• European equities are mixed with outperformance in the FTSE 100, post-BP earning; US equity futures in-fitting, NQ bid
• Dollar is marginally firmer and AUD the G10 outperformer following a “hawkish hold” at the RBA
• Bonds modestly firmer, though have been edging lower throughout the European morning
• Crude and XAU hold around the unchanged mark; base metals are propped up on Chinese stabilisation efforts
• Looking ahead, Canadian Ivey PMI, NZ Jobs data, Comments from Fed’s Mester, Harker, Kashkari, Collins & BoC's Macklem, Supply from the US, Earnings from Eli Lily, Ford, GE Healthcare & Chipotle.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed, having initially traded entirely in the green taking impetus from positive Chinese trade overnight; the FTSE 100 outperforms post-BP (+5.9%) earnings.
• European sectors are mixed; Energy is the clear outperformer propped up by strength in Energy after BP’s strong results. To the downside, Utilities is hampered by a broker downgrade at RWE (-1.1%) and UBS (-2.9%) numbers are weighing on Financials.
• US equity futures (ES -0.1%, NQ +0.2%, RTY -0.4%) are mixed with outperformance in the NQ lifted by improved sentiment within the Tech sector and as NVDA (+1.4%) looks to breach the USD 700/shr level for the first time.
• Click here and here for the sessions European pre-market equity newsflow, including earnings from BP (strong), Infineon (cut guidance) & more.
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FX

• Dollar remains at elevated levels after a combination of NFP, hawkish Fed speak and strong ISM sent the DXY to a YTD peak at 104.60 yesterday. DXY remains above its 100DMA at 104.21, though not much in the way of upside until 105.
• EUR still in a downtrend since late-Dec; currently remains in place after the pair took out its 100DMA to the downside yesterday at 1.0783 and printed a YTD trough at 1.0723.
• The JPY is relatively steady vs. the USD after advancing to a fresh YTD peak yesterday at 148.89. Fate of the pair will ultimately depend on the relative Fed vs. BoJ policy path.
• AUD is the G10 outperformer following the "hawkish hold" from the RBA and strong Chinese equity performance overnight. That being said, it was unable to maintain 0.65+ status with yesterday's YTD trough of 0.6486 in close proximity.
• PBoC set USD/CNY mid-point at 7.1082 vs exp. 7.2057 (prev. 7.1070).
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FIXED INCOME

• USTs are a touch firmer, though has been edging off best levels throughout the European morning. Yields are lower across the curve with modest bull-flattening; the docket for today includes supply (3yr) and Fed speak from Mester, Collins, Harker & Kashkari, trough for today at 110-26.
• Bunds are a touch firmer as the complex generally rebounds from the post-NFP/Powell/corporate-supply induced pressure of Monday's session. Thus far, broader macro drivers are relatively limited with the complex unreactive to German Industrial data and an ECB survey.
• Gilts is the modest outperformer, though this follows recent underperformance as BoE expectations have been subject to a more hawkish re-pricing.
• Spain has started the 30yr syndicated bond sales with EUR 50bln in initial demand, according to the lead manager.
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COMMODITIES

• Crude is modestly firmer, having initially started the session on a softer footing, with overall specifics light for the complex; currently, Brent holds just above USD 78/bbl.
• Spot gold is around flat and unable to benefit from the modest pullback in the Dollar and lower yield environment; resides just under the 21-DMA at USD 2029/oz, 50-DMA above at USD 2034/oz.
• Base metals are bid, deriving support from the firmer APAC handover given the strength seen in China from support measures into the Lunar New Year celebration period.
• Citi: TTF prices could average USD 8.5/MMBTU in Q1 (circa. EUR 27/MWh), but then surpass USD 10/MMBTU during Q2.
• Petrobras CEO said the Co. will expand refining capacity by 25% in four years, according to Reuters.
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NOTABLE EUROPEAN HEADLINES

• Barclays noted that UK January consumer spending rose 3.1% Y/Y with more consumers shopping online due to cold weather, while consumer confidence about personal finances was at the highest since November 2021.
• ECB's de Cos says is confident that inflation is returning to the 2% target
• ECB Consumer Inflation Expectations survey (Dec) - 12-months ahead 3.2% (prev. 3.5%); 3-year ahead 2.5% (prev. 2.4%). Economic growth expectations for the next 12 months remained unchanged at -1.3%

