• European equities are firmer, taking the lead from strong Nvidia earnings, which has led to outperformance in the NQ
• Dollar is subdued and the Antipodeans outperform, benefiting from the broader risk tone
• Bonds are divergent, with EGBs choppy on the morning’s PMI data
• Crude holds firm alongside base metals which benefit from the softer Dollar and positive risk tone
• Looking ahead, US IJC, ECB Minutes, CBRT Policy Announcement, Speeches from Fed’s Jefferson, Bowman, Harker, Kashkari & Cook, Supply from US. Earnings from, Pioneer Natural Resources, Moderna, Intuit & Booking.

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+1.0%) soared at the open, taking lead from strong Nvidia (+13%) earnings, after-hours. Thereafter, in tandem with the softer-than-expected German PMI data, equities came off best levels and have been edging lower since, but remain markedly firmer on the session.
• European sectors are mixed; Tech is the clear outperformer after strong Nvidia earnings; peers such as ASML (+4.5%), BE Semiconductor (+15.7%, also on strong earnings) gain. Mercedes Benz (+4.9%) is leading the gains in the Autos sector, whilst Nestle (-4.3%) drags down Food Beverage and Tobacco.
• US Equity Futures (ES +1.0%, NQ +2%, RTY +0.5%) are entirely in the green, with clear outperformance in the tech-heavy NQ, after yet another strong earnings report from Nvidia (+13%).
• Click here and here for the sessions European pre-market equity newsflow, including earnings from Anglo American, Rolls Royce, Nestle and more.
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FX

• USD is suffering at the hands of the NVIDIA-inspired jubilant move in the equity complex. DXY has been as low as 103.43 thus far (following French PMIs) before recovering in close proximity to its 200DMA at 103.69.
• An eventful morning for the EUR as strong French PMI metrics sent EUR/USD to a session peak of 1.0888 (50DMA sits at 1.0886) before a soft German manufacturing release sent the pair back to current levels of around 1.0855.
• GBP is benefitting from USD weakness with some two-way price action following mixed PMI metrics. As it stands, Cable is resting on its 50DMA at 1.2675.
• JPY is relatively steady vs. the USD with the pair remaining in consolidation mode after printing a YTD peak last week; trough of the session at 150.02.
• Antipodeans are both notably firmer vs. the USD as risk conditions prove supportive. AUD/USD cleared the 200DMA at 0.6563 and weekly high.
• PBoC set USD/CNY mid-point at 7.1018 vs exp. 7.1854 (prev. 7.1030).
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FIXED INCOME

• USTs are near unchanged on the session as we await Fed speak & weekly US data with Wednesday's FOMC Minutes release uneventful overall. More pertinently, the 20yr auction was poor, which sparked pressure in Treasuries.
• Bunds were initially hampered by the weak US outing, before then jumping lower on the hot French PMI data. Thereafter, a mixed German PMI release (big misses in Manufacturing & Composite), helped Bunds to rise back above 132.00 from their earlier trough at 131.78.
• Gilt price action moved in tandem with the aforementioned French/German data, before lifting by around 20 ticks after the UK Flash PMIs; currently holds around 97.30, towards the top-end of 96.92-97.49 bounds.
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COMMODITIES

• Crude is holding onto overnight gains after risk appetite was bolstered by all-around blockbuster earnings from tech giant Nvidia, with the mood reverberating cross-market. The larger-than-expected build in Private Inventories was ignored. Brent futures hold around USD 83.50/bbl.
• Firm trade across precious metals as a function of the risk-induced softness in the Dollar potentially coupled with some tailwinds from favourable technicals; XAU found support near its 21 DMA (2,024.16/oz) before rising above its 50 DMA (2,032.03/oz).
• Base metals are higher across the board this morning, but to varying degrees, with the complex bolstered by the risk-on sentiment and the weaker Dollar.
• Dubai sets the official crude differential for May at parity to DME Oman.
• German Economy Minster Habeck expects that gas prices will continue to fall.
• US Energy Inventory Data (bbls): Crude +7.2mln (exp. +3.9mln), Gasoline +0.4mln (exp. -2.1mln), Distillate -2.9mln (exp. -1.7mln), Cushing +0.7mln.
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NOTABLE EUROPEAN HEADLINES

