EUROPEAN EQUITY OPEN:

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  OVERNIGHT: US stocks were mixed on Friday, with SPX just above unchanged in choppy (albeit tight) trading conditions, and the S&P posted its worst week since December, as markets hawkishly repriced Fed views. APAC stocks began the week in a mostly subdued fashion amid balloon-related geopolitical tensions, and as markets brace for tomorrow's US CPI report.


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  EUROPEAN OPEN: European stocks have started the week with a modest upside bias. News flow has been quiet, with traders casting their focus onto this week’s key events, which include nominations for the new BoJ Governor and his deputies (Tue), US CPI (Tue) and retail sales (Wed) data, lots of activity data out of the UK, while the Aussies will release jobs data (Thu) – see below for our week ahead preview.


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  US-CHINA: US-China geopolitical tensions are lingering after the US military downed a fourth flying object after it flew in proximity to sensitive military sites; China responded by claiming that since last year, US high altitude balloons had flown over Chinese airspace on 10 occasions without permission. For now, traders are not treating this as a significant step-up in geopolitical tensions, but are keeping it on the radar, particularly ahead of China's senior foreign diplomat Wang Yi's visit to France, Italy, Russia and Hungary later this month; Wang Yi will also attend the Munich Security Conference later this week.


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  EUROPEAN EARNINGS: Earnings have been thin this morning; Morgan Stanley notes that Q4 results so notes: 1) +32% breadth of sales beats, whic hthe bank says is still good, but lower than previously; 2) a healthy 20% net beat on EPS; 3) positive EPS trends from large-cap Value stocks, especially Financials; 4) mild negative skew to price action around beats/misses.

DAY AHEAD:

• Our live day ahead calendar can be accessed here; a PDF version can be accessed here.


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  DAY AHEAD: It is a quiet start to a busy week. There is nothing by way of scheduled economic data releases in Europe or North American of any significance. On the speakers front, ECB's Centeno will be doing the media rounds; speaking in January, Centeno was positive on Q4 growth in Europe, and said it was likely to be positive; ahead, he thinks we are approaching the end of the rate hike process, arguing that although inflation may have some resistance in January and February, it will fall again from March. President Lagarde and ECB's Panetta (Dovish) will be at a Eurogroup meeting, although not expected to make any new policy comments, and there will be no text release. Meanwhile, Fed Governor Bowman will deliver remarks from a banking supervision event; she could offer some insight on weekend reports that said the Biden administration had discussed the possibility of stepping up oversight of financial firms operating outside the banking system, a sign they could move to ease or repeal Trump-era restrictions on regulating nonbank firms such as hedge funds or asset managers.


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  WEEK AHEAD: Instead, traders will look to this week's key events, which include: nominations for the new BoJ Governor and his deputies (Tue), US CPI (Tue) and retail sales (Wed) data, lots of activity data out of the UK, while the Aussies will release jobs data (Thu). Our week ahead briefing can be accessed here.

STOCK SPECIFIC NEWS:

• Our full equity specific briefings for February 13th can be accessed here and here.


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  COMMUNICATIONS: Telefonica (TEF SM) and Liberty Global (LBTYA) reportedly seek to sell 25% of Cornerstone, could fetch EUR 3bln+. Italy could buy a 20% stake in Telecom Italia's (TIT IM) network unit for EUR 2bln to keep oversight. EU antitrust regulators set to approve Orange's (ORA FP) Belgian deal by end-Feb, sources said.


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  CONSUMER CYCLICAL: Flutter Entertainment's (FLTR LN) FanDuel chief is confident the unit will achieve FY profitability. Renault (RNO FP) and Nissan (7201 JT) to invest USD 600mln to produce six new models in India including two EVs. BMW (BMW GY) CFO said FY22 pre-tax earnings forecasts were met. Of note for UK homebuilders, Deutsche Bank downgrades Barratt Developments (BDEV LN), Crest Nicholson (CREST LN), Persimmon (PSN LN), Redrow (RD LN), Taylor Wimpey (TW/ LN).


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  ENERGY: CEO of industry body Energy UK warns more energy suppliers could go under amid consumer stress.


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  FINANCIALS: Deutsche Bank (DBK GY) staff reportedly breached EU rules on misselling FX derivatives in Spain, FT claims. Pershing Square Holdings (PSH LN) could leave London for NY, analysts speculate after a call with its manager Bill Ackman. Intesa Sanpaolo (ISP IM) CEO reportedly targets private banking revenue growth of +3.5-4.0% on inflows +4%.


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  HEALTH CARE: Sanofi (SAN FP) Global Head of R&D to leave the company. Orpea (ORP FP) organic revenue +5.7% Y/Y, says planned capital increases would reflect a theoretical EUR 0.20 price. Siemens Healthineers (SHL GY) downgraded at Kepler Cheuvreux.


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  INDUSTRIALS: Airbus (AIR FP) has reportedly signed deal with Air India for roughly 250 planes. Fraport (FRA GY) 2023 start solid, with January passengers +65.5% Y/Y and flight movements +20.6% Y/Y, though cargo volume -18.8% Y/Y. Leoni (LEO GY) EBIT falls, says cash flow after financing costs will be strongly negative in 2023. Goldman Sachs initiates Weir Group (WEIR LN) with a Buy. Aurubis (NDA GY) upgraded at Morgan Stanley.


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  MATERIALS: Norsk Hydro (NHY NO) downgraded at Carnegie. Rio Tinto (RIO LN) downgraded at BNP Paribas.


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  REAL ESTATE: Castellum (CAST SS) is to carry out USD 955mln rights issue.


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  TECH: Teddy Sagi has offered to buy Kape Technologies (KAPE LN) for USD 3.44/shr (vs close GBP 2.5950). Siltronic (WAF GY) downgraded at Berenberg.


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  UTILITIES: Severn Trent (SVT LN) is in focus after UK environment secretary reportedly backs off higher fines for sewage spills amid fears large fines could scare off infrastructure investors. Iberdrola (IBE SM) Q4 net electricity production -1.1% Y/Y. RBC downgrades Severn Trent (SVT LN) and Pennon Group (PNN LN).

13 Feb 2023 - 08:10- EU Research- Source: Newsquawk