• European bourses and US futures are modestly firmer across the board; the NQ leads the gains as Tech continues yesterday’s strength.
• The Dollar is flat whilst GBP marginally underperforms following soft UK Retail Sales data, AUD is bid on firmer base metals and a positive risk tone.
• Treasuries and Bunds are contained whilst Gilts outperform following UK data.
• Crude continues to build on the prior day’s strength with a lack of pertinent catalysts; Base metals are firmer amid Chinese stimulus hopes.
• Looking ahead, highlights include EZ Consumer Confidence (Flash), Canadian Retail Sales, US UoM Prelim, and speeches from Fed’s Daly & Barr.

EUROPEAN TRADE

EQUITIES

• European bourses are modestly firmer but with price action contained amid a lack of pertinent catalysts; the FTSE 100 (+0.5%) leads amid the softer Pound and lower yields.
• European sectors hold a slight positive tilt; Travel & Leisure outperforms, Tech continues to build on the prior day's advances whilst Consumer Products is hampered as Luxury gives back some of yesterday's gains.
• US equity futures are firmer across the board to varying degrees. The NQ (+0.7%) continues yesterday’s outperformance.
• BASF (BAS GY) FY Prelim (EUR): adj. EBIT 3.81bln (exp. 3.85bln); Sales 68.90bln (exp. 70.58bln); Miss in forecasts "primarily attributable to non-cash-effective impairments in the amount of EUR 1.1bln".
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FX

• A contained session for the Dollar thus far in narrow 103.31-51 ranges amid a lack of pertinent catalysts and a light docket ahead; DXY resides within yesterday's 103.14-63 range on either side of its 200 DMA (103.45).
• A flat session for the EUR amidst a quiet morning with little price action seen on the sub-forecast German PPI metrics; EUR/USD trades within yesterday's 1.0845-1.0906 parameter.
• GBP is the G10 underperformer (albeit narrowly) in the aftermath of the dismal UK Retail Sales data; Cable found resistance just above its 21 DMA (1.2708) and matched yesterday's high.
• Antipodeans are mixed trade across the antipodeans with the AUD propped by a rise in base metals whilst NZD is subdued following a further contraction in Manufacturing PMI.
• PBoC set USD/CNY mid-point at 7.1167 vs exp. 7.1972 (prev. 7.1174).
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FIXED INCOME

• USTs are flat following yesterday's bear-steepened as the long end failed to recover from the larger-than-expected drop in US jobless claims; Resistance at 111-21 and support at the 38.2% Fibonacci retracement level from Oct 19 at 110-14.
• Gilts saw a marginal gap higher at the resumption of trade following the dismal UK Retail Sales metrics, which saw the contract open at 98.90 (vs yesterday's 98.71 close).
• Another choppy morning within narrow ranges for Bunds with horizontal trade seen in APAC hours following yesterday's fall under 134.00 after yesterday's US data.
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COMMODITIES

• WTI and Brent continue to extend on gains after settling higher by over USD 1/bbl apiece yesterday; Brent Mar resides above USD 79/bbl and found resistance just before USD 79.50/bbl.
• Modest upside bias in precious metals as the DXY remains caged whilst geopolitics could be underpinning the yellow metal as prices were largely unfazed by yesterday's US data; XAU found support at near its 50 DMA (USD 2,019.74/oz).
• Base metals are firmer across the board despite relatively muted price action elsewhere, with copper continuing to edge higher.
• Russia's Kremlin said there is no prospect of reviving Black Sea Grain deal, said alternative routes to ship Ukrainian grain carry huge risks
• Saudi Finance Minister said Saudi Arabia is not worried about the oil price, via BBG interview
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NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt has given strong hints that he wants to cut taxes in the spring budget, according to the BBC. He did not offer any further detail on the scale of potential future tax cuts, as the government awaits an assessment from the Office for Budget Responsibility (OBR). It is widely expected that the chancellor will focus on income tax in the budget on 6 March, BBC said.
• SNB's Jordan said that additional rate hikes from the Bank are not necessary to maintain price stability, according to Aargauer Zeitung