DATA RECAP

• UK BRC Retail Sales YY (Jan) 1.4% (Prev. 1.9%); BRC Total Sales YY (Jan) 1.2% (Prev. 1.7%)
• German Industrial Orders MM (Dec) 8.9% vs. Exp. 0.0% (Prev. 0.3%)
• German HCOB Construction PMI (Jan) 36.3 (Prev. 37)
• EU HCOB Construction PMI (Jan) 41.3 (Prev. 43.6)
• Italian HCOB Construction PMI (Jan) 51.6 (Prev. 55.2)
• French HCOB Construction PMI (Jan) 39.6 (Prev. 42.6)
• Italian Mfg Business Confidence (Jan) 88.3 (Prev. 95.4, Rev. 87.3); Consumer Confidence (Jan) 96.4 (Prev. 106.7, Rev. 95.8)
• UK S&P Global Construction PMI (Jan) 48.8 vs. Exp. 47.3 (Prev. 46.8)
• EU Retail Sales YY (Dec) -0.8% vs. Exp. -0.9% (Prev. -1.1%, Rev. -0.4%); Retail Sales MM (Dec) -1.1% vs. Exp. -1.0% (Prev. -0.3%, Rev. 0.3%)

NOTABLE US HEADLINES

• US Commerce Secretary Raimondo said the US expects to announce several more semiconductor chips funding announcements in the next six to eight weeks, while she added there is no artificial timeline and vowed to award funds as soon as possible but get it right.
• White House said the administration strongly opposes a standalone Israel aid bill which President Biden would veto.

EARNINGS

• NXP Semiconductors NV (NXPI) - Q4 2023 (USD): Adj. EPS 3.71 (exp. 3.65), Revenue 3.42bln (exp. 3.39bln). Co. said it is navigating a soft landing by managing what is in its control, especially limiting over shipment of products to customers. Sees Q1 Adj. EPS USD 2.97-3.38 (exp. 3.17). Sees Q1 revenue USD 3.03bln-3.23bln (exp. 3.17bln). (Newswires) Shares +2.8% pre-market
• Palantir (PLTR) - Q4 23 (USD): Adj. EPS 0.08 (exp. 0.08), revenue 608mln (exp. 602mln). Q124 revenue view 612-616mln (exp. 617mln). FY revenue view 2.652-2.668bln (exp. 2.66bln). Said demand for large language models from commercial institutions in the US continued to be "unrelenting," and it is focussed on the rollout of its AI; adds momentum with AI product is now significantly contributing to new revenue and new customers. Sees Q1 revenue between USD 612-616mln (exp. 617mln), Q1 operating income seen at USD 198mln (exp. 171mln); for the FY, revenue seen between USD 2.652-2.668bln (exp. 2.66bln), and operating income seen between USD 834-850mln (exp. 760mln). (Newswires) Shares +18.4% pre-market
• Semiconductors - US Commerce Secretary Raimondo said the US will announce several more semiconductor chips funding announcements over the next six to eight weeks, adding that there was no artificial timeline, adding that the US will award funds as quick as possible.
• BP (BP/ LN) - Q4 (USD): EPS 0.18 (exp. 0.15), adj. EBITDA 10.56bln (exp. 9.2bln), Profit 0.4bln (prev. 4.9bln), adj. for inventory holding losses of 1.2bln and adverse 1.5bln impact. USD 1.75bln buyback & dividend of USD 0.07270/shr, +10% Q/Q for Q1. USD 3.5bln buyback in H1 2024, plans buybacks of at least USD 14bln through 2025. Q1 Guidance: Upstream production higher vs Q4. Customer business: expects seasonally lower volumes across most businesses and the absence of one-off positive effects from Q4. Expects fuels margins to remain sensitive to movements in cost of supply. Products: expects a significantly lower level of refinery turnaround activity vs Q4. "expects lower industry refining margins, with a larger reduction in realized margins due to narrower North American heavy crude oil differentials." 2024 Guidance: Reported and underlying upstream production to be slightly higher vs 2023. Customers: expects continued growth from convenience. Products: lower level of industry refining margins, with realized margins impacted by narrower North American heavy crude oil differentials and for "refinery turnaround activity to have a similar impact on both throughput and financial performance compared to 2023, with phasing of activity in 2024 heavily weighted towards the second half." Gulf of Mexico oil spill payments to be around 1.2bln pre-tax, incl. 1.1bln to be paid in Q2. In other news, Whiting, Indiana refinery (435k BPD) is continuing assessment following a power outage, according to Reuters. (Reuters/Newswires) Shares +5.4% in European trade
• Infineon (IFX GY) - Q1 (EUR): EPS 0.44 (exp. 0.46), Revenue 3.7bln (exp. 3.83bln). Cuts outlook citing market environment outside automotive remains weak and does not expect noticeable recovery in demand until H2'24. Guides Q2 Revenue approx. 3.6bln (exp. 4.1bln). Segment result margin approx. 18%. Provides FY24 Guidance: Cuts FY24 Revenue 15.5-16.5bln (exp. 18.2bln, prev. guidance 16.5-17.5bln), adj. gross margin "low to mid 40s %" (prev. guidance 45%), adj. FCF 1.8bln (prev. guidance 2.2bln). (Newswires) Shares -3.0% in European trade