• EU is reportedly poised to release EUR 6.3bln in post-pandemic aid to Poland as early as next week in a major vote of confidence in the new government’s ability to mend ties with Brussels, according to Bloomberg.
• UK Chancellor Hunt is reportedly working on plans for a 99% mortgage scheme, via FT citing officials.
• BoE's Greene says the tick-up in PMI data offers some grounds for optimism on growth in 2024; wage growth is heading in the right direction; services inflation generally started to ease; says she needs to see more evidence that UK inflation is not entrenched before she votes for a cut

DATA RECAP

• EU HCOB Composite Flash PMI (Feb) 48.9 vs. Exp. 48.5 (Prev. 47.9); Services Flash PMI (Feb) 50.0 vs. Exp. 48.8 (Prev. 48.4); Manufacturing Flash PMI (Feb) 46.1 vs. Exp. 47.0 (Prev. 46.6); "The latest PMI print gives hope for a recovery in the eurozone, which is why we are sticking to our annual HCOB forecast of 0.8% for 2024".
• UK Flash Composite PMI (Feb) 53.3 vs. Exp. 52.9 (Prev. 52.9); Manufacturing PMI (Feb) 47.1 vs. Exp. 47.5 (Prev. 47.0); Services PMI (Feb) 54.3 vs. Exp. 54.1 (Prev. 54.3)
• German HCOB Composite Flash PMI (Feb) 46.1 vs. Exp. 47.5 (Prev. 47.0); Services Flash PMI (Feb) 48.2 vs. Exp. 48.0 (Prev. 47.7); Manufacturing Flash PMI (Feb) 42.3 vs. Exp. 46.1 (Prev. 45.5)
• French HCOB Composite Flash PMI (Feb) 47.7 vs. Exp. 45.0 (Prev. 44.6); Services Flash PMI (Feb) 48.0 vs. Exp. 45.6 (Prev. 45.4); Manufacturing Flash PMI (Feb) 46.8 vs. Exp. 43.5 (Prev. 43.1)
• Italian Consumer Prices Final YY (Jan) 0.8% vs. Exp. 0.8% (Prev. 0.8%); MM (Jan) 0.3% vs. Exp. 0.3% (Prev. 0.3%)
• Italian CPI (EU Norm) Final YY (Jan) 0.9% vs. Exp. 0.9% (Prev. 0.9%); MM (Jan) 0.3% vs. Exp. -1.1% (Prev. -1.1%)
• EU HICP-X F&E Final YY (Jan) 3.6% vs. Exp. 3.6% (Prev. 3.6%); MM (Jan) -0.9% vs. Exp. -0.9% (Prev. -0.9%); YY (Jan) 3.3% vs. Exp. 3.3% (Prev. 3.3%); YY (Jan) 2.8% vs. Exp. 2.8% (Prev. 2.8%); MM (Jan) -0.4% vs. Exp. -0.4% (Prev. 0.2%)
• French Business Climate Mfg (Feb) 100.0 vs. Exp. 99.0 (Prev. 99.0, Rev. 98)

