• Equities are mostly modestly firmer; Adobe lower in the pre-market after soft guidance
• Dollar is flat, RENGO wage hike fails to lift the Yen
• Bonds are contained at post-PPI lows and Gilts continue to underperform
• Crude pulls back from best levels whilst copper holds at multi-month highs
• Looking ahead, US Import Prices, Canadian Wholesale Trade, UoM Inflation Expectations, Comments from ECB’s Lane

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.2%) began the session around the unchanged mark, before sentiment improved and edging into the green.
• European sectors are mixed; Telcoms takes the top spot, propped up by Vodafone (+4.5%) and Swisscom (+2.5%), whilst Real Estate is hampered by post-earnings losses in Vonovia (-6.1%).
• US equity futures (ES +0.1%, NQ +0.1%, RTY +0.3%) are modestly firmer with price action mimicking that seen in Europe; Adobe (-11.6% pre-market) is weaker after providing soft guidance.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• Contained trade for DXY and within 103.37-48 parameters, holding onto yesterday's PPI and IJC-induced gains. Upside sees the 50 and 100DMA at 103.53 and 200DMA at 103.65. To the downside, little in the way of support until 103.
• EUR/USD is unable to reclaim 1.09 with 1.0889 the high watermark for the session in quiet newsflow. If 1.09 is reclaimed, the 10DMA sits just above at 1.0905. Downside sees 1.0867 from 7th March.
• Steady trade for GBP vs. USD as UK-specifics remain light ahead of a CPI, PMI, retail sales data and the BoE announcement next week. The range for Cable stands at 1.2731-1.2756.
• JPY is pressured despite a strong outcome to the RENGO wage tally. Possibly a buy-the-rumour sell-the-fact move given that the data was expected to be on the hawkish side. Currently holds towards the upper end of a 148.83-04 range.
• Antipodeans are both softer vs. the USD but NZD more so amid cross-related buying in AUD/NZD. Antipodean-specific newsflow remains light ahead of the RBA next week.
• Click here for more details.

FIXED INCOME

• USTs are rangebound and remain around 110-06 following the hawkish PPI/IJC move yesterday, with support at 110-01+ from 14th Feb; focus turns to US Import Prices & UoM Inflation Expectations.
• Bund price action is steady and relatively rangebound within a 131.31-99 range; ECB's Lane to give remarks at 14:30 GMT / 10:30 ET.
• Gilts are once again the incremental underperformer, but only modestly so and holding above the 98.00 mark and by extension last week's 97.91 trough.
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COMMODITIES

• Crude initially traded sideways, taking a breather following yesterday's rally, before succumbing to some weakness into the European morning around the time details of the Hamas ceasefire proposal emerged; profit-taking may also be a factor. Brent Apr now holds below USD 85/bbl.
• Firm trade in precious metals despite the stronger Dollar but against the backdrop of the global risk aversion experienced yesterday (and into APAC) coupled with the ongoing geopolitical tensions in Russia/Ukraine and the Middle East; XAU resides within yesterday's USD 2.152-77.04/oz.
• Base metals are higher across the board this morning as momentum picked up with Shanghai copper reaching near-three-year highs and 3M LME touched a 10-month peak.
• Commerzbank lifts silver year-end price forecast to USD 29/oz.
• JP Morgan believes that Russia can maintain oil exports at its current levels through June, even as it cuts crude production by 0.5mln BPD. Drop in Russian exports could spur price pressures of an additional USD 5/bbl to the forecast of USD 88-90/bbl by May and the mid-80/bbl region in H2-2024.
• German Chemical Industry Association (VCI): 2023 production -7.9% Y/Y, Producer Prices -0.4% Y/Y; Revenue -12.2% Y/Y
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NOTABLE EUROPEAN HEADLINES

