• European bourses are generally firmer, though the FTSE 100 lags after significant underperformance in Glencore & HSBC; US futures lower pre-Nvidia
• Dollar is incrementally firmer, Antipodeans bid in tandem with strong Chinese equity trade overnight
• Bonds are mixed but edging higher in recent trade post-supply; attention on US 20yr supply later today
• Crude is softer and Gold is modestly firmer with specifics light
• Looking ahead, EZ Consumer Confidence, NZ Trade, Australian PMI, FOMC Minutes, Comments from Fed’s Bostic, Bowman & BoE’s Dhingra, Supply from the US, Earnings from NVIDIA, Analog Devices & Synopsys

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (-0.1%) are mixed with a slight positive bias, following on from a similar APAC handover. FTSE 100 (-0.8%) underperforms, hampered by significant losses in index heavyweights.
• European sectors are on a mixed footing; Autos outperform with broad-based gains within the sector. Basic Resources is at the foot of the pile, weighed on by Glencore (-5.5%) and Rio Tinto (-2.1%) following poorly received earnings. Banks are also lower, after softer HSBC (-7.1%) results.
• US Equity Futures (ES -0.2%, NQ -0.4%, RTY -0.2%), are modestly in the red, continuing the losses seen in the prior session. Nvidia (-1.7%) is softer in the pre-market, ahead of earnings.
• In terms of pre-market movers; Amazon (+1.0%) and Uber (+0.6%) are firmer, after S&P Dow Jones Indices said they are set to join the DJIA and DJTA respectively.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from Rio Tinto, Glencore, HSBC, BAE Systems and more.
• Click here for more details.

FX

• Dollar is mixed vs its peers following yesterday's session of losses which sent the DXY down to a low of 103.79 but stopped shy of testing the 200DMA at 103.68.
• EUR is back on a 1.07 handle after pulling back from yesterday's 1.0839 peak and back below its 100DMA at 1.0806. Yesterday's low sits at 1.0761 with not much in the way of notable EZ newsflow to guide price action thus far.
• JPY is relatively steady vs. the USD as the pair continues to pivot around the 150 mark and remains within yesterday's 149.68-150.44 range.
• Antipodeans are both firmer vs. the USD but NZD more so. NZD/USD has mounted yesterday's peak and the 50DMA at 0.6181 with focus now on a potential test of 0.62. AUD/USD currently below yesterday's best of 0.6579 and the 200DMA at 0.6563.
• PBoC set USD/CNY mid-point at 7.1030 vs exp. 7.1877 (prev. 7.1068).
• Click here for more details.

FIXED INCOME

• USTs are essentially unchanged after Tuesday's light session into the 20yr supply. An outing which hasn't spurred any overt concession just yet, but this could well emerge into the US session. The yield curve is slightly steeper, whilst the benchmark itself is comfortably within Tuesday's 109-19 to 110-05 bounds.
• Bunds started the session on bearish/defensive footing, printing a trough at 132.89; initially unreactive to a strong German outing, but modest upside has emerged since.
• Gilt price action is in-fitting with the above ahead of BoE speak from Dhingra; incremental upside to a strong 2028 outing.
• UK sells GBP 4bln 4.50% 2028 Gilt: b/c 3.34x (prev. 2.86x), average yield 4.095% (prev. 3.946%) & tail 0.4bps (prev. 1.2bps)
• Germany sells EUR 3.712bln vs exp. EUR 4.5bln 2.20% 2034 Bund: b/c 2.1x (prev. 1.77x), average yield 2.38% (prev. 2.23%) and retention 17.53% (prev. 19.78%)
• Click here for more details.

COMMODITIES

• Crude is lower with fresh catalysts light, though focus still remains on the Middle East and China; Brent futures hover off lows and holds around USD 82/bbl.
• Precious metals see upward biases despite the modest gains seen in the Dollar, but as market sentiment is tilting lower and geopolitics largely show signs of expanding; XAU met resistance at its 50 DMA (2,031.04/oz today).
• Mostly firmer trade across base metals. 3M LME copper rose back above the 8,500/t mark and LME aluminium soared over 3% in early trade
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt will have GBP 23bln of headroom for pre-election tax reductions in next month's budget, according to the Resolution Foundation, via Bloomberg.