DATA RECAP

• UK Retail Sales MM (Dec) -3.2% vs. Exp. -0.5% (Prev. 1.3%, Rev. 1.4%); ONS said retailers say part of the fall reflects consumers purchasing food and Christmas gifts in November
• UK Retail Sales Ex-Fuel YY (Dec) -2.1% vs. Exp. 1.3% (Prev. 0.3%, Rev. 0.5%); Retail Sales Ex-Fuel MM (Dec) -3.3% vs. Exp. -0.6% (Prev. 1.3%, Rev. 1.5%); Retail Sales YY (Dec) -2.4% vs. Exp. 1.1% (Prev. 0.1%, Rev. 0.2%)
• German Producer Prices MM (Dec) -1.2% vs. Exp. -0.5% (Prev. -0.5%); German Producer Prices YY (Dec) -8.6% vs. Exp. -8.0% (Prev. -7.9%)
• Swiss Producer/Import Price MM (Dec) -0.6% (Prev. -0.9%); Producer/Import Price YY (Dec) -1.1% (Prev. -1.3%)

NOTABLE US HEADLINES

• White House announces new actions to cut EV costs for Americans and continue building out convenient, reliable and made-in-America EV charging network
• PPG Industries Inc (PPG) Q4 2023 (USD): Adj. EPS 1.53 (exp. 1.49), Revenue 4.35bln (exp. 4.27bln); anticipate economic conditions will remain subdued during H1 '24
• Supermicro (SMCI) raises Q2 guidance; EPS view USD 5.40-5.55 (prev. 4.40-4.88, exp. 4.52) and revenue between USD 3.6-3.65bln (prev. 2.7-2.9bln, exp. 2.78bln); cites "strong market and end customer demand for rack-scale, AI and Total IT Solutions" Shares +10.5% after-hours
• Amazon (AMZN) AWS said to invest about JPY 2.3tln in Japan over 2023-2027 for data centre business expansion, according to Nikkei

GEOPOLITICS

MIDDLE EAST

• Yemen's Houthis military spokesman said naval forces carried out an operation against the American ship Chem Ranger in the Gulf of Aden with naval missiles, while the US military later stated Houthis launched two anti-ship ballistic missiles at a US-owned tanker ship and that there was no reported damage or injuries.

OTHER

• North Korea said it conducted a test of an underwater nuclear weapons system and that the test was in response to joint military drills involving South Korea, the US and Japan, according to KCNA.
• Belarusian Defence Minister said Belarusian new defence doctrine defines actions in case of aggression against CSTO allies, according to Tass

CRYPTO

• Bitcoin, +0.7%, attempts to pare back some of the prior day's hefty losses, though still remains below the USD 41.5k level.

APAC TRADE

• APAC stocks mostly took impetus from the tech-led advances on Wall St where sentiment was underpinned after initial jobless claims fell to the lowest since September 2022 and with tech encouraged by TSMC's earnings which lifted the Co.'s shares by over 6% and underpinned other chipmakers including Samsung Electronics.
• ASX 200 climbed back above 7,400 with the advances led by tech after similar outperformance stateside.
• Nikkei 225 was underpinned and briefly climbed above 36,000 after Japanese CPI data continued to soften and a source report noted there was no pressure for the BoJ to rush towards the exit.
• Hang Seng and Shanghai Comp were subdued amid the lingering concerns surrounding an uneven recovery in the Chinese economy, while a restriction on short sales by China's largest brokerage did little to spur a recovery.

NOTABLE HEADLINES

• China's MOFCOM said it hopes all parties concerned will restore and ensure the security of shipping lanes in the Red Sea and it hopes all parties jointly safeguard the smooth flow of global production, supply chains and normal order of international trade. Furthermore, it stated that China will strengthen coordination with relevant departments, closely track developments and provide timely support and assistance to foreign trade enterprises.
• Japanese Finance Minister Suzuki said forex moves are driven by various factors and the government is watching forex developments carefully, while he reiterated it is important for FX to move stably reflecting fundamentals. Suzuki also stated that he won't comment in advance about what the government expects the BoJ to do but hopes the BoJ guides policy appropriately, working closely with the government to sustainably achieve the 2% inflation target.
• Moody's cuts Huarong Asset Management to Junk, according to Bloomberg
• China's cabinet has reportedly instructed heavily indebted governments to halt some unfinished infrastructure projects, according to Reuters sources; Beijing is said to be concerned about potential default due to local governments' large debts.
• China securities regulator said will strengthen supervision over stock index futures trading to safeguard market stability. No signs yet of the intensive build-up of short positions in stock index futures.

DATA RECAP

• Japanese National CPI YY (Dec) 2.6% vs. Exp. 2.5% (Prev. 2.8%); National CPI Ex. Fresh Food YY (Dec) 2.3% vs. Exp. 2.3% (Prev. 2.5%); National CPI Ex. Fresh Food & Energy YY (Dec) 3.7% vs. Exp. 3.7% (Prev. 3.8%)
• Chinese FDI (YTD) (Dec) -8.0% (Prev. -10.0%)