• ECB's Rehn reiterates data dependence, says inflation is set to enable easing to occur near the summer. On rates "... Therefore, there are no obvious reasons why adjustment measures could not be taken from the point of view of economic policy". Subsequent comments: Says at last week's meeting of the ECB council we started a discussion about reducing the restrictive dimension of monetary policy and about when it is appropriate to begin lowering rates. If inflation continues to fall and according to our estimate, sustainably downwards towards the target. We can already slowly start easing our foot off the brake pedal monpol.
• UK PM Sunak ruled out an early election on May 2nd and noted his working assumption is that the election would be held in H2.
• The Bank of England/Ipsos Inflation Attitudes Survey: 1yr inflation expectation slips to 3% from 3.3%. Median expectations of the rate of inflation over the coming year were 3%, down from 3.3% in November 2023. Asked about expected inflation in the twelve months after that, respondents gave a median answer of 2.8%, unchanged from 2.8% in November 2023. Asked about expectations of inflation in the longer term, say in five years’ time, respondents gave a median answer of 3.1%, down from 3.2% in November 2023. When asked about the future path of interest rates, 36% of respondents expected rates to rise over the next 12 months, down from 44% in November 2023.
• German Economy Ministry says no tangible recovery yet in sight, according to a report.

DATA RECAP

• French CPI (EU Norm) Final YY (Feb) 3.2% vs. Exp. 3.1% (Prev. 3.1%); CPI (EU Norm) Final MM (Feb) 0.9% vs. Exp. 0.9% (Prev. 0.9%)
• Swedish Money Mkt CPIF Infl 5 Yrs (Mar) 2.0% (Prev. 2.10%); Money Mkt CPIF Infl 1 Yr (Mar) 2.0% (Prev. 1.90%)
• Swedish CPIF Inflation 5 Years (Q1) 2.1% (Prev. 2.10%); CPIF Inflation 1 Year (Q1) 2.4% (Prev. 2.80%)
• Swedish Unemployment Rate SA (Feb) 8.0% vs. Exp. 8.3% (Prev. 8.2%); Unemployment Rate (Feb) 8.5% (Prev. 8.5%); Total Employment (Feb) 5.174M (Prev. 5.136M)
• Turkish EndYear CPI Fcst/Cb Svy (Mar) 44.19% (Prev. 42.96%)
• Polish CPI Final YY (Feb) 2.8% vs. Exp. 3.2% (Rev. 3.7%); CPI Final MM (Feb) 0.3% vs. Exp. 0.5%.
• Italian Consumer Prices Final YY (Feb) 0.8% vs. Exp. 0.8% (Prev. 0.8%); Consumer Prices Final MM (Feb) 0.1% vs. Exp. 0.1% (Prev. 0.1%)
• Italian Retail Sales SA MM (Jan) 1.0% (Prev. -0.1%); Retail Sales NSA YY (Jan) -0.1% (Prev. 0.3%)

NOTABLE US HEADLINES

• Adobe Inc (ADBE) - Q1 2024 (USD): Adj. EPS 4.48 (exp. 4.38), Revenue 5.18bln (exp. 5.14bln), announces new USD 25bln share repurchase program. Co. drove record Q1 revenue demonstrating strong momentum across Creative Cloud, Document Cloud and Experience Cloud. The chair and CEO said they have done an incredible job harnessing the power of generative AI to deliver ground-breaking innovation across our product portfolio. Co noted Q1 results and record RPO reflect strong customer adoption of their innovative products and services. Sees Q2 Adj. EPS USD 4.35-4.40 (exp. 4.39). Sees Q2 rev. 5.25bln-5.30bln (exp. 5.30bln). (Newswires) Shares -10.9% after-hours.
• Apple (AAPL) - Buys AI startup DarwinAI as part of race to add features; has added dozens of DarwinAI staff to its AI division, according to Bloomberg. (Bloomberg)

GEOPOLITICS

MIDDLE EAST

• At least 11 Palestinians were killed and 100 injured in Israeli forces targeting people waiting for humanitarian aid in Gaza, according to the Gaza health ministry cited by Reuters.
• Australia's Foreign Minister said Australia is to resume funding for UNRWA which is the UN's main Palestinian relief agency.
• US military said Houthis fired two anti-ship ballistic missiles from Yemen towards the Gulf of Aden and two towards the Red Sea although there were no injuries or damage reported to US or coalition ships, while the US military said it destroyed nine anti-ship missiles and two drones in Houthi-controlled areas of Yemen, according to Reuters.
• UKMTO received a report of an incident 76NM west of Yemen's Hodeida and announced a merchant vessel was struck by a missile and sustained some damage, although the crew were reported safe and the vessel is proceeding to its next port of call.
• Hamas ceasefire proposal to mediators includes first stage of releasing Israeli women, children, elderly, and ill in exchange for 700-1000 Palestinian prisoners, according to the proposal seen by Reuters
• Ambrey says a tanker was subject to a missile strike on the starboard side circa. 88NM north-west of Hodeidah, Yemen; damage report, no crew injuries.