EARNINGS

• NVIDIA Corp (NVDA) - Q4 2024 (USD): Adj. EPS 5.16 (exp. 4.64), Revenue 22.1bln (exp. 20.62bln). Q1 25 revenue view 24bln plus or minus 2% (exp. 21.9bln). Revenue breakdown (USD). Data Centre revenue 18.4bln (exp. 17.21bln). Gaming revenue +58% y/y to 2.9bln (exp. 2.72bln). Professional Visualization revenue 463mln (exp. 435.5mln). Automotive revenue -4.4% Y/Y to 281mln (exp. 272.1mln). Other metrics ADJ gross margin 76.7% (exp. 75.4%). R&D expenses +26% Y/Y to USD 2.47bln (exp. 2.43bln). ADJ operating expenses +25% Y/Y to USD 2.21bln (exp. 2.23bln). ADJ operating income USD 14.75bln (exp. 13.14bln). Free cash flow USD 11.22bln (exp. 10.82bln). Commentary Generative AI has "hit the tipping point". Data Center sales to China declined significantly in Q4 due to US government licensing requirements. Says has gotten requests for information from antitrust regulators in France, EU, UK and China over its sales of GPUs and efforts to allocate supply, while it expects to receive additional requests for information. CEO says demand far exceeds supply for next-generation products and cannot keep up with demand as we ramp. Says China represented mid-single-digit percentage of data centre revenue in Q4 due to USG licensing requirements and sees it to be in a similar range in Q1 (Newswires) Shares +13% in pre-market
• Anglo American (AAL LN) - FY (USD): Revenue 30.7bln (exp. 30.8bln). Adj. Net 2.90bln (exp. 2.81bln). Adj. EBTIDA 9.96bln (exp. 9.76bln). Basic EPS 2.42 (exp. 2.33). Cuts FY dividend to 0.41 (prev. 0.74, -45% Y/Y). COMMENTARY "There is no doubt that while the immediate macro picture presents some challenges for our PGMs and diamonds businesses, the demand trends for metals and minerals have rarely looked better." "Our updated assessment of global GDP growth and consumer demand were the main factors behind our USD 1.6bln write-down of our book value of De Beers, principally relating to goodwill." Anglo American secures additional multi-billion tonne high quality iron ore resource at Minas-Rio. Shares +3.4% in European trade
• Rolls Royce (RR/ LN) - FY (GBP): Revenue 16.49bln (exp. 14.82bln). FCF 1.285bln (prev. 505mln). Operating Margin 10.3% (prev. 5.1%). Sees 2024 FCF 1.7-1.9bln (exp. 1.37bln). Co. sees further improvement to all mid-term targets. Shares +7.9% in European trade
• Mercedes-Benz (MBG GY) - Q4 (EUR): Revenue 40.26bln (exp. 38.61bln). Sees 2024 Cars Adj. Return on Sales between 10-12% (exp. 11.3%); Free cash flow of the industrial business seen slightly above the prior-year level. COMMENTARY: Group EBIT is expected to be slightly below the previous year's level resulting in divisional guidances. Mercedes-Benz Cars will seek to defend and hold pricing at 2023 levels. Index Weightings: DAX 40 (4.01%), Euro Stoxx 50 (1.6%), Stoxx 600 (0.5%) Shares +4.7% in European trade
• AXA (CS FP) - FY23 (EUR): Revenue 102.7bln (exp. 105.5bln), Net 7.19bln (exp. 7.45bln). Co. announces a share buyback of up to EUR 1.6bln. Co. increased main financial targets for 2024-2026. Targeting a total payout ratio of 75%, comprising a 60% dividend payout ratio and an additional 15% from annual share buy-backs. Dividend +16% Y/Y to EUR 1.98/shr. Co. announced a new strategic plan dubbed “Unlock the Future”. (AXA) Index Weightings: CAC 40 (3.3%), Euro Stoxx 50 (1.8%), Stoxx 600 (0.6%) Shares +2.4% in European trade
• Nestle (NESN SW) - FY23 (CHF): Revenue 92bln (exp. 94.04bln). Organic Revenue +7.2% (exp. +7.4%). Dividend 3 (exp. 3.08). Real Internal Growth -0.3% (exp. +0.08%). Sees 2024 organic revenue around +4% (exp. +4.91%). OUTLOOK 2024 outlook: "We expect organic sales growth around 4% and a moderate increase in the underlying trading operating profit margin. Underlying earnings per share in constant currency is expected to increase between 6% and 10%." 2025 mid-term targets fully confirmed: mid-single-digit organic sales growth and an underlying trading operating profit margin range of 17.5% to 18.5% by 2025. Underlying earnings per share in constant currency to increase between 6% and 10%. COMMENTARY Growth was broad-based across most geographies and categories. Distribution costs as a percentage of sales decreased. (Nestle) Index Weighting: SMI (17.5% - largest), Stoxx 600 (2.8% - second largest) Shares -4% in European trade

NOTABLE US HEADLINES

• Alphabet's Google (GOOG) to pause Gemini image generation of people after issues, via Bloomberg

GEOPOLITICS

MIDDLE EAST

• Israeli military sounded sirens in the Red Sea port city of Eilat, warning of possible income aerial threats. It was separately reported that a possible medium-range ballistic missile launched by Iranian-backed Houthis in Yemen was intercepted by Israel's Arrow air defence system over the Red Sea near Eilat.
• UKMTO has received reports of an incident 70nm south east of Aden, Yemen.
• UKMTO says it has been reported a vessel attack by two missiles, resulting in onboard fire 70NM Southeast of Yemen's Aden.
• Ambery Saysp Alau-flagged, UK-owned general cargo ship was reportedly targeted with two missiles approx. 63NM Southeast of Aden, Yemen

