• European equites are around flat, whilst US futures are slightly softer following the prior day’s strength
• Dollar is flat and around 104.00, JPY is softer following continued hawkish Fed speak
• Bonds are softer but Bunds/Gilts yet to test Thursday’s lows, fleeting hawkish move on Ifo/ECB Consumer survey
• Commodities pressured with catalysts light thus far; White House announces new Russian sanctions
• Looking ahead, ECB’s Schnabel

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.1%), have not deviated much from levels seen at the open, with trade fairly tentative after the prior day’s strength. The FTSE MIB (+0.6%) is the exception, lifted by continued strength in the Italian banking sector.
• Sectors are mixed; Chemicals take the top spot, lifted by post-earning strength in BASF (+0.5%). Autos build on the prior day’s gains after Barclays upgraded Mercedes Benz (+1.5%). Telecoms is the clear laggard, hampered by Deutsche Telekom's (-1.7%) results.
• US Equity Futures (ES -0.1%, NQ -0.2%, RTY -0.6%) are subdued, paring back some of the pronounced strength in the prior session. Nvidia soared as much as 16% in the prior session and is higher by 1.8% in the pre-market.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from Allianz, BASF and more.
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FX

• DXY is pivoting around the 104.00 mark within a 103.85-104.01 range and contained within yesterday's 103.43-104.12 parameters.
• Uneventful trade for EUR/USD with the pair sandwiched between its 100DMA at 1.0811 and 200DMA at 1.0826. IFO did little to move the dial, whilst ECB inflation expectations posted a modest uptick for the 1yr reading.
• Hawkish Fed rhetoric has seen the JPY lose further ground to the dollar with focus on a potential test of the recent YTD peak at 150.88. Such a move could prompt verbal jawboning from Japanese officials.
• NZD is the marginal laggard across the majors following soft retail sales overnight. AUD is trivially firmer vs. the USD with the pair supported via favourable risk dynamics.
• PBoC set USD/CNY mid-point at 7.1064 vs exp. 7.2008 (prev. 7.1018).
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FIXED INCOME

• Once again, initial leads were bearish with EGBs veering lower throughout the morning. The German Ifo release which printed alongside the latest ECB Consumer Inflation survey, saw a slight increase in the 12-month view. Reaction to the data was hawkish, but not sufficient to trigger a test of 132.00.
• USTs are following their European peers with the pressure resulting in a slight uptick in pricing for the Fed, but very close to the Fed's own view; currently near lows at 109-10.
• Gilt price action is in-fitting with Bunds with specifics light so far. Overall bearish action has pressured Gilts to a 97.10 trough.
• Italy sells EUR 4bln vs exp. EUR 3.5-4bln 3.20% 2026 BTP Short Term and EUR 0.5-1.0bln 1.50% 2029 & EUR 2.55% 0.25-0.5bln 2041 BTPei.
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COMMODITIES

• A weak session for crude prices this morning despite a lack of fresh or clear fundamental drivers, although sentiment has been gradually coming off best levels this morning; Brent Apr dipped back under USD 83/bbl.
• Precious metals also see broad weakness, despite a relatively contained Dollar and quiet news flow, whilst risk appetite has been waning from best levels in recent trade; XAU holds around USD 2020/oz; base metals are lower across the board.
• QatarEnergy is due to make an announcement on Sunday that will have "a significant impact" on the industry, according to Reuters sources; details light
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NOTABLE EUROPEAN HEADLINES

• ECB's Holzmann says the main risk to rake cuts is Red Sea tensions, via Bloomberg TV; Some wage increases have been quite high. Better to cut later and faster than too early. ECB hopes for cuts but have been wrong before. Does not see circumstances for the ECB to cut before the Fed.
• ECB's Schnabel says monetary policy has had a weaker impact on dampening demand for services
• ECB's Nagel says it is too early to cut rates even if a move appears tempting; will only get a key price pressure in Q2, then "we can contemplate cut in interest rates"; price outlook is not yet clear enough. Period of rapid inflation is over, and some setbacks ahead are possible. Inflation, including "hard core" will remain markedly higher than 2% in coming months.
• ECB Consumer Inflation Expectations Survey (Jan) - 12-months ahead 3.3% (prev. 3.2%); 3-year ahead 2.5% (prev. 2.5%)
• UK Ofgem Energy Price Cap (GBP): 1,690 (exp. 1,656; prev. 1,928), -12.3% (exp. -14%) for dual-fuel households.

