 vs exp. 7.1996 (prev. 7.1063).
• Mexican Central Bank kept its interest rate at 11.25%, as expected, with the decision unanimous and it removed the previous guidance about needing to hold the key rate for some time.
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FIXED INCOME

• USTs are at the unchanged mark as relief from the well-received 30yr auction, making it three from three for the week, proved fleeting with focus switching from supply to the US CPI seasonal adjustment; currently flat in 110-22 to 110-30 bounds.
• Bunds are contained/incrementally softer with specifics light into the US main event. Yields are mixed and exhibit no clear bias given the overall tone but the session's 133.23-133.61 bound includes a new WTD & YTD trough.
• Gilt price action is in-fitting with peers into the US session. BoE's hawkish dissenter Haskel spoke pre-open and largely echoed the extensive remarks from peer Mann on Thursday; made a new WTD & YTD trough of 97.45.
• Click here for more details.

COMMODITIES

• Crude is holding near yesterday's highs which saw the contracts settle higher by almost USD 2.50/bbl apiece amid broadening concerns of a widening Middle East conflict as Israel and Hamas have yet to come to a ceasefire agreement; Brent Apr trades around 81.75/bbl (81.36-81.84/bbl range).
• Horizontal trade across precious metals amid light newsflow and a contained Dollar; XAU dipped back under its 50 DMA (USD 2,033.84/oz) but remains within yesterday's range (USD 2,020.25-2,038.79/oz).
• Mostly softer trade across base metals, in part amid the buoyant Dollar, whilst Chinese markets have also shut for some 10 days amid the Chinese New Year celebrations.
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NOTABLE EUROPEAN HEADLINES

• UK's Ofgem says they are considering new rules to reduce the consumer cost which arises from supplier failures, costs claimed under a solar levy would be a liability of the failed supplier.
• Franklin Templeton's Head of European Fixed Income Zahn says BoE probably needs to cut rates sooner than peers; says he is overweight UK Government bonds.

DATA RECAP

• German HICP Final YY (Jan) 3.1% vs. Exp. 3.1% (Prev. 3.1%); HICP Final MM (Jan) -0.2% vs. Exp. -0.2% (Prev. -0.2%)
• German CPI Final YY (Jan) 2.9% vs. Exp. 2.9% (Prev. 2.9%); CPI Final MM (Jan) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
• Italian Industrial Output YY WDA (Dec) -2.1% (Prev. -3.1%, Rev. -2.9%); Industrial Output MM SA (Dec) 1.1% vs. Exp. 0.9% (Prev. -1.5%, Rev. -1.3%)
• Norwegian Core Inflation MM (Jan) 0.0% vs. Exp. -0.1% (Prev. 0.2%); Core Inflation YY (Jan) 5.3% vs. Exp. 5.2% (Prev. 5.5%)
• Norwegian Consumer Price Index YY (Jan) 4.7% vs. Exp. 4.6% (Prev. 4.8%)
• Hungarian CPI YY (Jan) 3.8% vs. Exp. 4.4% (Prev. 5.5%); Core CPI YY (Jan) 6.1% vs. Exp. 6.4% (Prev. 7.6%)

NOTABLE US HEADLINES

• Donald Trump wins the Nevada Republican caucus with 25/26 delegates appointed thus far.
• Intel (INTC) - Moody's downgraded Intel's ratings to A3 from A2, with its outlook changed to stable from negative. The downgrade reflects its view that Intel's financial profile will remain challenged over the next 12-24 months, and while its competitive position was expected to improve with further progress in its product and manufacturing process improvements, Moody's said gross leverage will remain high and adj. FCF will remain negative as substantial R&D and capital investments will weigh on profitability and cash flow generation. Shares +0.5% in pre-market trade.