DATA RECAP

• UK PSNB Ex Banks GBP (Jan) -16.691B GB vs. Exp. -18.7B GB (Prev. 7.77B GB, Rev. 7.375B GB); PSNB, GBP (Jan) -17.615B GB (Prev. 6.846B GB, Rev. 6.451B GB)
• UK PSNCR, GBP (Jan) -23.344B GB (Prev. 12.863B GB, Rev. 14.335B GB)
• South African Core Inflation YY (Jan) 4.7% vs. Exp. 4.5% (Prev. 4.5%); Core Inflation MM (Jan) 0.3% vs. Exp. 0.2% (Prev. 0.2%)
• South African CPI YY (Jan) 5.3% vs. Exp. 5.4% (Prev. 5.1%); CPI MM (Jan) 0.1% vs. Exp. 0.1%

EARNINGS

• BAE Systems (BA/ LN) – FY (GBP): Sales 25.2bln (exp. 24.6bln), adj. EBIT 26.82bln (exp. 27.1bln), Board has recommended a final dividend of 18.5p. Q4: EPS 63.2p (prev. 55.5p Y/Y), Adj. EBIT 2.68bln (prev. 2.48bln Y/Y). Order backlog 69.8bln (prev. 58.9bln Y/Y). Guides initial FY24 adj. EPS +6-8%, Revenue +10-12%, adj. EBIT +11-13%. Shares -3.5% in European trade
• Glencore (GLEN LN) - FY23 (USD): Revenue 217.83bln (exp. 216.02bln). adj. EBTIDA 17.10bln (exp. 17.35bln). Net Debt 4.92bln (exp. 4.43bln). Adj. Marketing EBIT 3.5bln (exp. 3.67bln); Recommends to shareholders a USD 0.13/shr base cash distribution. "Although the current macroeconomic environment remains challenging, global economic growth is forecast to bottom out in 2024." "Supply constraints and energy transition demand prevented large inventory increases in most commodities during this cyclical trough, leaving markets well-positioned for a strong recovery as demand conditions improve." "This is particularly the case for copper, where the closure of a major mine and various cuts to production guidance through the second half of 2023 have highlighted the persistent supply challenges facing the industry. These are likely to keep the market tight throughout 2024 against previous expectations of oversupply." Shares -5.5% in European trade
• HSBC (5 HK / HSBA LN) - FY23 (USD): Revenue 66.06bln (exp. 66.69bln). Pretax profit 30.35bln (exp. 34.12bln). Announces up to USD 2bln in share buybacks and a fourth interim dividend of USD 0.31/shr. Co. says the outlook for loan growth remains cautious for H1. OTHER METRICS: CET1 ratio 14.8% (exp. 14.5%). NIM 1.66% (prev. 1.42% Y/Y). Cost efficiency ratio 48.5% (prev. 64.6% Y/Y). OUTLOOK: Sees ROTE in the mid-teens for 2024. Expect banking NII Of At Least USD 41bln For 2024. The dividend payout ratio target remains at 50% for 2024, excluding material notable items and related impacts. Shares -7.1% in European trade
• Rio Tinto (RIO AT / RIO LN) - FY23 (USD): Adj. EPS 7.25 (exp. 7.27). Underlying Profit 11.8bln (exp. 11.7bln). Revenue 54.04bln (exp. 53.94bln). Net Income 10.6bln (exp. 11.15bln). Underlying EBITDA 23.90bln (exp. 23.85bln). Co. said cost pressures and weaker market demand lowered underlying EBITDA by USD 1.0bln. Shares -2.1% in European trade
• Fresenius (FRE GY) - Q4 (EUR): Adj. Net 397mln (exp. 416mln, prev. 445mln Y/Y), EBIT 634mln (exp. 592mln, prev. 559mln Y/Y), Revenue 5.68bln (exp. 5.82bln, prev. 5.67bln Y/Y). Guides FY23 EBIT +4-8%, Organic Revenue growth +3-6%. Shares +4% in European trade
• Carrefour (CA FP) - FY23 (EUR): Adj. Net 1.3bln (prev. 1.2bln Y/Y), Sales 94.13bln (prev. 90.81bln Y/Y). Raises dividend by 55% to 0.87/shr and launches new 700mln share buyback programme. CFO says the retailer plans to keep cutting prices this year in France to be more competitive; the Red Sea crisis has caused delays of one-to-two weeks on products coming from Asia to Europe and increased transport costs. Shares +4.6% in European trade