DATA RECAP

• UK GfK Consumer Confidence (Feb) -21.0 vs. Exp. -18.0 (Prev. -19.0)
• Swiss Non-Farm Payrolls (Q4) 5.488M (Prev. 5.465M, Rev. 5.465M)
• German Ifo Expectations New (Feb) 84.1 vs. Exp. 84 (Prev. 83.5); Ifo Business Climate New (Feb) 85.5 vs. Exp. 85.5 (Prev. 85.2); Ifo Current Conditions New (Feb) 86.9 vs. Exp. 86.7 (Prev. 87, Rev. 86.9)

EARNINGS

• Standard Chartered (2888 HK / STAN LN) - FY23 (USD): adj. Pretax 5.7bln (exp. 5.89bln, prev. 4.76bln Y/Y), adj. Op Revenue 17.4bln (exp. 18.6bln, prev. 16.3bln Y/Y). Announces USD 1bln share repurchase. Guides initial FY24-26 op. income growth at the top of the range +5-7%. Underlying profit before tax rose 27% Y/Y to 5.7bln, NII rose 23% Y/Y to 9.6bln, Q4 adj. pretax 1.08bln (exp. 989.6mln), Co. announces USD 1bln buyback. (Newswires) Index Weightings: FTSE 100 (0.8%). Shares +8.1% in European trade
• Allianz (ALV GY) - Q4 (EUR): Adj. EPS 6.00 (exp. 5.69, prev. 4.99 Y/Y), Op. 3.77bln Y/Y (prev. 3.96bln Y/Y). Guides initial FY24 Op. 13.8-15.8bln. Proposes to increase FY dividend to EUR 13.80 (exp. 12.08, prev. 11.40), announces buyback programme of up to EUR 1bln, to be conducted between March 2024 and year-end. Regular dividend payout ratio increased to 60% (prev. 50%). This new dividend policy shall already apply to the dividend for fiscal year 2023 (Newswires) Index Weightings: DAX (7.9% - third largest), Euro Stoxx 50 (3.0%), Stoxx 600 (1.0%) Shares -3.2% in European trade
• BASF (BAS GY) - Q4 (EUR): Revenue 15.9bln (exp. 16.2bln). Adj. EBIT 292mln (exp. 398mln). Sees 2024 operating profit between EUR 13.8-15.8bln (exp. 15.48bln). Guides FY24 EBITDA 8-8.6bln, FCF 0.1-0.6bln. Proposes dividend of EUR 3.40/shr for FY23. Targeting cost-saving plans of up to EUR 1bln by the end of 2026. (Newswires) Index Weightings: DAX 40 (3.6%), Euro Stoxx 50 (1.4%), Stoxx 600 (0.4%) Shares +0.5% in European trade
• Deutsche Telekom (DTE GY) - Q4 (EUR): Adj. Net 1.83bln (exp. 1.63bln), Adj. EBITDA 10.06bln (exp. 10.1bln), Revenue 29.4bln (exp. 28.5bln). Guides initial FY24 EPS > 1.75 (exp. 1.84), Adj. EBITDA 42.9bln. (Newswires) Index Weightings: DAX 40 (6.2%), Euro Stoxx 50 (2.3%), Stoxx 600 (0.8%) Shares -2.7% in European trade