CRYPTO

• Bitcoin shed as much as 6% off its price, falling to as low as USD 65.5k, before paring the move back to around USD 68k.

APAC TRADE

• APAC stocks declined amid data-related headwinds from the US including hot PPI and weak Retail Sales.
• ASX 200 was dragged lower by underperformance in mining-related industries after iron ore resumed its slide.
• Nikkei 225 retreated amid cautiousness ahead of the RENGO wage announcement and its potential ramifications on BoJ policy as reports had suggested strong wage hikes could be the deciding factor on whether the BoJ hikes at next week's crucial meeting.
• Hang Seng and Shanghai Comp. were negative with heavy losses in tech and property sectors in Hong Kong where the Hang Seng Mainland Properties Index fell more than 3% after a steeper decline in Chinese New Home Prices, while the mainland was only marginally pressured after the PBoC kept its 1-year MLF rate unchanged and opted to not fully roll over the maturing amount.

NOTABLE ASIA-PAC HEADLINES

• PBoC announced a CNY 387bln 1-year Medium-term Lending Facility operation vs. CNY 500bln maturing with the rate kept unchanged at 2.50%, as expected.
• China is said to tighten IPO listing requirements according to the regulator cited by Bloomberg.
• China is reportedly urging EV makers to purchase local chips as the clash with the US escalates, via Bloomberg.
• Chinese FX Regulator says foreign investors increased their holdings of domestic bonds by a net of USD 1.1bln in Feb; foreign holdings of Chinese onshore bonds remain at relatively high levels in Feb and foreigners net increase onshore stocks. Major economies expected to shift monetary policy stance in 2024, external liquidity tensions to ease and conducive to China's FX market stability.
• S&P Global Cuts outlook on China's Vanke BBB+ Credit Rating to Negative from Stable

OTHER

• Russia's Kremlin, on French President Macron's latest statement on Ukraine, says France is already involved in the war and has signaled it's ready for deeper involvement

JAPAN

• Japanese Finance Minister Suzuki said they are seeing a strong pay hike move in wage talks and the government is to mobilise all policy steps available to continue the wave of wage hikes, while he added that Japan is no longer in deflation.
• A Reuters poll showed 35% of economists expect the BoJ to end negative rates in March and 62% expect April, while 31% of economists expect the BoJ to end YCC in March and 62% expect April.
• Japanese Unions said to have won over 5% average (exp. 4.1%, demand 5.85%) in wage hike talks, according to Kyodo News
• Japan RENGO 1st Wage Tally: 5.28% (exp. 4.1%; 2023 final figure 3.6%). Base Pay to rise 3.70% (Initial 2.33% in 2023). Japan's FY24 pay increases is the largest in over three decades.
• BoJ is reportedly making final arrangements to end negative interest rates at next week's meeting, according to JiJi.
• RENGO says part-timers wage hikes reached 6% for 2024.
• Head of Japan's biggest trade union confederation RENGO says rising inequality, inflation and labour crunch among factors behind big wage hikes.
• Japanese government and BoJ are to keep the joint statement including the 2% price target, according to JiJi.

DATA RECAP

• Chinese House Prices YY (Feb) -1.4% (Prev. -0.7%).
• Chinese M2 Money Supply (Feb): 8.7% Y/Y (exp. 8.8%); New Yuan Loans (CNY) 1.56tln (exp. 1.55tln).
• Indian Trade Def Govt -USD (Feb) 18.71B vs. Exp. 18.3B (Prev. 17.49B); Imports - USD (Feb) 60.11B (Prev. 54.41B); Exports - USD (Feb) 41.4B (Prev. 36.92B)