NOTABLE US HEADLINES

• US House Republicans are reportedly expecting a government shutdown behind closed doors, according to Axios.
• UBS Global Wealth Management now sees the Fed cutting rates from June (vs prev. view of May)

GEOPOLITICS

MIDDLE EAST

• China's envoy to the UN said the objection to a ceasefire in Gaza equals a license to kill and is nothing different from giving the green light to a continued slaughter following the US veto of the Security Council draft resolution on a ceasefire in Gaza, while China expressed its strong disappointment at and dissatisfaction with the US veto, according to Reuters.
• US Central Command said Houthis fired two anti-ship ballistic missiles at a Greek-flagged and US-owned bulk carrier bound for Yemen's Port of Aden, while one of the missiles detonated near the ship and caused minor damage
• UKMTO received a report of heightened uncrewed aerial system activity 40NM west of Yemen's Hodeidah.
• "Israeli sources: progress in hostage talks, Israeli delegation will head to Cairo", according to Sky News Arabia

OTHER

• Ukrainian military intelligence chief Budanov said Russia will struggle to keep up the fight and Russians don't have the strength to achieve the goal of seizing two eastern regions this year, according to WSJ.
• Taiwan's Defence Ministry denied increasing military deployments on Taiwan's offshore islands and said there is nothing unusual regarding the military situation around Taiwan, but stated that it is making preparations with the coast guard for possible new scenarios near offshore islands, according to Reuters.

CRYPTO

• Bitcoin (-1.3%) falls back below USD 52k, and Ethereum (-2.2%) dips back under USD 3k.

APAC TRADE

• APAC stocks traded mixed with headwinds following the tech-led declines stateside ahead of Nvidia earnings and FOMC Minutes.
• ASX 200 was dragged lower by consumer stocks and miners in another busy day of earnings.
• Nikkei 225 continued its gradual pullback from near-record levels but remained above the 38,000 level.
• Hang Seng and Shanghai Comp. shrugged off early weakness with outperformance in Hong Kong driven by strength in property and tech, while the mainland also recovered its initial losses and more following recent stability efforts by Chinese authorities.

NOTABLE HEADLINES

• China's housing authority said a total of CNY 123.6bln of development loans have been approved and that CNY 29.4bln have been issued under China's "whitelist" mechanism which was launched on January 26th and is aimed at injecting liquidity to the property sector.
• Chinese Foreign Minister Wang met with his French counterpart and said China is ready to strengthen strategic communication with France and forge more consensus, strengthen solidarity and cooperation, as well respond more effectively to global challenges. Wang also stated the two sides had in-depth communication on issues related to peace and security, while they agreed that multi-polarisation is indispensable for peace and stability, and will continue to strengthen strategic coordination. Furthermore, Wang said in a meeting with French President Macron that he hopes France will continue to play a constructive role in the healthy and stable development of Sino-European relations, while China hopes France will also create a fair and just business environment for Chinese enterprises there and provide positive and stable long-term expectations.
• China state asset regulator says state-owned firms should take steps to develop and promote artificial intelligence and should speed up in building smart computer centres.
• China's draft legislation of private economy promotion has commenced, according to state media.
• Japanese government cuts its view on the economy for the first time since November 2023.
• China is said to be tightening its grip on stocks with net sale ban at the open and close, according to Bloomberg sources. Major institutional investors have been banned form reducing equity holdings at the open and close of each session. Firms affected by the ban are not able to offload more shares than they buy during the first and last 30 minutes of the trading day. The order was delivered from China’s securities watchdog to major asset managers and proprietary trading desks of brokerages, sources said. The CSRC (with newly appointed Chairman Qing) also created a task force to monitor short-selling.

DATA RECAP

• Japanese Trade Balance Total (JPY)(Jan) -1758.3B vs. Exp. -1925.9B (Prev. 68.9B); Exports YY (Jan) 11.9% vs. Exp. 9.5% (Prev. 9.7%); Imports YY (Jan) -9.6% vs. Exp. -8.4% (Prev. -6.9%)
• Australian Wage Price Index QQ (Q4) 0.9% vs. Exp. 0.9% (Prev. 1.3%); Wage Price Index YY (Q4) 4.2% vs. Exp. 4.1% (Prev. 4.0%, Rev. 4.1%)