NOTABLE US HEADLINES

• Fed's Cook (voter) said she would like to have greater confidence that inflation is converging to 2% before beginning to cut the policy rate and believes risks towards achieving employment and inflation goals are moving into a better balance, while she now sees two-sided risks in considering monetary policy. Cook also stated she is weighing the risks of easing policy too soon which could keep inflation high, versus easing too late and harming the economy. Furthermore, she believes the current monetary policy stance is restrictive and sees an eventual rate cut as adjusting policy to reflect a shifting balance of risks.
• Fed's Waller (voter) said data since his last speech on January 16th reinforced his view that they need to verify inflation progress from H2 2023 will continue which means there is no rush to begin cutting rates, while it is appropriate to be patient, careful and methodical given the economy's strength and recent inflation data. Waller added the recent CPI report serves as a reminder that inflation progress is not assured and it is unclear if the CPI increase is due to seasonal factors and housing costs, or indicates more persistent inflation. Waller also said that more data is needed to determine if the January CPI increase was significant or just noise which means waiting longer before he has enough confidence that starting rate cuts will keep them on the 2% inflation path. Furthermore, he said the start of policy easing and the number of rate cuts will depend on incoming data and believes the committee can wait a little longer before easing monetary policy, as well as warned that cutting too soon could undermine inflation progress and risks considerable harm to the economy.
• Goldman Sachs pushed back its first Fed rate cut forecast to June from May and now only sees 4 cuts this year instead of 5 cuts.
• White House announces more than 500 new sanctions against Russia for its ongoing war in Ukraine and death of Kremlin critic Navalny; will target defense industrial base, procurement networks

GEOPOLITICS

MIDDLE EAST

• US charged four mariners from an Arabian sea vessel transporting suspected Iranian-made advanced conventional weapons.
• "Israeli Foreign Minister: We will not be patient for a longer period in order to reach a diplomatic solution on the Lebanese front", according to Sky News Arabia

OTHER

• China's envoy for Korean Peninsula affairs told US's North Korea affairs official that China will continue to play a constructive role in promoting the political settlement of issues concerning the Korean Peninsula and said all parties concerned should acknowledge the core of the Korean Peninsula issue, as well as address their concerns through balanced and meaningful dialogue, according to Reuters.

CRYPTO

• Bitcoin (-1%) is lower and edges back towards USD 50k.

APAC TRADE

• APAC stocks mostly benefitted amid tailwinds from the tech-led surge in the US on the NVIDIA wave as its shares surged over 16% and its market cap increased by a record USD 277bln.
• ASX 200 finished higher with gains led by outperformance in tech, consumer stocks and financials.
• KOSPI kept afloat with South Korea to execute a record KRW 398tln budget in H1 to prop up domestic demand.
• Hang Seng and Shanghai Comp. were mixed with the tech sector facing headwinds from ongoing trade-related frictions, while the mainland was indecisive as participants digested the PBoC's liquidity injection, CSRC's denial of regulatory measures, and the latest Home Price data which showed a steeper Y/Y fall in property prices.

NOTABLE HEADLINES

• US and China are in talks over innovative emerging market debt plans to prevent a surge in defaults.
• China has reportedly turned to private firms to hack an array of foreign governments and organisations, while files indicate China infiltrated the cyberinfrastructure and collected data of government departments in Malaysia, Thailand and Mongolia, according to FT citing a large data leak from Shanghai Anxun Information Technology.
• China's Embassy in the UK commented regarding UK sanctions on Chinese companies in which it stated that sanctions against relevant companies are 'unilateral actions that have no basis in international law' and it is firmly opposed to them, while it would like to inform the British side that any act that undermines China's interests will be resolutely countered by the Chinese side, according to Reuters.
• US export curbs on China won't extend to legacy chips which generally refers to 28-nanometer and older-generation semiconductors, according to US official cited by Nikkei.
• US lawmakers urged Volkswagen (VOW3 GY) to halt operations in Xinjiang after vehicles with Chinese components were held at US customs.
• Chinese commercial banks sold a net USD 9.8bln of FX in Jan (vs net sale of USD 4.3bln in Dec), according to FX regulator.
• China's CSRC vows to crack down on market manipulation and insider trading, will step up onsite inspection of listing candidates.
• Fitch on China says it believes rate cuts will deliver only a minor boost to economic activity.
• Chinese Cabinet meeting says they are to study measures to attract and utilise foreign investment on a larger scale; to study measures to prevent and resolve local debt risks

DATA RECAP

• Chinese New Home Prices MM (Jan) 0.4% (Prev. -0.5%); New House Prices YY (Jan) -0.7% (Prev. -0.4%)
• New Zealand Retail Sales QQ (Q4) -1.9% (Prev. 0.0%); Retail Sales YY (Q4) -4.1% (Prev. -3.4%)