EARNINGS

• PepsiCo Inc (PEP) - Q4 2023 (USD): core EPS 1.78 (exp. 1.72), Revenue 27.9bln (exp. 28.4bln); plans to buyback around USD 1bln in shares. Shares -1.7% in pre-market trade
• Expedia Group Inc (EXPE) - Q4 2023 (USD): Adj. EPS 1.72 (exp. 1.68), Revenue 2.89bln (exp. 2.88bln). Negative free cash flow USD 415mln (exp. negative USD 192.6mln). Gross bookings USD 21.67bln (exp. 22.0bln). Announces CEO transition plan with Ariane Gorin to succeed Peter Kern as CEO. (Newswires) Shares -14.1% in pre-market trade
• Take-Two Interactive Software Inc (TTWO) - Q3 2024 (USD): EPS -0.54, Revenue 1.37bln (exp. 1.34bln); currently working on a significant cost reduction programme across the entire business to maximise margins. Cuts FY24 net bookings view to 5.25-5.3bln (prev. 5.45-5.55bln, exp. 5.48bln). (Newswires) Shares -8.5% in pre-market trade
• Hermes (RMS FP) - Q4 (EUR): Revenue 3.36bln (exp. 3.29bln). Sales at constant FX +17.5% (exp. +13.7%). FY recurring operating income 5.65bln (exp. 5.52bln). Proposes exceptional dividend of EUR 10/shr. Q4 Americas revenue +21.6% (exp. 12.1%). Q4 total Europe revenue +18.6% Y/Y. Q4 total Asia revenue +14.8% Y/Y. Confirms guidance. Executive Chairman says the Co. is very confident about the Chinese market; sees no interruptions in US trends (Newswires) Shares +4.5% in European trade
• L'Oreal (OR FP) - Q4 2023 (EUR): Sales 10.61bln (exp. 10.89bln), +6.9% (exp. +9.56%). Q4: North Asia comp. sales -6.2%(exp. +7.29%). Europe sales 3.27bln, +11.6%. North America sales 2.84bln, +9.4%. Luxe sales 4.1bln, +0.4% (exp. +4.42%). Consumer product sales 3.7bln, +7.7%. Professional products sales 1.23bln, +6.4%. Dermatological beauty sale 1.5bln, +27.3%. FY23: EPS 12.08 (exp. 13.15), +7.3%. Sales 41.18bln (exp. 44.5bln), +7.3%. Operating margin 19.8%. Op. 8.1bln (exp. 9.08bln, prev. 7.4bln Y/Y). Notes of the stagnating beauty market in China. (FT/Newswires) Shares -5.8% in European trade
• Ubisoft (UBI FP) - Q3 2023-24 (EUR): Sales 606mln (exp. 697mln, prev. 773mln), Net Bookings 626mln (prev. 727mln). Q4 Net Bookings seen "sharply up", leading to a record annual net bookings figure. Reaffirms FY targets. “Moving forward, we're gearing up for a very promising line-up for fiscal year 2025, including the upcoming release of Star Wars Outlaws' in 2024" (Newswires/ Ubisoft) Shares +17.5% in European trade

GEOPOLITICS

MIDDLE EAST

• US President Biden said the conduct of Israel's response in the Gaza strip has been over the top and he is pushing very hard now to get a sustained pause in Gaza.
• White House said negotiations are ongoing regarding a hostage release and ceasefire deal, while it added that Secretary of State Blinken made it clear the US has concerns regarding Rafah operations. The White House also said that President Biden and German Chancellor Scholz will discuss Ukraine, the Middle East and the Red Sea shipping attacks.
• US Central Command said its forces conducted seven self-defence strikes against four Houthi unmanned surface vessels on Thursday and conducted strikes against seven mobile anti-cruise missiles that were prepared to launch against ships in the Red Sea.
• "Iranian militias move weapons and ammunition from Deir Ezzor to fortified Hezbollah positions on the Syrian-Lebanese border in anticipation of US strikes", according to Sky News Arabia

OTHER

• Russian President Putin said Russia has not yet achieved its goals in Ukraine and suggested the US should encourage Ukraine to resume talks, while he was said to sincerely believe that Russia has a historic claim to land in Ukraine. Putin said the US and Russia hold contacts at different levels and that Russia has no interest in Poland, Latvia or anywhere else, as well as noting that WSJ reporter Evan Gershkovich may be freed if the special services agree. Furthermore, he said those in power in the West have come to realise it is impossible to inflict strategic defeat on Russia and are wondering what to do next, while he added that they are ready for this dialogue.

CRYPTO

• Bitcoin (+2.7%) soars above USD 46.5k, lifting crypto-related stocks in the pre-market; Coinbase (+5.2%)

APAC TRADE

• APAC stocks traded mixed and were mostly subdued in holiday-thinned conditions ahead of the Lunar New Year.
• ASX 200 was rangebound amid light catalysts, while RBA Governor Bullock reiterated a focus on bringing inflation down but noted that the Board hasn't ruled in or out a further rate hike and even touched upon cuts.
• Nikkei 225 breached 37,000 for the first time since February 1990 amid a weaker currency and earnings updates.
• Hang Seng was pressured amid losses in property and tech in a shortened trading session and with mainland participants already away for Chinese New Year celebrations.

NOTABLE HEADLINES

• US President Biden's administration is said to consider restrictions on China EVs to address data security concerns, while the move would be an additional hurdle beyond tariffs to keep out Chinese smart cars, according to Bloomberg.
• BoJ Governor Ueda said the chances are high for accommodative conditions to stay even if negative rates are abandoned, while he added they will pay heed to the health of the balance sheet if exit from stimulus policy draws near.
• RBA Governor Bullock said the Board is focused on bringing inflation down and recent developments in inflation are encouraging but they have some way to go to meet the inflation target and noted while there are some encouraging signs, Australia’s inflation challenge is not over. Bullock also stated the Board hasn’t ruled out a further increase in interest rates but neither has it ruled it in, while she added that inflation doesn't need to be in the 2%-3% band for them to think about rate cuts and if consumption slows more quickly than expected, it will be an opportunity to cut rates.

Data Recap

• Chinese M2 (Jan): 8.7% Y/Y vs exp. 9.3%; New Yuan Loans 4.92tln (exp. 4.5tln)