OTHER

• US, Japan and South Korea held a trilateral export control meeting at the US Embassy in Tokyo and agreed to cooperate further on Russia-bound export control and outreach to Southeast Asia, as well as critical tech export control, according to Japan's Trade Ministry.
• US GOP Rep. Gallagher said during a delegation visit to Taipei that they are there to show bipartisan support for Taiwan and need to be more vigilant than ever to pass on the gift of freedom. Gallagher also stated that the message they want to send is that if China attempts an invasion, that effort would fail, while he added that the US stands with Taiwan, according to Reuters.
• Taiwan's President Tsai thanked the US for continuing to help Taiwan strengthen its defences and said they will continue to engage with the world, as well as hope to see even more Taiwan-US exchanges this year. It was also reported that Taiwan's President-elect Lai said they are facing great pressure from China and will continue to enhance defence capabilities, according to Reuters.
• China’s coast guard said it drove away a Philippine Fisheries and Aquatic Resources Bureau vessel that 'illegally intruded' into the waters adjacent to Scarborough Shoal, according to state media.

CRYPTO

• Bitcoin sits just shy of USD 52k, whilst Ethereum (+2.2%) edges higher and back towards USD 3k.

APAC TRADE

• APAC stocks were mostly positive amid tailwinds from the tech uplift in US futures following NVIDIA earnings.
• ASX 200 lagged as participants continued to digest an influx of earnings and after Australia's Flash Manufacturing PMI returned to contraction territory.
• Nikkei 225 outperformed amid tech strength and eventually printed fresh intraday record highs above 39,000.
• KOSPI was marginally higher after the BoK kept rates unchanged and signalled an unlikelihood of a cut soon.
• Hang Seng and Shanghai Comp. were both firmer albeit with price action in Hong Kong choppy amid US-China chip-related frictions, while the mainland remained afloat after the latest stability efforts by China.

NOTABLE HEADLINES

• China's Foreign Minister Wang said he feels Europe's rational perception of China is increasing, believing China's development is in line with the logic of history and Europe should not be afraid of it or reject it. Wang added that the European side is positive about strengthening China-EU exchanges at all levels and is very enthusiastic about deepening practical cooperation, while he would like to stress to the European side that 'de-risking' will not eliminate cooperation and 'reducing dependence' will not reduce mutual trust.
• Chinese small banks reportedly cut deposit rates to ease margin pressure, according to China Securities Journal.
• BoK maintained its base rate at 3.5%, as expected, with the decision made unanimously. BoK said it will maintain a restrictive policy stance for a sufficiently long period and will monitor the inflation slowdown, financial stability and economic growth risks, household debt growth, monetary policy operations in major countries and developments in geopolitical risks. BoK also stated that consumption and construction investment to recover at a slower pace, as well as noted that uncertainties to the growth outlook are high. Furthermore, Governor Rhee said five board members said the current interest rate should be maintained at least for the next three months and one board member said the door for a rate cut should be opened for the next three months, while Rhee added that he still doesn't see much chances of a rate cut in H1 and that most members' view it is too early to discuss rate cuts.
• Former BoJ policymaker Sakurai says BoJ could end negative rates in March if this year's pay hikes exceed 4%, although there's an equal chance it may wait until April, according to Reuters.
• Japanese PM Kishida says need to achieve wage hikes exceeding price increases

DATA RECAP

• Japanese Manufacturing PMI Flash SA (Feb) 47.2 (Prev. 48.0); Services PMI Flash SA (Feb) 52.5 (Prev. 53.1)
• Australian Manufacturing PMI Flash (Feb) 47.7 (Prev. 50.1); Services PMI Flash (Feb) 52.8 (Prev. 49.1)
• New Zealand Trade Balance (NZD)(Jan) -976.0M (Prev. -323.0M, Rev. -368M); Exports (NZD)(Jan) 4.93B (Prev. 5.94B, Rev. 5.85B); Imports (NZD)(Jan) 5.91B (Prev. 6.26B, Rev. 6.22B)