• European bourses modestly firmer having picked up from an uneventful open with newsflow limited
• DXY fell below Monday’s trough with pressure coming via JPY strength after Japanese CPI
• Session’s focus for fixed income is supply, EGBs stuck near unchanged levels while USTs are a touch firmer
• Commodities near unchanged levels as we await fresh geopolitical developments, latest pour some cold water on Biden’s framing. Metals bid, benefitting from USD/yields.
• Fed's Schmid (non-voter) said there is no need to pre-emptively adjust the stance of policy
• Looking ahead, highlights include US Durable Goods, Richmond Fed, NBH, Fed Discount Rate Minutes, Comments from Fed's Barr, BoE's Ramsden, ECB's Elderson, Supply from the US
• Click here for the Newsquawk Week Ahead.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer having picked up a touch in limited newsflow after an uneventful open, Euro Stoxx 50 +0.3%. Breadth overall fairly narrow, though the likes of the DAX 40 +0.4% have begun to extend modestly higher.
• Sectors mixed with no clear theme or bias though Basic Resource names outperform while Morgan Stanley lifted Semiconductors to Overweight (prev. Neutral). Auto names, in Germany in particular, are modestly firmer after Monday's pressure.
• Stateside, futures remain near the unchanged mark but with a slight positive bias, ES +0.1%, in-fitting with initial action in European trade but yet to experience the modest uptick seen since in European peers. Newsflow thus far limited, updates around MSFT, HES, CVX among others.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from abrdn, Puma, Bouygues & more.
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FX

• The DXY fell below Monday's 103.71 trough to a 103.60 base amid JPY pressure post-Japanese CPI. However, USD/JPY failed to test 150.00 to the downside and has since risen a touch with the USD benefitting in-turn and towards the 103.81 peak.
• EUR holds near the 1.0850 mark in relatively tight parameters with specifics light and no follow through from German GfK.
• Cable is unchanged and within Monday's range, docket ahead for the UK is headlined by BoE's Ramsden.
• AUD outperforms as it resides near its 100-DMA and is yet to test the 200-DMA at 0.6555 and 0.6561 respectively, Kiwi ever so slightly softer vs the USD ahead of the RBNZ.
• PBoC set USD/CNY mid-point at 7.1057 vs exp. 7.1945 (prev. 7.1080).
• Chinese regulators are reportedly taking measures to keep the renminbi exchange rate stable as Beijing aims to bolster confidence in China's economy and currency ahead of the "Two Sessions" gathering set to begin March 4th, while measures include refraining from short-term interest rate cuts and keeping the CNY currency band against the dollar firm, according to FT.
• Click here for more details.

FIXED INCOME

• Session's focus has been supply. Little reaction to outings from the Netherlands, UK & Germany thus far though the overall hefty docket in addition to syndication details/announcements from Slovakia, France, Italy (Valore) & UK has kept EGBs near the unchanged mark.
• Bunds held a tick above Monday's Monday's 132.33 base and by extension remain above Friday's 132.05 low; BTPs similarly contained but we await further 7yr Valore (Retail) updates after Monday's first day of subscription saw a record EUR 6.4bln of demand.
• Gilts not 'stuck; to unchanged levels in the same way as BTPs as its own supply was via a I/L; most recently, no reaction to the DMO announcing it will be launching a new 30yr syndication from 11th March (week after the March budget).
• USTs a touch firmer but someway shy of Monday's 110-04 peak after lacklustre 2yr & 5yr sales, 7yr due later. Yields currently under modest pressure with no overt flattening/steepening bias.
• Click here for more details.

COMMODITIES

• Crude is near unchanged but holding on to most of the prior day's gains amid the recent Dollar softness and ongoing geopolitics, no reaction to the most recent updates which poured some cold water on Biden's relative optimism overnight.
• Nat gas under pressure but within familiar ranges for Dutch TTF while its US peer is essentially flat intraday.
• Precious metals benefit from the softer USD and yield environment, but slipped from best as the DXY lifted from its low; base peers post modest gains with potential tailwinds from reports out of China around measures to support consumption.
• Russia is to ban gasoline exports for six months with the ban to be introduced from March 1st, according to Tass.
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt is considering plans to lower national insurance instead of income tax and could also announce a duty on vapes, according to reporting by The Telegraph.

DATA RECAP

• UK BRC Shop Price Index YY (Jan) 2.5% (Prev. 2.9%)
• German GfK Consumer Sentiment (Mar) -29.0 vs. Exp. -29.0 (Prev. -29.7, Rev. -29.6)

EARNINGS/EQUITY SPECIFICS

• Hess (HES), Chevron (CVX) - Chevron's USD 53bln acquisition of Hess faces potential disruption as rivals ExxonMobil (XOM) and CNOOC (883 HK) claim pre-emptive rights over Chevron's stake in a crucial Guyana oil project (the largest oil discovery in a decade). Discussions are ongoing, but failure to resolve this could jeopardise the Hess takeover, Chevron said. (Newswires) HES -2.9%, CVX -0.6% in pre-market trade
• Puma (PUM GY) - Q4 (EUR): Revenue 1.98bln (exp. 2.094bln). EBIT 94.4mln (exp. 100mln). Net 0.8mln (exp. 28mln). Adverse currencies lead to a negative impact on sales of more than EUR 400mln. Asia/Pacific sales increased by 2.8% Y/Y, supported by strong growth in Greater China and India. The rest of Asia was softer, impacted by consumer sentiment and warm weather conditions. Sales in the Americas region decreased by 2.4% Y/Y due to the devaluation of the Argentine peso. 2024 EBIT guidance 620-700mln (exp. 663mln). "Going into 2024, we see that the market environment remains challenging." (Puma) +0.5% in European trade
• Lowe's Companies Inc (LOW) Q4 2023 (USD): Adj. EPS 2.28 (exp. 1.68), Revenue 18.602bln (exp. 18.45bln) choppy pre-market
• EU antitrust regulator says it will analyse Microsoft's (MSFT) AI partnership with Mistral AI.