GEOPOLITICS

• US Central Command said its forces conducted a strike in self-defence against two Houthi explosive uncrewed surface vehicles, according to Reuters.
• Yemen's Houthis says they targets one US and one British ship with naval missiles, via group's spokesperson

CRYPTO

• Bitcoin holds above the USD 43k mark, and Ethereum (+2.2%) continues to outperform, taking the coin above USD 2.3k.

APAC TRADE

• APAC stocks were somewhat mixed as Chinese market stabilisation efforts offset the early headwinds from Wall Street where yields climbed to YTD highs after hot ISM Services data and recent hawkish Fed rhetoric.
• ASX 200 declined with weakness in tech and real estate amid rising yields, while attention was also on the RBA which maintained its rates as expected and reiterated its hawkish rhetoric.
• Nikkei 225 was subdued after disappointing household spending and soft wage data but with the downside cushioned amid a slew of earnings releases.
• Hang Seng and Shanghai Comp outperformed with sentiment boosted by China's latest market stabilisation efforts including reports China's sovereign fund will further increase ETF holdings, while the CSRC also encouraged listed firms to buy back more shares to inject more capital into the A-share market.

NOTABLE HEADLINES

• China's securities regulator said it encourages listed firms to buy back more shares to inject more capital into the A-share market and make every effort to maintain stable market operations, while it will guide institutional investors to increase stock investment. Furthermore, it was later reported that Chinese President Xi is set to discuss China's stock market with regulators.
• Chinese sovereign wealth fund CIC's unit Central Huijin said it fully recognises A-shares' allocation value and increased ETF holdings recently, while it will continue to increase holding size, according to Bloomberg.
• US President Biden's administration sent five senior Treasury officials to Beijing this week for economic talks including on subsidies and China's "non-market" policies that are ending excess industrial capacity, according to a Treasury official cited by Reuters.
• RBA kept rates unchanged at 4.35%, as expected, while it reiterated that the board remains resolute in its determination to return inflation to the target and that a further increase in interest rates cannot be ruled out. RBA also repeated that returning inflation to the target within a reasonable timeframe remains the board's highest priority and although it noted that inflation continued to ease in the December quarter, it added that inflation remains high at 4.1%. Furthermore, it stated the Board needs to be confident that inflation is moving sustainably towards the target range and said that inflation is still weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. RBA's quarterly Statement on Monetary Policy lowered the forecasts for inflation and GDP, while it noted that risks to the outlook are balanced and stated the level of demand is still above the economy's capacity to supply, creating price pressures.
• RBA Governor Bullock said at the press conference that the situation is more back to normal than during the pandemic and that everyone is focused on inflation, while she added there is still more work to do and still a little way to go to get inflation down. Furthermore, she stated that risk remains that inflation expectations drift further and they are not ruling anything in or out on policy, while they need to be convinced on inflation before thinking of cutting rates.
• BoJ is on track for a policy shift by April, via Reuters citing sources; assisted by wage outlook. Piece adds that the BoJ is laying the groundwork to end NIRP by April and overhaul other policy framework areas, but likely to go slow on subsequent action

DATA RECAP

• Japanese All Household Spending MM (Dec) -0.9% vs. Exp. 0.2% (Prev. -1.0%); All Household Spending YY (Dec) -2.5% vs. Exp. -2.1% (Prev. -2.9%); Overall Labour Cash Earnings (Dec) 1.0% vs. Exp. 1.3% (Prev. 0.2%)
• Australian Retail Trade (Q4) 0.3% vs. Exp. 0.1% (Prev. 0.2%, Rev. -0.1%)