NOTABLE US HEADLINES

• Fed's Schmid (non-voter) said there is no need to pre-emptively adjust the stance of policy and that the Fed should be patient and wait for convincing evidence that the inflation fight has been won, while they are not out of the woods yet on 'too high' inflation. Schmid said there is no hurry to halt the ongoing reduction in the size of the Fed's balance sheet and how much further the Fed can shrink its balance sheet is 'an open question'. Furthermore, he doesn't favour an 'overly cautious' approach to balance sheet runoff and some interest-rate volatility should be tolerated.
• US Treasury Secretary Yellen said she is carefully monitoring economic challenges in certain countries but noted the global economy remains resilient and global growth has been stronger than expected, while she added inflation is to fall in 80% of economies this year. Yellen said the US economy's strength has been a key driver of positive global economic performance and although there are risks to the US outlook, America's growth has consistently exceeded projections, according to Reuters.
• US Commerce Secretary Raimondo said the US is to make 20% of 'leading edge' chips by the end of the decade and some chip companies may get half of what they sought or less in government subsidies.

GEOPOLITICS

MIDDLE EAST

• Hamas received a draft Paris proposal which allows for a 40-day initial halt in all military operations and for the gradual return of displaced civilians to North Gaza, except men of military age, while it proposes all Israeli women, children under 19, elderly, and sick hostages would be released in exchange for a number of Palestinian prisoners. Furthermore, Palestinian prisoners would be exchanged for the release of Israeli hostages at a ratio of 10 to 1, according to a senior source cited by Reuters.
• US President Biden said he hopes a ceasefire agreement between Israel and Hamas can take effect by next Monday and national security advisers told him negotiators are "close", according to AP.
• US President Biden said Israel has agreed not to engage in "activities" during Ramadan and has committed to enable an evacuation of significant portions of Rafah "before they go and take out remainder of Hamas", according to NBC interview
• US Central Command said it destroyed three unmanned surface vessels, two mobile anti-ship cruise missiles, and a one-way attack unmanned aerial vehicle in self-defence, according to Reuters.
• Hamas official says there are still "big gaps" that need to be bridged before a ceasefire. Thereafter, Israeli political sources report that they do not know what the basis of US President Biden's optimism regarding the imminent ceasefire is, via AJA Breaking and there is no breakthrough to announce on Gaza ceasefire, according to Qatar's Foreign Minister; remain upbeat and optimistic on mediation talks; no agreement between Israel and Hamas on any of the main issues linked to a ceasefire.

OTHER

• Czech PM Fiala said about 15 countries have shown interest in the Ukraine ammunition initiative and Dutch PM Rutte noted that several other countries will also contribute to the Czech-proposed ammunition initiative, according to Reuters.
• French President Macron said they think a Russian defeat is indispensable for Europe's security and they will be exploring ways to mobilise third countries to buy ammunition, while he added they will join the ammunition initiative. Macron also said European countries will increase sanctions on countries helping Russia to bypass European sanctions and noted that he didn't say France was not in favour of sending troops to Ukraine, while he stands by strategic ambiguity on the issue of sending troops to Ukraine and cannot rule it out.
• Russia's Kremlin, on French President Macron not ruling out sending European troops to Ukraine, says sending NATO member contingent to Ukraine is a very important new element; if this happens, talks would have to shift to the inevitability of conflict with NATO.
• Russian Security Council Secretary Patrushev met with Cuba's Raul Castro to discuss security cooperation, according to Ifax.

CRYPTO

• Bitcoin continues to rise and swiftly eclipsed the USD 55k mark, extending on the pronounced price action seen on Monday.

APAC TRADE

• APAC stocks traded mixed after the lacklustre handover from the US as markets braced for looming risk events.
• ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners.
• Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data.
• Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption.

NOTABLE HEADLINES

• US intends to increase defence industrial cooperation with Japan, India, and other partners in the Indo-Pacific to build supply chain resilience in the face of threats like China, according to a Pentagon official cited by Nikkei.
• China's Commerce Minister Wang met with USTR Tai at the WTO conference in Abu Dhabi and expressed Beijing’s “solemn concerns” over US tariffs and Taiwan-related issues, according to SCMP.
• China's Commerce Minister Wang said China is highly concerned about the trade remedy investigation initiated by the European side on China's EVs and other products, while he expressed strong dissatisfaction with this investigation that lacks factual basis.
• China's Commerce Minister Wang said China hopes Australia will pay attention to and actively promote the resolution of specific problems encountered by Chinese enterprises in Australia, as well as actively support China's accession to CPTPP.
• ABC News reported that it understands China is on track to lift tariffs on Australian wine at the end of next month when a review into the wine duties concludes.
• Standard Chartered (2888 HK) suspended new subscriptions by clients in China under the QDII outbound investment programme citing "commercial reasons", according to Reuters.
• PBoC held a working meeting on Feb 26th; says they are to use all monetary tools in full and use them well.
• China says it will prevent fluctuations in the housing market, according to CCTV; says localities should promote balance between supply and demand in the real estate market. All cities should accurately study and judge housing demand and improve housing supply, cities should take into account local economic and social development alongside population changes.

DATA RECAP

• Japanese National CPI YY (Jan) 2.2% vs. Exp. 1.9% (Prev. 2.6%)
• Japanese National CPI Ex. Fresh Food YY (Jan) 2.0% vs. Exp. 1.8% (Prev. 2.3%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Jan) 3.5% vs. Exp. 3.3% (Prev. 3.7%)